Iowa cooperative rescinds metered internet usage pricing

“We have to respond to competition”

Orlan Love
Published: February 27 2014 | 4:14 pm - Updated: 29 March 2014 | 4:15 am in

WINTHROP – Competition and complaints have prompted the East Buchanan Telephone Cooperative to rescind its recent policy to charge Internet customers based on their usage volume.

“We have to respond to competition,” General Manager Butch Rorabaugh said Tuesday following competitor Prairie iNet’s installation of a wireless broadband transmitter atop a Winthrop grain elevator.

Prairie iNet, which provides internet service in Iowa and five other Midwest states, has three tiers of unlimited service based on download speed: $29.95 per month for 3 mbps, $39.95 per month for 5 mbps and $49.95 per month for 10 mbps.

East Buchanan’s new prices for unlimited service, announced in a postcard sent to customers last week, are identical.

Rorabaugh said he’s heard rumors that Prairie iNet plans to expand service to Quasqueton and Aurora, two other communities served by East Buchanan Telephone. No one at Jab Broadband, the Englewood, Colo., based parent company of Prairie iNet, could be reached for comment.

Rorabaugh said an online protest petition with more than 500 signatures “had some impact” in the decision to reinstate unlimited Internet service for both digital subscriber line (DSL) and wireless customers. So, too, did direct feedback from customers, he said.

The cooperative on Dec. 26 implemented metered service, which resulted in substantially larger bills for heavy internet users.

The new price schedule prompted former Winthrop resident David McElroy, now an information technology professional living in Dubuque, to initiate the online protest petition.

McElroy said the metered usage price schedule penalized, among other users, the growing part of the market that wants to stream data-intensive video entertainment services such as Netflix over the internet.

Rorabaugh said the rate increases were needed to help offset revenue losses in phone service and federal funding. The co-op’s income from long-distance access charges fell from $738,929 in 2009 to $456,701 in 2013. Meanwhile, during that same period, income from the Federal Communications Commission's Universal Service Fund, designed to prop up rural broadband service, fell from $454,200 to $169,196.

With those rate increases nullified, “It’s a bigger challenge than it was before to balance the budget. We have to look for ways to cut costs and provide other services,” he said.

The company, he said, will soon roll out a new home monitoring service, which would notify customers via email or text message when sensors detect temperature fluctuations, water in basements and other conditions that could lead to expensive repairs.

Rorabaugh said the company has “written literally hundreds of orders for conversion to the unlimited service,” with only two known defections to Prairie iNet.

McElroy said he is pleased that East Buchanan Telephone has lowered its rates to affordable levels for high volume users. If the company had not implemented metered usage, it would still have its market to itself, he said.

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