WINTHROP – To quote Brian Stelter, of the New York Times, “ The broadband era began with the expectation that Internet connections were like buffets-all you can eat, 24 hours a day. But users are now being prodded to think about how much they’re consuming.”
That has certainly become the case for members/customers of the East Buchanan Telephone Cooperative (EBTC) as they come to terms with the new, tiered pricing structure implemented by the Coop on Dec. 26, 2013. Currently, pricing for DSL and the company’s new wireless offering are similar to the much-maligned pricing structure of most cellular internet services. At the present time price tiers at EBTC range from $24.95 for 5 gigabytes (equivalent to two downloaded, high-definition movies), to $299.95 for 100 gigabytes (GB) with overages priced at $5 per GB for 3Mbps (data transfer speed over the Internet. The U.S. average is 8.6 Mbps.)
According to the EBTC Board the reasons cited for the new pricing structure are due to improvement costs for service and maintenance, the impact of recent FCC orders, and in the interest of fairness for the 70 percent of EBTC Internet customers who only use 15 GB of data, or less, each month.
Unfortunately for EBTC members/customers, the new pricing is hitting hard, especially students, area libraries, and those who work from home, relying heavily on the Internet to conduct day-to-day business.
In an effort to get EBTC to “Stop pricing home internet like cellular internet,” former Winthrop resident David McElroy, started a petition of protest on “Change.org.” Over 300 people have already signed the petition. To see and/or sign the petition go to www.hange.org/petitions/east-buchanan-telephone-cooperative-stop-pricing-home-internet-like-cellular-internet. The site also includes updates and comments since the initial launch of the petition.
On Thursday, Jan. 9, McElroy and approximately 25 disgruntled customers met with the EBTC Board about the issue during the Board’s regular monthly meeting. At the start of the meeting customers were told that the Board would allot 15 minutes for comments, which did end up being extended to approximately 25 minutes. However, 10 minutes of that time was utilized by McElroy, acting as group spokesman, for a presentation containing “talking points” regarding the new pricing structure. The main points McElroy shared during his presentation included:
-EBTC prices not in line with other providers in the area, for example Indytel at Independence charges $31.95, PrairieiNet Wireless in Masonville and Rowley charges $29.95, and Mediacom in Manchester charges $9.95 with a 250GB cap, and $10 per 50 GB for overages.
- EBTC monitored data use while the connection speed PRIOR to the new pricing structure, was still at 1 Mbps. Meanwhile customers were asked to sign up for the price level they felt was most suited to their individual situations before new pricing went into effect; otherwise EBTC would place them at the 5 GB level by default. However, on Dec. 26th, speed was increased to 3 Mbps and customers discovered that three times more data was being used, than what they signed up for and subsequently found out they were already over their allotted gigabytes shortly after the new pricing went into effect.
- EBTC does not meet federal standards for “broadband.” (As of 2010 FCC considers Broadband anything 4Mbps or faster in downloading and 1Mbps or faster for uploading. Based on the national average, EBTC is actually 65 percent slower than the national average.
-Current plans do not take into account the needs of individuals who work at home or attend classes online.
-That EBTC’s DSL and line of sight broadband customers appear to be subsidizing the cost of EBTC’s IPTV service, and that an argument could be made that this could be considered anticompetitive and preferential treatment is being given to IPTV over competitors like Netflix, Hulu, Amazon, and Google.
-Upgrades will be difficult for people to afford. For example, if someone has two kids in high school using school-owned laptops it would take 10.6 GB of data to upgrade the two laptops, meaning families would have to spend around $53 per year on data just to keep the laptops up to date.
After McElroy’s presentation, customers at the meeting did have roughly 10 minutes to air their concerns and share comments which included the now exorbitant costs for students to take online classes (estimated by McElroy to be roughly an additional $135/month for just two classes), and outrage at how monthly Internet bills will end up doubling... even tripling under the new plan, for what one disgruntled customer said, “Was basically sub-standard service.”
The Jan. 9 meeting was recorded and can be viewed on YouTube.
As for the EBTC Board of Directors, not a single board member made a statement of any kind, other than EBTC General Manager Butch Rorabaugh who did say that that the Coop is now looking at special packages for online students and individuals who work from home and for individuals with “unique situations.” He also said that customers can change their internet data usage packages/ pricing tier at any time from the 1st to the 20th of each month, and that playback settings on services like Netflix can be adjusted so less data is used during downloads. In addition, it was also stated that Rorabaugh intends to specifically address McElroy’s “talking points” later in a mass email or through customer billing statements in the near future.
Since the meeting, Rorabaugh has brought up other considerations not covered in McElroy’s presentation, saying, “I think the largest issue separating our Board and the petitioning group is the cost of serving this area. The petitioning group proposes EBTC should be able to offer services at the same price as surrounding companies but fails to consider what it cost EBTC to provide service.”
He goes on to explain that EBTC has 1,057 customers as of Dec. 31, 2013, and serves a 165- mile area. That means customer density is roughly seven customers per square mile. Customers have to be within 18,000 feet of a rural DSL cabinet or central office to receive any type of high speed internet connection. EBTC has 324 miles of copper cable and 20 miles of fiber connecting 16 rural DLS cabinets and three central offices (Aurora, Winthrop, and Quasky). That does not include cable running from pedestals along the road to the side of homes. Most of the cable and fiber was placed between 1999 and 2000, and the Coop was hoping it would be depreciated by 2019. But, EBTC ended spending an additional $95,000 to bore under the Wapsi when the Quasky Bridge was replaced and another $100,000 when old Highway 20 was rebuilt last year. Meanwhile, electronics in each cabinet costs approximately $50,000 but only serves approximately 12 customers/ cabinet, and EBTC says they have updated original components twice bringing total investment to $150,000 for each cabinet, bringing the grand total (for16 cabinets) to $2,400.000.
Another area Rorabaugh touched upon was the impact of recent FCC orders.
Since 2009, he says, the FCC has decreased access charges by $285,004 and Universal Funding by $282,228, for a total of $566,232 or $531.68 per customer. The decrease is expected to continue. During the same timeframe internet demand has grown by 1,000 percent.
“But we did not increase rates. Instead we worked very hard to become more efficient, reduce costs and diversify operations. But, we are running out of ideas. The change in FCC policy has transferred a significant portion of network cost to our customers.”
He goes on to say, “The FCC missed an opportunity during Dec. 2012 to require funding by internet businesses like Netflix, Google, Amazon etc. Otherwise, we would probably not be having this discussion right now if these companies would contribute just a small percentage of sales for our area to support the internet.”
In the meantime, Rorabaugh also reminds customers that they can sign up for free online customer care which monitors customer usage 24/7, and encourages online students, work at home individuals and those with unique situations to call him at the office to discuss their concerns.
“I have talked to several people,” he said, “but would like to collect more information for the Board’s consideration.”
Rorabaugh has been in the communications business for 35 years and was chief financial officer for the largest independent company in Minnesota before moving to Iowa, and has spent six years serving on the Rural Iowa Independent Telephone Association (1 year as president) and has made several trips to Capitol Hill and FCC headquarters.
“I know communications,” he says, “ and my concern is for this cooperative. Although measured internet may not be popular, I am genuinely concerned about the long term survival of EBTC if changes are not made.”