U.S. ISP forces customers into insanely long contracts, sues customers when FCC intervenes


You might have found a good deal that an Internet Service Provider (ISP) is offering and then decided to give them your business. But later on, you might have found out that you don’t like the agreement you have with your ISP—you may have a one, two or three year contract at a certain speed, and you’re not getting the speeds that were advertised to you or your service might be intermittent, both for a various number of reasons, and you want out. To get out, you usually need to pay an early termination fee. A United States ISP from Virginia, OpenBand, decided to bring the contract to end all ISP contracts to the table—contracts ranging in length from 25 to 75 years to residents of Loudoun County, Virginia, and thus, no affordable early termination fee.

OpenBand convinced many communities to sign contracts with them to provide TV and broadband Internet services at USD$150 (Php 6,089) a month. Although residents were free to sign up for other TV and/or broadband Internet services, people from these communities still had to pay the USD$150 fee to OpenBand, essentially creating a monopoly over TV and broadband Internet services for their area. OpenBand now had no competition as a result of being a monopoly, and customers complained that OpenBand made no effort to improve their service. Some residents bought services from other ISPs, and were willing to put up with paying both the fee from their preferred ISP and OpenBand’s fee as well.

Customer complaints reached the Federal Communications Commission (FCC), which regulates ISPs and other forms of communications in the United States. When the FCC made changes to make ridiculously long contracts illegal (thus freeing customers from the firm grip of OpenBand), many customers (obviously) chose not to renew. OpenBand, in response, decided to sue everybody that subscribed to their services—from individuals to homeowner associations to the county’s Board of Supervisors and two individual supervisors themselves, for USD$50 million. In response, at least two homeowners’ associations have filed lawsuits against OpenBand.

The case is currently in court, and OpenBand shows no sign of letting go. It has claimed that the FCC has no jurisdiction over the arrangements they made with the homeowners, and has also gone as far as to redefine the terms (contracts vs. easements). One of the judges hearing the case, J. Harvie Wilkinson III, said, “The FCC ruling, it seems so clearly directed at prohibiting exactly what is taking place here, and I am beginning to get the idea that these standing questions, these ripeness questions, a lot of them are just a fog that’s being thrown up [by OpenBand attorneys] to provide protection for a shell game that’s going on here with all these different companies and different agreements.” Wilkinson also said, “OpenBand appeared to be seeking to evade the FCC exclusivity order by calling the contractual agreements…easements. It is one thing after another. The whole thing is a subterfuge.”

Financially, OpenBand seems to be in it for the long haul—it has already spent USD$4 million to reclaim its monopoly, which may rise as more people locked into OpenBand’s “lifetime” contracts bring their cases against the company/monopoly.

Source: TechDirt