Phillip “I don’t have $1 million in AT&T and Verizon stock” Dampier

Before Tom Wheeler, President Obama’s pick to head the Federal Communications Commission, can find his seat at the federal agency overseeing the nation’s telecommunications industry, he will need time to sever the extensive ties he maintains as an ex-lobbyist and investor in the companies he will soon oversee.

To avoid an even bigger appearance of a conflict of interest, Wheeler has agreed to dump at least $1 million in personal stock in AT&T and Verizon, as well as divest himself of holdings in 76 other media and tech companies including Time Warner, Comcast, Google, Sprint, Deutsche Telekom and News Corp.

Wheeler is also submitting his resignation from the board of Earthlink, an Internet Service Provider, and will also sell off his shares in that company. He will also have to step down from Core Capital, a venture capitalist investor firm with extensive holdings in the telecom industry.

In our view, Wheeler has shown he couldn’t be more of a telecom industry insider unless he also served on the board of AT&T. Wheeler’s extensive holdings depict someone who has maintained a direct financial interest in the industry for years, even after ending his leadership at the National Cable Television Association and leading the nation’s biggest wireless industry lobbying group, the CTIA.

These kinds of deep industry ties are a serious concern for the average consumer. As we’ve reported before, Tom Wheeler has said almost nothing on his blog about consumer interests, writing views from the perspective of an industry lobbyist and investor. Watching him disgorge well over a million dollars in direct investments in AT&T and Verizon — companies he’d oversee in his new role — does not ease our concern he remains a consummate insider. He is well-positioned to move back through the D.C. revolving door at the end of the Obama Administration to reinvest in the companies his tenure at the FCC could potentially make or break.

Wheeler’s appointment represents another broken promise from the Obama Administration:

“No political appointees in an Obama-Biden administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years. And no political appointee will be able to lobby the executive branch after leaving government service during the remainder of the administration.”

Not allowing Wheeler to oversee regulations or contracts with the companies who helped pay his salary and earn him a fortune from his investments would leave the new FCC chairman little to do beyond opening the mail. But of course, that campaign promise from the Obama-Biden campaign has long since been broken and forgotten by most.

Despite the clear conflicts of interest, President Obama remains fully behind his new FCC chairman pick.

“Tom knows this stuff inside and out,” Obama said.

No doubt.

Former FCC commissioner Nicholas Johnson blasts the nomination of Tom Wheeler, an ex-industry lobbyist and insider, for the role of new chairman of the FCC. (From: TheRealNews) (16 minutes)

Other stories of interest:

1. Change We Can Believe In? Cable/Wireless Industry Lobbyist Will Now Head FCC
2. Reviews Are In: Big Telecom Gushes Love for New FCC Chairman Tom Wheeler
3. Our Response to Public Knowledge’s Harold Feld Regarding Tom Wheeler
4. Incoming House Chairman Asks Telecoms for Their Deregulation Wishlists: ‘Help Us Help You’
5. “Future FCC Chairman” Tom Wheeler’s Fruit Doesn’t Fall Far from Big Telecom’s Tree

Wireless Industry: We’re running out of spectrum!
Wireless Industry: We’ve got plenty to room for unlimited ESPN!

America is on the verge of a wireless traffic data jam so bad, it could bring America to its knees.

Or not.

Stop the Cap! notices with some interest that while wireless carriers continue to sound the alarm about a spectrum crisis so serious it necessitates further compressing the UHF television dial and forces other spectrum users to become closer neighbors, the same giant phone companies warning of impending doom are negotiating with online video producers to offer customers “toll-free,” all-you-cat-eat streaming video of major sports events that won’t count against your usage allowance.

ESPN is in talks with at least one major carrier (AT&T or Verizon Wireless) to subsidize some of the costs of its streamed video content so that customers can watch as much as they want without running into a provider’s usage limit. Both Verizon and AT&T have signaled their interest in allowing content producers to pay for subscribers’ data usage. In fact, they don’t seem to care who pays for the enormous bandwidth consumed by streaming video, so long as someone does.

At a recent investment bank conference Verizon Wireless chief executive Dan Mead explained the next chapter in monetizing data usage will allow the company to rake in more revenue from third parties instead of customers already struggling with high wireless bills.

“We are actively exploring those opportunities and looking at every way to bring value to our customers,” said Mead.

Content producers are increasingly frustrated with the stingy caps on offer at AT&T and Verizon Wireless because customers stop accessing that content once they near their monthly usage limit. One large provider admitted to ESPN that “significant numbers” of customers are already reaching their cap before the end of their billing cycle, after which their online usage plummets to limit the sting of overlimit charges.

Offering “toll-free” data could dramatically increase the use of high bandwidth applications and increase profits at wireless providers based on new fees they could collect from content producers. Customers would still be subject to usage limits for all non-preferred content, a clear violation of Net Neutrality principles.

The buffet is open.

But in case you forgot, wireless carriers won exemption from Net Neutrality, arguing their networks lack the capacity to sustain a Net Neutral Internet experience. These same companies claim without more frequencies to handle the massive, potentially unsustainable amount of wireless traffic, the wireless data apocalypse could be at hand in just a few years. It was also the most-cited reason AT&T and Verizon discontinued their unlimited use data plans.

But unlimiting ESPN video? No problem.

In January 2010, Verizon Wireless was singing a very different tune to the FCC about the need to control and manage high bandwidth applications like the “toll-free” streaming video service ESPN proposes (underlining ours):

Wireless broadband services face technological and operational constraints arising from the need to manage spectrum sharing by a dynamically varying number of mobile users at any time. Thus, unlike, for example, cable broadband networks, where a known and relatively fixed number of subscribers share capacity in a given area, the capacity demand at any given cell site is much more variable as the number and mix of subscribers constantly change in sometimes highly unpredictable ways.

Are wireless carriers now part of the problem?

For example, as a subscriber using a high-bandwidth application such as streaming video moves from range of one cell site to another, the network must immediately provide the needed capacity for that subscriber, while not disrupting other subscribers using that same cell site. Of course, the problem is magnified many times over as multiple subscribers can be moving in and out of range of a cell site at any given moment. Moreover, the available bandwidth can fluctuate due to variations in radio frequency signal strength and quality, which can be affected by changing factors such as weather, traffic, speed, and the nearby presence of interfering devices (e.g., wireless microphones).

These problems compound those resulting from limited spectrum. As the Commission has repeatedly recognized in proclaiming an upcoming spectrum crisis, “as wireless is increasingly used as a platform for broadband communications services, the demand for spectrum bandwidth will likely continue to increase significantly, and spectrum availability may become critical to ensuring further innovation.”

A wireless carrier cannot readily increase capacity once it has exhausted its spectrum capacity. Thus, wireless broadband providers are left to acquire additional spectrum (to the extent available) or take measures that use their existing spectrum as efficiently as possible, which they do through a combination of investing in additional cell sites and network management practices that optimize network usage and address congestion so as to provide consumers with the quality of service they expect.

Regulators need to ask why wireless companies are telling the FCC there is a bandwidth crisis of epic proportions that requires the Commission to exempt them from important Net Neutrality principles while telling investment banks, shareholders and content producers the more traffic the merrier, as long as someone pays. Customers also might ask why their unlimited use data plans were discontinued while carriers seek deals to allow unlimited viewing with their preferred content partners.

What is the real motivation? The Wall Street Journal suggests one:

“Creating a second revenue stream for mobile broadband is the holy grail for wireless operators but collecting fees from content companies would probably make the FCC take a close look into the policy implications,” said Paul Gallant, managing director at Guggenheim Securities. An FCC spokesman declined to comment.

The Wall Street Journal takes a closer look at a plan to manage an end run around Net Neutrality by allowing preferred content partners to offer streaming video services exempt from your usage cap. (4 minutes)

Other stories of interest:

1. What Spectrum Crisis: Verizon Wireless Tries to Monetize Video Usage With New App
2. Bulldozing Wireless Net Neutrality: Carriers Want “Toll-Free” Data for Their Partners
3. Proof Verizon’s Banishment of ‘Unlimited Data’ is a Money Grab, Not a Capacity Concern
4. AT&T’s Internet Overcharging Merry-go-Round — Billing App Makers for Your ‘Overusage’
5. AT&T’s ‘Data Tsunami’: Upselling Customers for Higher Profits During Spectrum ‘Crisis’

Verizon casts off its rural landline network for some customers.

Verizon landline customers reporting problems with their service in Pennsylvania may be soon targeted for Verizon’s wireless landline replacement — Voice Link — according to two sources sharing an internal memo with Broadband Reports.

The May 7 memo states that a significant number “selected customers” will be migrated off Verizon’s copper landline network to the Voice Link wireless service. One of the sources recognized the move as an end run around regulators:

“It has become painfully obvious to both our employees and customers that Verizon wishes to divest themselves of all regulated services,” says the source. “Abandoning our regulated wire line customers in favor of fixed point LTE may seem like a clever move but it violates “The Negroponte Principle” and will ultimately bump-up against the immutable laws of spectrum conservation physics.”

“It’s a shame that corporations like Verizon can build a FTTCS based wireless empire with regulatory subsidies provided by their wireline customers and then force them onto the unregulated wireless side,” argues the insider. “Questions of ethics and legality abound and perhaps regulatory over-sight is warranted here.”

Verizon may not get too much oversight from Pennsylvania regulators hoodwinked by the telecom company in the past.

Voice Link is a voice-only wireless home phone replacement that lacks certain calling features, Caller ID with Name for one, and requires the homeowner to provide power (and backup batteries in the event of a power failure). Customers are also dependent on quality reception from the nearest Verizon Wireless cell tower and that it remains in service during severe weather events or prolonged power outages.

Some of the customers likely targeted are still waiting for DSL broadband service from Verizon. If those customers are identified as Voice Link prospects, they will be waiting for broadband forever because Voice Link does not support data services and Verizon cannot supply DSL over a scrapped landline network.

Stop the Cap! has also learned today that the Federal Communications Commission has no problem with Verizon’s unilateral action to switch landline customers to wireless.

A FCC representative told our reader Anne, who is currently fighting Verizon over its plans to abandon landline service on the New Jersey Barrier Island, that they consider Voice Link a functionally equivalent landline service. In a response that could have come directly from Verizon customer service, the FCC helpfully describes the new service Anne already understands and does not want:

Q. What if Verizon is NOT replacing copper with fiber, but is going strictly to wireless?  There will be no landlines whatsoever.  Is that acceptable?

A. “Yes that is acceptable and it is called Verizon Voice Link.  It is a wireless device that plugs into the telephone lines in your home, allowing customers the ability to use their home telephone to make and receive calls.” — FCC Representative Number : TSR54

“This second FCC response, like the first one, ignores the issue, is unprofessional and is insulting,” says Anne. “Obviously, I already know what Voice Link is.”

Other stories of interest:

1. Verizon to Rural America: Voice Link is Coming Soon; Buy a Satellite Dish If You Want Data
2. Six Months After Sandy, Verizon Abandoning Wired Network in Mantoloking, N.J.
3. Verizon’s Long Term Plan to Abandon Wired Landlines/Broadband in Non-FiOS Areas Begins
4. Verizon Seeks to Abandon Landlines on Fire Island; Wireless or You Are On Your Own
5. Verizon Will Cease Selling Standalone DSL Service May 6th; Voice With DSL Only, Please

Verizon FiOS is off limits to rural customers. Wireless voice and satellite broadband is in your future.

Verizon Communications has big plans for its “miraculous” wireless home phone replacement which will soon find itself in rural homes across Verizon’s service area as part of a larger plan to dismantle rural America’s wired telephone network.

Just as company executives promised more than a year ago, Verizon wants to transition rural customers to fixed wireless phone service that could mean the end of wired broadband for millions of Verizon customers still using DSL.

Verizon senior vice president Tom Maguire told Communications Daily Voice Link is Verizon’s answer for customers it cannot easily transition to fiber optics. He is thrilled about the prospects of getting rid of deteriorating copper networks in favor of an inexpensive wireless alternative.

“I’m super jazzed about this because I think it will be good for everybody,” he said. “I think it’ll change a lot.”

For rural Verizon customers, the changes could be profound, dramatic, and not exactly a win-win scenario:

• No more wired phone service, which means medical monitoring, many home security systems, and inexpensive dial-up service that all rely on landline technology will be rendered unusable;
• No more unlimited use DSL service, no business broadband service, no credit card processing or other electronic business transactions that depend on a wired connection;
• No enforced quality of service standards, rate oversight, or guarantee of access to quality voice service;
• No prospect of advanced fiber optic FiOS services, including high bandwidth video and broadband.

Verizon is making it clear Fire Island and the New Jersey Barrier Island are just the first steps towards the retirement of copper, either in favor of fiber optics in high profit/low-cost areas or wireless in rural areas not worth upgrading.

Maguire claims Fire Island residents did not want the company to tear up yards or streets to replace its damaged copper wire network with newer technology like fiber. But Fire Island residents and administrators tell Stop the Cap! they were never asked. Instead, residents are being told Voice Link is likely their only option for traditional phone service on the western half of the island, and some customers are unhappy they will never get FiOS broadband upgrades Verizon says are financially untenable to provide.

Verizon has quietly tested Voice Link in Florida, giving customers the option of keeping their wired service or switching to the wireless alternative. But the test may have been stacked in Voice Link’s favor, as the choice was given to voice-only customers having chronic service problems with Verizon’s deteriorating copper wire network.

Going forward, many rural customers may not have a choice. For those who want Internet access, Verizon isn’t promising its wireless network is up to the task. Their suggested alternative?

Verizon’s solution for rural broadband.

Get a satellite dish.

Maguire acknowledged Voice Link customers won’t be able to fax or do certain activities, but he said the telco never pretended they would. Verizon won’t be offering data services with Voice Link, but if Fire Island customers want more options, they can potentially choose satellite, he said.

Maguire believes that customers living with a deteriorating copper landline network will gravitate quickly towards a wireless phone replacement.

Verizon arranged a blind test of Voice Link for 40,000 customers in another company’s territory with unbranded devices. When the copper wire network performed normally, customers preferred the quality of traditional landline service. But after it rained, the poorly maintained network made all the difference.

“The copper sounded like hell, it was noisy and static-y,” Maguire said.

Maguire did not say if Verizon blind tested whether customers preferred traditional landline service, Voice Link, or its fiber optic FiOS network.

Verizon hopes to begin introducing its Voice Link service in other markets as early as June.

Other stories of interest:

1. Verizon’s Long Term Plan to Abandon Wired Landlines/Broadband in Non-FiOS Areas Begins
2. Verizon Seeks to Abandon Landlines on Fire Island; Wireless or You Are On Your Own
3. Six Months After Sandy, Verizon Abandoning Wired Network in Mantoloking, N.J.
4. Verizon Will Cease Selling Standalone DSL Service May 6th; Voice With DSL Only, Please
5. Verizon Ending DSL Service in FiOS Fiber-Wired Service Areas

Verizon says customers are responsible for maintaining and replacing backup batteries used with its FiOS service.

Beep.  Beep.  Beep.

Verizon FiOS phone customers will one day hear that ominous sound in their home and begin searching for the source. The audible alarm isn’t coming from the smoke detector or your computer’s uninterruptible power supply. It is coming from a square white box mounted in your garage or basement with a Verizon logo on it.

The Verizon Optical Network Terminal (ONT) Battery Backup Unit (BBU) provides up to eight hours of backup power for your FiOS voice services in the event of a commercial power failure.

Verizon considers its battery your problem, even though you lease the equipment from Verizon as part of your monthly service. After one year of standard warranty coverage, customers are responsible for maintaining the battery and for any damages that might occur if one fails to replace or remove it. Verizon’s website warns not promptly removing the spent battery could result in leaking corrosive battery acid which might damage the BBU itself. You would be held responsible for any repair or replacement costs.

Some Verizon FiOS customers cannot understand why they should pay to maintain equipment Verizon still technically owns.

“They require us to lease the equipment (set-top boxes, wireless router, backup battery device, etc.) so they are responsible,” believes one disgruntled customer. “If they would sell it to us or allow us to provide our own I could see us paying for it.”

Verizon representatives say they fully disclose customers are responsible for maintaining the battery. But customers complain it is buried in the fine print. Many more are unhappy to learn Verizon charges at least $45 for a replacement battery that seems to last only about two years.

Joanne Gaugler is on her third battery in seven years, and that one is now on its way out.

“The battery I have now has been beeping for a long time,” Gaugler wrote.

Not only does the battery beep incessantly, but the company also begins sending e-mail messages warning customers they need to replace it to avoid the possibility of damaging their equipment.

“When I called about this problem ten months into my FiOS service, the representative had me remove and reinstall the battery, claiming it was probably a loose connection and that I did not need a new battery,” says Stop the Cap! reader Jim Connor. “When I called back about the same problem 13 months into my FiOS service — one month out of warranty — the representative insisted I buy a new battery.”

Connor said Verizon charges an exorbitant amount for the replacement.

“Another profit center for Verizon, because they charge $35 for the battery and another $9 to ship it, before taxes,” Connor writes. “I ended up paying $10 less at a local battery replacement store, but Verizon got all bothered I did not buy it from them, warning it could ‘damage my service.’”

Verizon strongly discourages customers from buying replacement batteries from anyone other than themselves and disclaims any responsibility for damages caused by “an improper battery.” Verizon also offers customers free battery replacement if you happen to buy a Verizon Protection Pak plan, which starts at $19.99 a month.

There is nothing special about Verizon’s backup battery, a standard issue 12-Volt 7.2Ah SLA (Sealed Lead Acid) model often found in home alarm systems. Frugal Verizon FiOS customers can find equivalent batteries online for less than half the price Verizon charges, often with no upfront sales tax or shipping.

A Stop the Cap! search for “GS Portalac PX12072″ or “GT12080-HG” (from labels on current batteries) on websites like Amazon or eBay quickly uncovered several highly rated alternatives that cost as little as $18 with identical specifications.

Batteries of this type have a shelf life of 3-5 years, and an in-service useful life of 1.5-3 years, after which they should be replaced and recycled.

Another alternative is to simply remove the battery altogether. That will result in no backup landline service in the event of a power failure, but your cell phone may already offer a suitable alternative.

KDKA in Pittsburgh reports around 10 Verizon FiOS customers a day are flooding into local Batteries Plus stores looking for new batteries for the company’s equipment.  (4 minutes)

http://www.phillipdampier.com/video/Verizon Install Replacement Battery 2012.flv

Now that you have a replacement battery in hand, here is a Verizon-produced video explaining how to safely install it.  (4 minutes)

Other stories of interest:

1. Comcast: Pay for Your Own Backup Batteries Because We Don’t Include Them Anymore
2. Time Warner Cable Plagued by Battery Backup Thefts That Impact Phone, Internet Customers
3. House on Fire? Save Verizon FiOS Boxes First; Man Faces $2,345 Bill for 6-Year Old Equipment
4. AT&T Cell Towers in Connecticut Damaged by Winter Storm: 152; Verizon Wireless: 0
5. Sandy Exposes the Soft Underbelly of Wireless; Inadequate Storm Preparation Faulted

Verizon Communications has filed a formal tariff obtained by Stop the Cap! with the New York State Public Service Commission (PSC) that would establish conditions under which it can abandon its wired network in favor of wireless-only service.

If approved, Verizon will be able to drop wired landline and broadband service in any area of the state if the company can:

• certify that a substantial portion of its facilities in an area are destroyed, rendered unusable, or beyond reasonable repair, or,
• demonstrates that the use of wireless to serve specified customers, or groups of customers, is otherwise reasonable in light of the geographic location, the availability of competitive facilities to serve those customers or groups of customers, or in light of other criteria acceptable to the PSC.

Verizon is using the case of Fire Island, N.Y., to attempt a rewrite of New York’s communications tariffs. Although eastern Fire Island suffered some damage from Hurricane Sandy, a considerable amount of Verizon’s infrastructure further west did not survive the storm. Verizon wants to abandon that wired infrastructure, avoid spending money to upgrade the island to fiber optic service, and switch customers to a voice-only, wireless service called Voice Link that would leave Verizon’s DSL customers without broadband.

Although Verizon has currently only applied to drop wired service to the “western portion of Fire Island,” the tariff would set conditions under which Verizon could abandon its landline network for financial reasons in other portions of the state. For example, Verizon could argue that its declining number of rural landline customers are no longer financially viable to serve because of wired network upkeep and upgrade expenses. Verizon’s application would also allow it to abandon older facilities where competitive services (wireless or wired) are available, and allow Verizon’s wireless products to be considered a suitable alternative to meet universal service requirements.

Verizon says it will offer the same basic calling packages that landline customers can get at the same or lower prices. The company also promises to adhere voluntarily to PSC regulations on customer protection, customer complaints, service quality, safety and reliability.

But Verizon does not promise to offer a functionally equivalent wireless replacement for the landline.

For example, Verizon only promises to support voice calls, access local and toll calling, emergency services with E911 capability, assistance services, telecommunications relay services, and directory listings, including the option of non-published service.

Data services are not supported. Current Verizon DSL customers with unlimited use plans will be forwarded to Verizon Wireless to sign up for the same limited use wireless broadband plans already available in the rest of the country (the ones that charge $50 for up to a handful of gigabytes of monthly usage, depending on the plan). Business customers will need to buy new equipment and sign new contracts with Verizon Wireless (or other wireless carriers) to process credit card transactions. Although some voice calling features are supported, an exact list remains unavailable.

In the event of a power failure, a built-in backup battery will provide up to two hours of talk time, after which the line will stay out of service until commercial power is restored.

Verizon Voice Link: The company’s landline replacement, works over Verizon Wireless. (Asbury Park Press)

Because Verizon Wireless’ existing cellular network serving Fire Island is inadequate, the company has agreed to upgrade and improve service to the island.

Verizon argues its wireless solution is the only answer that makes sense.

“The cost of replacing facilities is very high, and if hurricanes or other severe storms occur in the future, there is a significant risk that the newly installed outside plant would again be damaged or destroyed,” argues Verizon’s Manuel Sampedro, who is overseeing Verizon’s service restoration effort on Fire Island. ”Wireless service is already the predominant mode of voice communication on the island.”

But in the event of another major storm, Verizon’s wireless facilities could also be knocked out of service, potentially for weeks, as happened during Hurricane Sandy.

In the nearby coastal city of Long Beach, N.Y., every cell tower in the area failed because of the storm . City Manager Jack Schnirman told the FCC at a recent hearing wireless proved no more robust than any other technology, and described a frustrating experience attempting to reach representatives from major cell phone carriers about when exactly service could be restored.

“Long Beach reached out to one of the carrier’s customer support departments, explained the devastation and inquired about the carrier deploying a cell on wheels,” Schnirman said. “The customer service rep replied, ‘you might want to look that up on the Internet, I don’t know what that is.’ Well obviously, ironically, we had no Internet at that time.”

Customers did not fare any better.

“There was one woman in particular who passed away, of natural causes, an elderly woman,” Schnirman said. “And her daughter had to walk literally a mile and a half from her home to police headquarters just to say, ‘Listen, my mom has passed, and I thought I should tell somebody.’ ”

Wireless carriers are not obligated to provide backup service in the event of a power failure. An FCC effort to set minimal standards for backup cell service was met with legal threats by the wireless industry and the FCC backed down.

Verizon is in a hurry to win approval of its tariff change, requesting its filing be approved and take effort on less than 30 days’ notice with a waiver of the requirement that it publish a public notice about the change in area newspapers.

Reporter David Cay Johnston says Verizon and AT&T’s efforts to abandon the landline are no accident. They are part of a larger lobbying effort to abandon company obligations under the “carrier of last resort” policies that guarantee every American access to quality landline telephone service. Wireless phone service is unregulated. Johnston isn’t the only one reporting on this story. Stop the Cap! has covered it repeatedly since early 2010. (2 minutes)

Other stories of interest:

1. Verizon Seeks to Abandon Landlines on Fire Island; Wireless or You Are On Your Own
2. Verizon’s Long Term Plan to Abandon Wired Landlines/Broadband in Non-FiOS Areas Begins
3. Six Months After Sandy, Verizon Abandoning Wired Network in Mantoloking, N.J.
4. Verizon Will Cease Selling Standalone DSL Service May 6th; Voice With DSL Only, Please
5. AT&T Will Invest $14 Billion to Expand Wired/Wireless Broadband, Abandon Traditional Landlines

Six months after Hurricane Sandy struck the northeastern United States, a significant number of Verizon customers are now learning they will never get their landline service back.

Mantoloking is the first town in New Jersey — but not the last — that will no longer be able to get landline service from the telephone company.

In its place, Verizon offers Voice Link, a home phone replacement that works exclusively over the Verizon Wireless network.

About 30 customers have signed up for the service after being without a home phone for a half a year.

The device looks like a wireless router, with an antenna and several jacks on the back to deliver service over your home’s existing telephone wiring. Instead of connecting with Verizon’s wired network, the unit receives a signal from the nearest Verizon Wireless cell tower to make and receive telephone calls.

Verizon is enticing customers to use this device instead of repairing its damaged network by promising free installation, unlimited nationwide calling and support for 911 and basic phone features like Caller ID and voice mail. For now, the service will not cost any more than a wired landline phone.

For Verizon’s bean counters, Voice Link is an inexpensive alternative to replacing copper wiring with FiOS fiber optic service. Verizon previously announced that maintenance on its aging copper wire network was becoming increasingly expensive.

“It acts just like a regular phone,” Tom Maguire, Verizon’s senior vice president of national operations told the Asbury Park Press. “There’s a dial tone. It has 911 capability, so if you dial 911 the emergency services guys are going to know exactly where you are.”

But members of Verizon’s unions who have had hands-on experience testing Voice Link suggest it isn’t everything Verizon says it is. The International Brotherhood of Electrical Workers’ Local 824 points out Voice Link was not intended to serve just anybody. It will deliver a voice-only service unsuitable for faxing, DSL, or data communications of any kind.

Mantoloking is located on New Jersey’s barrier island.

Stop the Cap! has also heard from Verizon customers directly affected by the forced migration to wireless, and many are unhappy about it.

“This is the death knell for wired broadband in areas bypassed by cable along coastal New Jersey,” shares Dale Smith. “We lost our Verizon landline and DSL service during Sandy and have had nothing but a cell phone for the last six months because Verizon has dragged its feet.”

Smith says a Verizon manager told him the company was “evaluating certain service areas” for an “exciting new wireless product” instead of repairing or replacing the company’s wired network.

“While they were ‘evaluating,’ we were getting no dial tone and huge cell bills from Verizon — good for them, but not for us.”

Smith had a chance to view Voice Link in action and thinks it represents a Verizon wolf in sheep’s clothing.

“It sounds remarkably better than a cell phone, which tells you something about how much effort manufacturers of smartphones spend on voice calling, but that is where the good ends and the problems begin,” Smith said. “The most annoying is no caller ID with name and fairly frequent call delays and failed calls.”

Smith says the Caller ID displays the caller’s number, but not name – a feature he relied on heavily. He found about 30 percent of test calls either took more than 10 seconds to start ringing, or never rang at all.

“Sometimes the calls would time out and other times you would just sit and listen in silence until the phone at the other end finally started ringing,” Smith said.

He also worries about call reliability.

“What happens if you are in a marginal signal area or the cell tower gets overcongested and starts dropping calls, or the power goes out at the cell tower? You can’t use your cell phone either in that case.”

Anne contacted us after complaining to the Federal Communications Commission that Verizon is dumping its reliable landline network for unreliable wireless, and is frustrated the FCC does not seem to understand what is going on in New York and New Jersey.

“The response from the FCC doesn’t even bother to recognize that Verizon isn’t going to fiber service from copper, but is relying on very unreliable wireless,” Anne tells Stop the Cap! “For a vulnerable area such as the barrier island, wireless will likely be useless during a disaster/big emergency, especially where electricity goes out.”

The FCC’s short response to Anne’s detailed complaint:

If Verizon wishes to replace the copper wiring with fiber it is strictly their business desicion (sic).  – Representative Number : TSR54

“I can’t believe this email is a product of the United States government,” Anne told us. “Why does the FCC exist at all?  It is a complete waste of taxpayer money.”

In addition to filing a complaint with the FCC, Anne has tried to help her elderly mother get her home phone back on the barrier island that was damaged by Hurricane Sandy. As of a week ago, every utility, except Verizon phone service, has been restored.

“Trying to get a straight story from Verizon has been impossible,” Anne said. “What a nightmare.”

The landline network is dead.

Jim Mudd also takes care of his parents who are headed back to the New Jersey coast in an area that still lacks Verizon phone service after Sandy washed away utility infrastructure. New poles have been placed and the power is back, but Verizon is nowhere to be found.

“Our local town officials tell us Verizon was hinting we might end up with Voice Link as well, although nothing formal has been announced,” Mudd writes. “This would be a major problem for us, because Voice Link will not work with our home alarm system or my parents’ medical monitoring service.”

Mudd says Verizon confirmed to him that data services of any kind, including faxing or credit card processing is not possible with the first version of the service, although Verizon said it was exploring better options in the future.

“After waiting a half a year for Verizon to restore my home phone, I hope they pardon me for not waiting around for them,” Mudd said. “We signed up with Comcast the moment they got service back, but they know they have a working monopoly here now, especially with Verizon signaling it wants to pull out of anything that is not wireless.”

“What annoys me is Verizon wanted rate increases back in the 1990s and on to pay for upgrading their network and replace it with fiber,” Mudd adds. “We paid those surcharges or higher rates like everyone else and we are going to get nothing to show for it. Don’t replace the copper, but don’t abandon us with wireless either. We paid for something better: fiber.”

Verizon’s Tom Maguire demonstrates the company’s Voice Link landline replacement, courtesy of the Asbury Park Press.  (1 minute)

Other stories of interest:

1. Verizon’s Long Term Plan to Abandon Wired Landlines/Broadband in Non-FiOS Areas Begins
2. Verizon Seeks to Abandon Landlines on Fire Island; Wireless or You Are On Your Own
3. Verizon Ending DSL Service in FiOS Fiber-Wired Service Areas
4. Customers Abandoning Verizon’s Dead NYC Landlines, Internet 4 Months After Sandy
5. Verizon Cutting Costs, Raising Prices & Profits; Unlimited Data Customers Invited to Leave

The company that charges customers north of $90 a month for cell phone service with a tiny data plan has introduced Verizon Cloud, a ho-hum free cloud storage add-on for Android devices that is leaving customers cold.

Verizon Wireless is applying the same stingy standards to its online backup service it uses for its paltry data plans, providing customers with less storage than the competition:

• Verizon Wireless: 500MB
• Dropbox: 2GB
• Google Drive: 5GB
• SkyDrive: 7GB

Run over your allowance? A premium plan comes with premium pricing: $2.99 per month for 25GB up to $9.99 per month for 125GB.

The ‘could you spare it’-storage allowance is bad enough, but the service’s performance is much, much worse judging from more than 5,700 scathing customer reviews. The majority of users rate Verizon’s app just one star, primarily because they couldn’t give it zero stars.

“It’s disappointing that Verizon would release this piece of crap and then encourage people to download it,” writes Andrew Gardner.

That’s okay Andrew. Verizon is gradually pushing the app to compatible phones with no uninstall option. Those using Verizon’s Backup Assistant will find all their content automatically transferred over to Verizon Cloud whether they want it floating there or not.

“I can’t wait not to use this,” shared Gabriel Rodriguez.

Some customers don’t want Verizon force-feeding apps on their phones, particularly ones designed to chew at their data plan allowance while unintentionally crashing their smartphones.

“This app is responsible for 99% of the crashes on my poor, aging Droid X over the last few months,” writes Tim Odell. “The update came through and was like ‘you must sign up for….’ Seeing any changes and a “plus” associated with a Verizon mandate also left me assuming it would (secretly) cost me money. For my troubles I’m awarded 1-2 crashes per day.”

“Verizon apps run flawlessly as long as you allow them to do whatever they want (ie. turn off your Wi-Fi) and use your data plan without your knowledge,” offers David Lawrence. “[A Verizon rep told me] ‘It’s good for business [and] job security.’ At this point I didn’t have enough bread crumbs to find my way home. Maybe she had just come from an internal training seminar and she missed the ‘don’t repeat this to a customer’ part. Or, maybe, we have come to a point in this world where some people are completely blind to theft and unfairness, as long as it’s marketed as ‘good business’. Either way, the app sucks.”

Other stories of interest:

1. Verizon Wireless Earns More from Wireless Data Traffic That Costs Them Less
2. Amazon Introduces Free Personal Cloud Storage; Will Consumers Use It on Capped Accounts?
3. Verizon Wireless Hotspot Pricing Will Burn a Hole in Your Wallet With $20/GB Overlimit Fee
4. Verizon Wireless Charges $5 a Month for Tool To Prevent Paying Even More
5. Verizon Sneaks Customer Off Unlimited Data Plan, Despite Promises It Wouldn’t

AT&T and Verizon Wireless have the largest share of wireless customers. (Wall Street Journal)

The Department of Justice has recommended the Federal Communications Commission promote competition by setting aside certain future low-frequency wireless spectrum for auctions open exclusively to smaller wireless carriers including Sprint and T-Mobile USA.

“Today, the two leading carriers have the vast majority of low-frequency spectrum whereas the two other nationwide carriers have virtually none,” the Department of Justice wrote in comments to the FCC. “This results in the two smaller nationwide carriers having a somewhat diminished ability to compete, particularly in rural areas where the cost to build out coverage is higher with high-frequency spectrum.”

The Justice Department’s antitrust division has monitored the wireless industry with increasing concern consumers are not getting benefits from a robustly competitive marketplace increasingly concentrated in the hands of two wireless giants: AT&T and Verizon Wireless.

That dominance is made possible, in part, from the control of lower frequency spectrum, particularly in the 600-800MHz range that easily penetrates buildings and delivers a more reliable signal over longer distances than frequencies counted in the gigahertz. Verizon and AT&T control large swaths of these lower frequencies that work well indoors and provide longer distance coverage in rural areas. Conversely, Sprint and T-Mobile, among other smaller carriers, rely heavily on higher frequencies that need a larger network of cell towers to support good signal levels.

It often means rural customers may find reception with AT&T or Verizon Wireless but end up with a roaming indicator or no service at all with smaller providers.

The Justice Department worries that auctioning off future prime 600MHz spectrum carved out of the UHF television band reallocated for wireless services will end up in the hands of the deepest pocketed providers — AT&T and Verizon Wireless, and further hamper the ability of Sprint, T-Mobile and other small carriers to compete.

“Due to the scarcity of spectrum, the Department is concerned that carriers may have incentives to acquire spectrum for purposes other than efficiently expanding their own capacity or services,” writes the DoJ. “Namely, the more concentrated a wireless market is, the more likely a carrier will find it profitable to acquire spectrum with the aim of raising competitors’ costs. This could take the shape, for example, of pursuing spectrum in order to prevent its use by a competitor, independent of how efficiently the carrier uses the spectrum. Indeed, a carrier may even have incentives to acquire spectrum and not use it at all.”

The Justice Department echoes critics’ contentions that given a chance, large wireless carriers will “warehouse” acquired spectrum, unused, denying it from the competition. Carriers object to that claim, calling it baseless. But incentives remain for providers to drag their feet: spectrum warehousing forces competitors to pay even higher prices for other scarce spectrum, the necessity of constructing a larger network of costly cell towers to offer robust coverage, and fighting customers’ perceptions of inferior quality indoor phone reception.

In response, AT&T sent a multi-page, thinly veiled threat to sue if the Commission adopted the recommendations of the Justice Department.

“The Department is quite candid about its motive for this blatant favoritism: it hopes that reducing competition for the spectrum may enable Sprint and T-Mobile ‘to mount stronger challenges’ to AT&T and Verizon,” AT&T wrote in response. “Picking winners and losers in this fashion would be patently unlawful.”

AT&T also claimed the Justice Department’s recommendations were specifically tailored to help the two competitors, despite the fact neither company has shown much interest in acquiring low-frequency wireless spectrum, much less further expand the reach of their wireless networks:

“It is especially puzzling that the Department feels the need to help Sprint and T-Mobile in particular. Sprint already has by far the largest nationwide portfolio of spectrum, and holds vastly more spectrum than either AT&T or Verizon. It will also have ample financial resources at its disposal, as the Department has already approved Sprint’s purchase by Softbank, a financially strong Japanese company, and Dish Network has now made a competing offer for Sprint, citing the financial and strategic advantages of its own proposed combination.

Regardless of how this bidding war turns out, Sprint will receive a sizable infusion of cash, spectrum or both. T-Mobile, which is owned by Deutsche Telekom, one of the largest telecommunications companies in the world, just recently acquired substantial amounts of spectrum from both AT&T and Verizon, and is on the verge of completing a merger with MetroPCS that will add another trove of spectrum. So it is surely not for a lack of spectrum resources or financial backing that the Department needs to propose a financial giveaway to these companies.

Moreover, neither company even chose to bid at the Commission’s last auction of low-frequency spectrum, nor have they availed themselves of opportunities to acquire such spectrum in secondary markets. If low-frequency spectrum was critical to their business plans, as the Department simply assumes, someone should have informed their management, which has, instead chosen to acquire deep holdings in [higher frequency] PCS, AWS, and BRS/EBS spectrum.”

The Justice Department filing did not name Sprint or T-Mobile directly, but both companies are the only remaining national competitors to both AT&T and Verizon Wireless.

Spectrum set-asides are not unusual in telecommunications regulation. The Canadian Radio-television and Telecommunications Commission set aside significant wireless spectrum exclusively for new entrants to promote competition. Ultimately, the new competitors had little impact with less than a 10 percent market share and all three are now considered up for sale. That spectrum may eventually end up in the hands of the largest Canadian wireless companies regardless of the CRTC’s original intentions when license transfer restrictions expire in 2014. All three could be acquired by one or more of the major providers.

Other stories of interest:

1. FCC on Verizon-Big Cable Spectrum Deal: Sure, Why Not?; But Justice Dept. Thinking Twice
2. Wall Street Wants Two Wireless Carriers for Americans: AT&T and Verizon
3. Moody’s Declares AT&T and Verizon the Winners — Sprint and T-Mobile Can “Never Catch Up”
4. Breaking: Justice Dept. Files Suit to Stop AT&T/T-Mobile Merger
5. The AT&T/Verizon Wireless Duopoly: “Humpty Dumpty Has Been Put Back Together Again”

Verizon Wireless is continuing its efforts to pull back on customer promotions that lower the price of your next phone. After eliminating discounts for loyal customers renewing their contracts, introducing a $30 “upgrade fee” for each new phone activated on an account, and eliminating one-year contracts, the wireless carrier is ending its 20-month upgrade policy, requiring customers to complete a full two-years of service before they can get their next subsidized phone.

The change was a point of contention on Verizon’s quarterly earnings conference call, as investors fretted about dissatisfied customers already upset that the wireless industry relies on two-year contracts while phone manufacturers release coveted device upgrades at least annually.

The wireless industry is already under pressure from Wall Street, prepaid providers and T-Mobile to abandon the traditional ‘subsidized phone for a two-year contract’-business model in favor of no-contract, carrier-financed phones.

In response to that pressure, Verizon Wireless has also introduced a 12-month optional financing plan targeting early upgraders, those who have lost or damaged their phones, or customers trying to hang on to their grandfathered unlimited data plans.

Verizon Wireless introduces its 12-month financing plan for devices.

Under the plan, credit-qualified customers can finance devices starting at $349.99 for 12 equal installments (and a $2 monthly finance charge) charged to your Verizon Wireless bill (first payment due at time of purchase).

Customers can prepay a portion of their purchase upfront to cut the monthly payment — an important option for premiere smartphones like the Apple iPhone 5 ($650) and the Samsung Galaxy S3 ($600). Finance that iPhone and your Verizon Wireless bill will increase by $56.25 a month, including the finance charge, for the next year. You will still pay Verizon’s regular plan prices, which are artificially inflated to recoup a device subsidy customers are not getting under Verizon’s finance plan.

Verizon Wireless says the total owed balance cannot exceed $1,000 per customer, which makes it less useful for families (and even for those two-person households who want the latest and greatest). There is also a limit of two financed devices at any one time. But customers can pay off the plan balance early, which stops the $2 monthly finance charge and opens the door to finance something else.

Shammo

Verizon confirmed customers grandfathered on discontinued unlimited data plans can also take advantage of the financing offer and not lose their unlimited data service. Verizon earlier announced it would allow customers to keep those plans indefinitely, as long as they paid the full price for subsequent device upgrades.

A $30 upgrade fee still applies for each new device activated on your account.

Revenues at Verizon Wireless rose 8.6 percent to $16.7 billion in the last quarter, accounting for more than half of Verizon’s overall revenue. The company has received accolades from Wall Street for implementing its revenue-enhancing Share Everything plans, which have turned into a major money-maker for the wireless carrier, even though only 30 percent of existing Verizon Wireless customers have been enrolled in the new plans to date. Verizon expects to shepherd an increasing number of existing customers to the Share Everything plans in future quarters.

Verizon chief financial officer Fran Shammo said he does not expect much pushback from Verizon Wireless customers upset about the promotional cutbacks.

“We don’t anticipate a lot of dissatisfaction,” Shammo told investors. “We’re not seeing a lot of resistance here.”

Other stories of interest:

1. Verizon Wireless Eliminating “New Every Two” Program; Other Upgrade Discounts Being Phased Out
2. Happy Days Are Here for Verizon Wireless Stockholders Over End to Unlimited Data
3. Verizon Wireless Extends “Smartphones Talk Free” Offer: $9.99 Off New Smartphone Lines
4. Verizon Wireless Earns More from Wireless Data Traffic That Costs Them Less
5. Working Around Verizon’s New Gouging Wireless Plans If You Still Have ‘Unlimited Data’