Frontier Communications "Testing" To See How Users Respond To Being Ridiculously Overcharged For Bandwidth
from the we-overcharge-because-we-can dept
Last year Time Warner Cable took a pretty severe beating from the press and public for plans to impose not only monthly broadband usage caps as low as 5 GB a month, but also for their decision to charge users up to $2 per additional GB. Given this was a 1,500-2,000% markup above bandwidth costs for the provider, most consumers realized that the already very profitable company was simply making a money grab -- and preparing to better monetize and/or stifle Internet video's impact on TV revenues. The media scuff up wasn't helped by company executives, who issued missives proclaiming that overcharging customers for bandwidth during a recession was only "fair" and that it would "actually encourage more use of broadband overall."
Time Warner Cable eventually backed off the plan, but not before their brand (which they're planning to change) took a lot of damage. One small reason they backed off was because one of the company's few competitors, Frontier Communications, started advertising their DSL service as uncapped in order to gain a competitive advantage. Despite the fact Frontier was previously planning to impose 5GB monthly caps on all speed tiers -- said ads lambasted the cable industry as greedy. Of course now that Time Warner Cable has backed off, Frontier is testing an even more ridiculous overcharging system.
According to a letter being sent to Frontier users in Minnesota, users who consume more than 100 GB a month are automatically having their bills bumped to $99 a month. Users who consume more than 250 GB a month are having their bills bumped to a staggering $250 a month. Users who don't respond within fifteen days get their service disconnected (throwing away a potential customer is always a brilliant business model). Keep in mind that Frontier is one of many American telcos that -- thanks to limited competition -- hasn't kept pace with demand or upgraded their network from last generation DSL technology in most markets. As such, many Frontier users don't see speeds above 3 Mbps to begin with, and that service can cost around $55 a month for a standalone (no voice landline) connection.
As in most of these efforts to overcharge broadband users, the letter being sent to consumers adds insult to injury -- informing users that the changes are being applied to provide "the best possible internet experience." The letter also informs users that anyone who uses over 5 GB of bandwidth a month is engaging in "unreasonable usage" according to the Frontier terms of service. Of course 5 GB is eaten up by one high definition film -- and as multi-user households use an ever-increasing array of services, 100 GB is quickly becoming a low ceiling as well.
These more aggressive pricing models are only employed by carriers who operate in uncompetitive markets (Time Warner's caps never appeared in markets where they competed with Verizon FiOS). While the pricing changes are almost always portrayed as an issue of "fairness" targeting a carrier's heaviest users, the changes eventually wind up hitting all of an ISP's subscribers. After these price hikes are portrayed as some sort of altruism, carriers will frequently try to trot out the argument that if they can't overcharge you for bandwidth, the Internet will simply explode (aka the Exaflood), something we've debunked countless times as the product of carrier lobbyists. Of course all of this is going on while the cost of bandwidth and networking hardware drops.
Frontier's timing also isn't particularly smart, given they're exploring this overcharging scheme just as they're trying to gain regulatory approval for their $8.5 billion plan to acquire millions of Verizon DSL and landline customers across fourteen states. Part of that deal involves a few thousand FiOS customers in Washington State, who'll be thrilled to learn that their state-of-the-art fiber to the home connection is about to get much more expensive and much less useful.