In this case its Verizon again. The name of the game is a Titanic shuffle of their data rate plan. May sound like small potatoes till you see the hurdle before you as a customer –

First, the details: Verizon has introduced a new data tier at $9.99 per month with a 25MB cap—this is the cheapest data plan now offered by the company and by most US wireless carriers, and applies to all 3G devices. Why does this equate to “upping” the data charges? Because the company is ditching its $19.99 per month plan with a 75MB cap altogether—you must either go with the $9.99 plan for a third of the data or or the $29.99 smartphone plan that applies to WinMo, Android, or BlackBerry devices.

This in a sense is a variant of the give the lantern away but charge for the oil dearly. Only this is charge minimally for low oil but if you want to use the lamp every night you has to pay!

Why can’t stuff be simple? Just charge .001¢ per kilobyte and be done with it. Equitable, quick and customers can check their bills quickly. But then that would not justify the marketees salary would it?

Linky.

Look, I think Verizon has the duty to make a buck for its shareholders. It also in my view has a obligation to play fair with its customer base. Sometimes the two are in conflict. When that happens, sometimes the FCC takes notice –

“Late Friday, Verizon Wireless responded to the Bureau’s queries. The company’s answers, however, are not satisfying and, in some cases, troubling. In particular, I am concerned about what appears to be a shifting and tenuous rationale for ETFs. No longer is the claim that ETFs are tied solely to the true cost of the wireless device; rather, they are now also used to foot the bill for ‘advertising costs, commissions for sales personnel, and store costs.’ Consumers already pay high monthly fees for voice and data designed to cover the costs of doing business. So when they are assessed excessive penalties, especially when they are near the end of their contract term, it is hard for me to believe that the public interest is being well served.

“I am also alarmed by the fact that many consumers have been charged phantom fees for inadvertently pressing a key on their phones thereby launching Verizon Wireless’s mobile Internet service. The company asserted in its response to the Bureau that it ‘does not charge users when the browser is launched,’ but recent press reports and consumer complaints strongly suggest otherwise.

“These issues cannot be ignored. Wireless communications are an essential part of our lives, linking us to our places of business, our communities, and our loved ones. The bottom line is that wireless companies can truly earn their desired long-term commitments from consumers by focusing primarily on developing innovative products, maintaining affordable prices, and providing excellent customer service. I look forward to exploring this issue in greater depth with
my colleagues in the New Year.

Or so says Mignon Clyburn.

Verizon responded –

* most customers who terminate do so in the first year;
* no matter when a customer terminates a contract, Verizon loses more money than the ETF covers;
* based on those two points, Verizon would lose too much money if it evenly prorated the $350 ETF;
* so by unevenly prorating, Verizon can keep the initial ETF lower than it otherwise would be, but high enough over the life of the contract to adequately offset losses.

Here’s the problem with their logic. If the customers require such high support $$ then adjust you plan rates. Also please explain why we keep hearing in the press about phantom key sequences that activate services without knowledge of the customer. It might explain the additional support costs. Also if most smartphone users quit in the first year then smart money would say you slam them for $350 up to and including month 13 or 14. Then prorate monthly as the chance of leaving has decreased significantly. Eh?

Bottom line? All the carriers thought they were just selling a cell phone with the capability to view short video clips. They never thought people would spend hours watching YouTube clips, short films, etc. They were wrong, got caught flatfooted and so now they are CYA’s themselves all over the place. No sympathy fellas.

Linky.

On of the most used marketing ploys in in the telco suit’s bag of tricks is raising revenue by tinkering with rates, billing or repackaging existing technology into higher priced offerings. That sort of tinkering has evolved into a fine art in the wireless biz, with AT&T as the master.

Recent growth in wireless data use has eroded the quality of service AT&T’s infrastructure has been able to provide to many of its customers. AT&T  has responded with a commitment to invest in upgrades, along with usage based price tweaking that amounts to a price increase for many of AT&T’s wireless data customers. According to a report on Neowin, this so called investment may have been a ruse with the expectation that a price increase alone will reduce usage, therefore improving performance.

As seen in the images below, AT&T’s “commitment to improving their network” claim could not be further from the truth. Since the release of the original iPhone,  AT&T has consistently spent less money on network construction. This seems very strange, considering they beefed up construction right before the iPhone’s initial release. With such a high demand phone,  AT&T should be expected to continue investing in their network, especially considering the fact that the iPhone was upgraded twice already, allowing it to consume more data, and ultimately bring more customers to the carrier.

Since the release of the iPhone, AT&T’s revenue has consistently increased. They now make approximately 80% more revenue from wireless data than they did when the iPhone was initially introduced. This increase doesn’t seem to be slowing down anytime soon, as it has been steadily inclining for the past two years. The post also shows stats regarding the economy’s negative effects on AT&T’s net income. Guess what? There weren’t any. AT&T was able to increase their cash, and cash equivalents on hand by 4.375 billion dollars since the start of 2009. They’ve seemed to keep profits fairly steady, considering the times. (more on Neowin)

As a brief diversion from the firestorm brewing between regulators and wireless carriers, here’s an animated collection of facts on the cell phone. Most is most interesting and disappointing to me is that Americans pay more than anyone in the world to use them.

Fourth place US wireless carrier T Mobile was conspicuously absent when the FCC auctioned off spectrum for new wireless broadband services. Left without the bandwidth necessary to provide true broadband to its entire customer base, the company has needed a survival strategy as traditional cellular begins to decline.

There have been abundant rumors about T Mobile’s parent acquiring Sprint, who is the majority owner in Clearwire. That move does make sense, but there may be a better way. If DT were to invest a little less money in Clearwire, it could solve its bandwidth problem and give Clearwire badly needed cash for faster expansion.

Bloomberg News is now reporting that Deutsche Telekom might decide to pay Sprint, Clearwire and/or MetroPCS for access to the their U.S. wireless spectrum. Such a deal would infuse Clearwire with $2 billion in much-needed cash for network upgrades, while giving Deutsche Telekom-owned T-Mobile access to wireless spectrum that would help with T-Mobile’s 4G plans. (DSL Reports)

A lot more of your monthly wireless spend will be going to Washington DC this year. The biggest players in the wireless cartel want to keep their cartel privileges.

In the most radical neutrality program ever outlined in the US, the new-look FCC is insisting that wireless carriers should account for their open policies in the same way as their wired broadband counterparts.

The proposed policy outlined this week would allow the FCC to monitor cellcos’ policies and rule on how well they conform to guidelines on neutrality. Genachowski also plans to toughen up the rules for the big phone companies such as Verizon and AT&T.

He has reaffirmed the 2005 broadband principles that consumers are entitled to access any legal internet content, and run any apps, from their choice of legal device, and with the right to competition among operators and providers of services, content and applications. These principles will now be formalized by the FCC and extended to mobile broadband.

Genachowski has also added two extra principles. Access providers will be barred from discriminating against particular internet content or apps, and they must be transparent about the network management practices they adopt. (The Register)

If we must have a wireless cartel, regulation is necessary. Unfortunately, many of the practices our new FCC chair seeks to end were originally enabled by regulations. For wireless there is simply too much spectrum licensed to to few providers to have a competitive market. With so much money involved, we can count on any new rules performing less well than advertised. Acts of Congress can and will undo any regs that the cartel cannot manipulate at the FCC level.

We need to rethink and retool how we allocate spectrum. Too little is available to the masses and too much is in the control of a very few companies. If there were robust competition , net neutrality would be a non issue.

I hate being wrong. A little over a year ago, I stated that things could not possibly get worse  at the FCC. I was wrong. While I won’t repeat that mistake I will report that the new butts in the FCC’ boards seats have managed to stoop to a few new lows even before the name plates on their offices have changed. The latest from the agency who has taken the public out of the public air waves? The same FCC  that allowed TWO companies to hold a DOMINANT chunk of the national wireless spectrum now wants to know why there is so little innovation in that market.

The Federal Communications Commission decided unanimously on Thursday to review the state of “innovation” in the wireless industry, a move that could lead to greater regulation of carriers and government intervention in disputes such as one that recently erupted over Google Voice and the Apple App Store.

All five FCC commissioners, including the two Republicans, voted to approve a pair of investigations into the wireless industry. One will look broadly at the state of competition and innovation, and the other, as CNET News reported last week, will evaluate whether truth-in-billing rules ensure subscribers know what they’re paying for on their monthly phone bills.

Thursday’s vote represents only a small first step toward more federal rules. While not all formal inquiries result in new regulations, FCC Chairman Julius Genachowski did stress that his agency should be “relentless” in its pursuit of wireless innovation. CTIA, the organization which represents the big wireless operators in the U.S., has said that the industry is very competitive and innovative.  (Cnet)

One has to wonder if any of the bureaucrats  FCC ever studied economics operated a business.  It’s a simple truth that if you allow a number as small as two businesses to dominate a marketplace they will neither innovate or serve their customers.

Maybe the FCC board only knows this too well. Since the federal bureaucracy is dominated by two political parties, it would hardly want to admit that truth.  Washington DC has become a monument to the sad results of an imagined competition when the field is limited limited to two major parties.

Sadly that truth is fully understood by even the uneducated flea market vendor here in the real world.  Running in inquiry into a cartel is counter productive, especially when it’s operatives preside over the investigation. The pile’s getting so high that  maybe even the willfully uniformed masses will be able to see it.

The big bad Q recently notified its wireless customers that they have 60 days to find an alternative provider or do without. Qwest was a Verizon reseller, so I assume the Dark V will only be too happy to offer a switch plan (hopefully without the bait). As legacy wireless begins its rush to Zero, there’s little money to be made if you own the network, and none to be made if you don’t. More evidence: Less than 30 days ago, Virgin sold it’s cellular business to it’s network provider Sprint.

Qwest will discontinue all Qwest Wireless service on Oct. 31, 2009.

· There is no early termination fee when disconnecting Qwest Wireless service.

· Qwest Wireless phone numbers are portable. Customers who switch to a new service provider, prior to Oct. 31, 2009, will be able to transfer their wireless phone numbers to the new service provider.

· Qwest is an authorized agent for Verizon Wireless. Qwest Wireless customers who select Verizon Wireless as their provider can take advantage of combined billing and exclusive handset offers from Verizon Wireless.

· In September and October, when Qwest Wireless customers who have not changed wireless service providers make a call, they will be routed to a live Qwest service representative, who will remind customers that Qwest is discontinuing Qwest Wireless service and a new service provider needs to be selected. Once the customer service communication is complete, calls will be connected as dialed.

· For more information about switching from Qwest Wireless service, visit http://www.qwest.com/wirelessfaq, or call 1 800-516-0669, or visit one of the many Qwest Solution Centers www.qwest.com/stores. (Qwest)

While the sampling is only 1000 people, the fact remains nearly half would buy 3G service if it were less expensive. Never mind 3G is pathetically slow and comes with usage caps.

Cellular modems have been available for several years in the form of PC Card or USB add-ons for laptops and increasingly are available built into netbooks, e-book readers, navigation devices and other products. The cost of the modems themselves is often subsidized, but in most cases, service still costs about US$60 per month.

ABI surveyed 1,000 consumers and found that 47 percent don’t have a cellular modem and are interested in using one, but only if the service cost $30 per month or less. Some said they would be willing to pay less than $10 per month. (Yahoo)

You can bet that the wireless cartel has been aware of this for some time.  They invest heavily in consumer research. That’s how they cook up the next crazy scam to get you to sign a two year contract. It seems that they are happy to provide service for a smaller number of users at double the critical mass price. That comes as no surprise. Delivering service to the masses would require upgrading thier feeble networks.

Significant numbers of cell phone users have been moving to lower cost prepaid plans pushing revenue per subscriber down for the wireless cartel. The Telcos have relied on over priced and quota limited mobile data to pick up the slack in keeping stratospheric profit margins in place.  The cable guys may be getting ready to upset the apple cart as thier own revenues from pay TV are beginning to decline.

Comcast is offering two combo plans: a metro service that combines home broadband and WiMAX mobile broadband for $49.99 for 12 months (after which the price jumps to $72.95), and a nationwide service that combines cable broadband with WiMAX and Sprint’s 3G network for $69.99 for the first year (it then jumps to $92.95). Clearwire, which Comcast has an investment in, is providing the WiMAX service. Considering that Sprint charges people $60 a month for mobile broadband and Comcast charges about $42 a month for its lowest tier, this second option is a great deal for the first year, and still offers savings over the long term. Think of the fast WiMAX speeds for local mobile broadband as a nice bonus. (GigaOM)