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Sprint Signals New Focus on Profitability; Cutting Back Upgrade Promotions, Discounts

SprintSprint will focus its postpaid wireless business on profitability in 2013, with reductions in customer discounts and a tighter upgrade policy that will raise prices for some and slow down others seeking new subsidized smartphones.

CEO Dan Hesse today told Wall Street investors Sprint will be leveraging its upgraded LTE network to help hold the line on discounts and early upgrades, reminding customers Sprint’s Network Vision plan is delivering better service with faster speeds and fewer dropped or blocked calls.

Sprint released its 1st quarter 2013 earnings this morning, showing the company reduced its quarterly losses from $863 million in the same quarter last year to $643 million. The company spent $1.4 billion during the first quarter on network upgrades, primarily on forthcoming 4G LTE network roll-outs.

Steve Elfman, Sprint’s president of network operations reported the company activated more than 12,000 LTE-upgraded cell towers by the end of the quarter, slowed only by inclement weather. This year will see a massive increase in those numbers.

“We now have zoning complete on over 32,000 sites and leasing complete on over 31,000 sites. More than 25,000 sites already or have already begun construction,” Elfman reported. “Our weekly construction starts are now at a level to achieve our goals for the year. There are over 600 cities under construction and we have now launched 4G LTE in 88 cities with over 170 expected to launch in the months to come.”

Hesse

Hesse

While Elfman oversees LTE upgrades, Sprint is also busy working towards decommissioning its Nextel network on June 30. Despite repeated warnings Nextel’s demise was close at hand, at least 1.4 million Nextel customers, nearly all business accounts, are still active on that network. Sprint is focusing most of its promotional budget again this quarter on convincing those customers to convert to Sprint service. But only 46 percent of Nextel customers took Sprint up on their repeated offers during the first quarter. Many others left for Verizon Wireless, switching off not only their Nextel commercial phones, but also those on Sprint’s network as well.

Sprint expects to hold on to a declining number of its Nextel customers as the second quarter progresses, until the network is switched off for good at the end of June.

That hurts, because Sprint has also been losing customers due to “pardon our dust” construction-related service interruptions as part of LTE 4G upgrades. Those disruptions are expected to accelerate  as more cities are prepared for LTE service.

Sprint’s Lifeline cell phone service for the poor, Assurance, also took major hits during the quarter after the FCC tightened eligibility requirements for the free/low-cost cell phone service. The company switched off 224,000 accounts in the last three months that either failed to re-certify eligibility or were never qualified in the first place. Sprint’s wholesale customers, which resell access on the Sprint network, are also busy deactivating unqualified Lifeline wireless lines, so Sprint expects a similar number of disconnects during the second quarter as those accounts are dropped from the network.

As Sprint turns its attention to profitability, revenue numbers at Sprint improved slightly. Sprint’s prepaid division added 568,000 net prepaid customers, and Virgin Mobile raised its minimum top up amount for 90 days of service to $20 (up from $15 with a credit card). As customers upgrade their Sprint postpaid phones, more customers are also encountering Sprint’s $10 “premium data” surcharge.

Customers will also discover a tightening of Sprint’s discounts and upgrade promotions. Among the efforts underway:

  • curtailing or eliminating certain customer credits and discounts;
  • tightening device upgrade policies to end early upgrades, although Sprint still retains its 20 month upgrade policy for now;
  • holding the line on phone subsidies for increasingly expensive smartphones.
Sprint's prepaid mobile division

Sprint’s prepaid mobile division

Slowing phone upgrades is particularly important for Sprint’s bottom line.

“I think the policy shifting is important in the industry because subsidies just keep going up and I think from the economic model perspective of the carriers we just can’t afford to upgrade as often,” said Sprint CEO Dan Hesse. “We’re not seeing any evidence yet that customers are interested in upgrading less often if they see less difference or improvement year-over-year in terms of what’s going on with these devices. In fact the opposite might be true which means these policies are really quite important for the industry.”

Hesse admitted that the drive to increase profits could cost Sprint some of its postpaid business, and probably already has over the last three years. But Hesse noted many of those contract customers have migrated to the company’s prepaid service, which keeps revenue in-house. Hesse expects as long as popular phones are available on prepaid plans, price-sensitive customers will continue to migrate towards prepaid service.

“I think what you are seeing is maturing of the U.S. markets beginning,” Hesse noted. “The U.S. has always been or traditionally been almost exclusively postpaid and it’s beginning to look like other markets that have a higher prepaid mix in terms of the number or percentage of customers.”

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Welcome to Virgin Mobile’s Higher Calling: The 2.5GB/256kbps Usage Throttle Starts Friday

Not quite.

Virgin Mobile founder Richard Branson is trying to convince customers they should sign up with a phone company that only sells you the services you need, but if “unlimited data” is one of them, look somewhere else.

Starting Friday, Virgin Mobile will quietly begin to throttle “heavy users” who reach 2.5GB of usage on their “unlimited use” data plans.  For the remainder of the billing cycle, Virgin will reduce mobile broadband speeds to just 256kbps — comparable to a significantly congested 3G connection.

It’s a long fall from Virgin Mobile’s original unlimited data offer which the company briefly attempted in the summer of 2010.

Entirely reliant on Sprint’s mobile network (and now operates as the prepaid division of Sprint), Virgin Mobile couldn’t handle the demand and quickly threatened to slow down the connections of their heaviest users.

The carrier’s decision to set a specific limit for its speed throttle was originally intended to take effect last October, but was delayed until March 23, 2012.

http://www.phillipdampier.com/video/New Virgin Mobile Ad.flv

Virgin Mobile’s delayed implementation of its speed throttle coincides with this imaging “refresh” of the “New Virgin Mobile” starring a timeless Richard Branson. (1 minute)

Virgin Mobile explains its reasons:

This change comes about because of the enormous data usage driven by our new more sophisticated smartphones, and the more extensive uses customers are finding for these devices.  We want to be able to serve our Beyond Talk customers who use these unlimited plans for their data-centric daily activity, primarily for regular access to email, the Internet, and social networking sites. Our goal is to ensure our products perform at the best possible level and that we have the best possible experience for all subscribers.  These control options are similar to those other carriers have in place ? and that Virgin Mobile maintains for its Broadband2Go product as well.

These plans are still unlimited.  There is no cap or limit on how much you can consume in any given month.  In order to ensure optimal network performance and a good customer experience for all subscribers, we are moving forward in establishing some parameters.

Most Beyond Talk customers will not experience a change in the performance of their Virgin Mobile service or notice any difference.  If you use this service for typical email, internet surfing and downloading, your throughput speeds should not be noticeably impacted.  For Beyond Talk subscribers who are using more than 2.5GB during a monthly plan cycle, limits to throughput speeds for the remainder of their monthly plan cycle will enable us to preserve overall network performance and customer experience.

The company’s redefinition of the word “unlimited” in nothing new in the world of mobile data.  T-Mobile, AT&T, and Cricket all throttle their customers when they exceed a certain level of usage, yet some still market “unlimited use” plans that many customers don’t realize are limited in usefulness when arbitrary allowances are exceeded.

Concerns for “optimal network performance” and “a good experience for all” disappear when you pull your wallet out. Virgin Mobile will reset your usage allowance to zero if you agree to pay for a new month of service the moment they’ve throttled your service.  That will get you another 2.5GB of usage, whether it preserves overall network performance or not.

http://www.phillipdampier.com/video/Richard Branson Message.flv

Watch Virgin Group’s Richard Branson explain why Virgin Mobile wants to change the image consumers have about their mobile phone company.  A fine print disclosure that “unlimited” mobile data really isn’t may not change things for the better.  (2 minutes)

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AT&T Scores Last (Again) in Consumer Reports’ Ratings; Oddly AT&T Reseller Scores Highest

AT&T has once again scored dead last in a nationwide survey (subscription required) of wireless providers commissioned by consumer magazine Consumer Reports.

Among national coverage carriers, Verizon Wireless again scored the highest, but not highest overall when including smaller independent and regional carriers.  Top honors were won by Consumer Cellular, a relatively small company in Portland, Ore. that ironically depends on bottom-rated AT&T’s network to deliver service.  What sets Consumer Cellular apart from other carriers is its near-exclusive focus on selling phone service to America’s senior population.  Working with groups like the AARP to market simple cell phones to older, less technologically-comfortable customers, over 85% of Consumer Cellular customers are over the age of 50.  The vast majority are occasional cell phone users, primarily using cell phones to make and receive calls.

Regional carrier U.S. Cellular, which used to top Consumer Reports‘ surveys, scored second.  Most U.S. Cellular customers are in the Pacific Northwest, Midwest, and parts of the East including New England.  CREDO, better known under its former name Working Assets Wireless, scored third.  It provides service over the Sprint network.

Among major-sized providers, only Sprint managed to escape the poor ratings for value received by AT&T, Verizon, and T-Mobile.  Also ironic, T-Mobile continued to score better than AT&T, which is still working feverishly to acquire the German-owned carrier.

AT&T also did poorly in delivering reliable voice and data services, according to respondents.  Customer service was also deemed lacking.

Consumer Reports

“Our survey indicates that subscribers to prepaid and smaller standard-service providers are happiest overall with their cell-phone service,” said Paul Reynolds, electronics editor for Consumer Reports. “However, these carriers aren’t for everyone. Some are only regional, and prepaid carriers tend to offer few or no smart phones.”

Consumer Cellular being a prime example. 

Consumer Reports surveyed 66,000 Americans for its 2011 Wireless Satisfaction Survey and found little had changed from last year.  The consumer magazine recommends consumers who don’t make or receive a lot of calls or are not addicted to wireless data services consider a prepaid plan instead of a two-year contract.  Competition in the prepaid arena continues to force prices down, and most providers offer month-to-month service plans that can be automatically renewed through a checking account or credit card, eliminating any hassle purchasing “top up” cards.

Most of the prepaid providers resell service provided by AT&T, Sprint, or Verizon Wireless.  Two that don’t: MetroPCS and Leap Wireless’ Cricket, received little regard from those surveyed.  MetroPCS scored second from the bottom and Cricket didn’t make the ratings at all.  Two prepaid plans to consider first: TracFone, excellent for occasional calling, and Straight Talk, sold by Wal-Mart — better for those who like to talk a lot on their phones.  If you don’t need the sexiest handset around, Stop the Cap! also recommends Page Plus, which relies on the Verizon Wireless network, especially if you don’t need a lot of data services.

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Canadians Trash Their Cell Phone Options: Bad Service, Worse Value; Koodo Rates Highest

Canadians overwhelmingly rate their mobile phone providers poor for value, telling Consumer Reports they are paying too much and getting far too little coverage and service in return.

The 2011 Consumer Reports Wireless Survey (subscription required) shows Canada’s largest cell companies are generally awful in the estimation of 15,000 Canadians polled for the survey.  At the very bottom of the barrel are mega-carriers Bell Mobility and Rogers, both rated lousy for service and customer support.

“You can always do better than Rogers and Bell, no matter what other carrier you can think of,” says Thierry Duluis, a Stop the Cap! reader in Quebec. “Biggest does not mean best.”

Consumer Reports agrees.  It top-rated Koodo, a no-contract carrier owned and operated by western Canada’s phone company Telus.  Koodo is a relatively new player, only launching service in 2008, but has since built a reputation for lower prices and reasonably good service to the majority of populated regions across Canada.  But Koodo’s data plans can be expensive and confusing.  A $5 data starter plan delivers 25MB of data, and automatically increments: 26MB-100MB = $10, 101MB-300MB = $15, 301MB-1GB = $20, 1.01GB–3GB = $30, + 2¢/MB above 3GB.  A alternative plan with a 2GB data allowance runs $25 a month with a 2¢/MB overlimit fee.

Consumer Reports

Ironically, several wireless brands owned by large Canadian phone and cable companies scored higher than their respective owners.  Koodo scored higher than Telus Mobility.  So did Fido, which is a wholly-owned subsidiary of Rogers.

Regional SaskTel, which operates in Saskatchewan, received an admirable rating from the consumer magazine, primarily because of its slightly better customer service.  But no carrier, prepaid or postpaid, did extremely well across all categories.  Canadians are frustrated by cell phone prices that are often higher than what their American neighbors pay, and are often accompanied with stingy usage allowances.

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Virgin Mobile Tightens the Noose on Its ‘Unlimited Mobile Broadband’ With Even More Speed Throttles

Virgin Mobile, which last year excited a number of our readers with the introduction of its Broadband2Go unlimited mobile broadband plan, has continued to evolve the meaning of “unlimited,” to now mean just 2.5GB of usage per month before speeds are reduced to the very un-broadband level of 256kbps.

It’s just another in a series of limits Virgin Mobile has placed on its 3G “unlimited” pay-as-you-go service since last August.

Last summer, customers paid up to $100 to purchase the mobile broadband device used with the service, and promptly discovered a lot of people were doing the same thing, which promptly overloaded the network and drove speeds downward.  Within months, our readers reported Virgin had quietly implemented a “fair access policy” that began reducing customers’ speeds after as little as 200MB of use daily, usually to 256kbps or less.  By February 2011, Virgin announced a 5GB usage cap, after which speeds would be permanently throttled until customers either paid an additional $40 or waited out the end of their billing cycle.

Apparently, even 5GB of usage per month is considered too much, so now Virgin Mobile is slashing that in half to 2.5GB.  Despite the ongoing decreases, company officials insist whatever level they are, they are still generous.  The company said less than 3 percent of its customer base will be impacted by a 2.5GB limit on their supposedly “unlimited” plan.  Virgin Mobile, now a wholly-owned subsidiary of Sprint, gets around that pesky contradiction by calling their plan “unlimited access,” which means you can access it day or night at speeds that either might be fast, or heavily throttled.

What used to cost $40 a month for truly unlimited service today costs $50 for 2.5GB.

Virgin Mobile's Broadband2Go "Before" Pricing from August, 2010

Virgin Mobile's Broadband2Go "New and 'Improved'" Pricing

The days of "Sugar Mama" are long gone.

Virgin Mobile is also hiking rates for two budget handset plans that include data:

  • 300 minutes, including unlimited texting and data up $10 to $35 a month
  • 1,200 minutes, including unlimited texting and data up $5 to $45 a month

But competition does occasionally deliver some benefits to consumers as Virgin recognizes it is being killed by cheaper unlimited smartphone plans from MetroPCS and Cricket, so it has cut the price on its own unlimited calling, texting, and data smartphone plan by $5 to match its competitors’ $55 monthly price.

Virgin Mobile is in the process or repositioning itself away from being a prepaid budget-priced carrier towards a smartphone-oriented provider for customers who do not want to sign lengthy service contracts with Verizon, AT&T, or even parent company Sprint.

This certainly means the days of Virgin Mobile’s Sugar Mama are long gone. 

Thanks to Bones and several other Stop the Cap! readers for sharing this news with us.

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Virgin Mobile Tries to Turn That Frown Upside Down: 5GB Cap Explained

Virgin Mobile has begun notifying their Broadband2Go customers of how they plan to continue delivering “an outstanding customer experience”: by throttling the speeds of any customer who exceeds 5GB of usage per month.

Many Virgin Mobile customers have been in touch with Stop the Cap! about they feel is bait and switch pricing engaged by Sprint’s prepaid mobile division.  At issue — customers who invested $75-150 in equipment to sign up for a service they were sold on being “unlimited.”  Virgin Mobile made the “unlimited” part of its service the focus of its marketing.

The company characterizes the decision to adopt an Internet Overcharging scheme “a difficult choice,” but it’s one that that will ultimately help the company’s bottom line while costing many of their customers a substantial amount of money for a service they might never have purchased had they known it was going to be limited.

As is the case with almost every Internet Overcharging scheme we’ve seen, the same marketing that promised an “unlimited” experience now promises that such usage limits won’t impact most customers.  In fact, the company’s notification states, “you can send over 500,000 e-mails or browse the web for 250 hours a month!”  Of course, nobody except spammers send that much e-mail, so that kind of boasting is ultimately meaningless to customers.

What is more meaningful is that Virgin’s new 5GB cap will effectively mean customers have to heavily ration their online experience, especially if it includes multimedia.  In fact, customers won’t be able to watch more than a handful of HD movies using the service.  That’s a $40 movie pass some customers would have passed up had they known it came with limits.

This notification arrived in our e-mail box this morning. Despite the spin, the e-mail is likely to enrage customers, especially those who only recently invested money in Virgin Mobile equipment they can no longer return for a refund.

In fact, Virgin Mobile’s return to the land of Internet Overcharging is nothing new for the company.  Customer response to the company’s earlier prepaid wireless broadband plans were, to say the least, underwhelming.

Virgin Mobile’s new usage limits are less about “delivering the same quality service you’ve come to expect” and more about protecting Sprint’s more lucrative postpaid mobile data customers who pay more to use the same 3G network.  While Stop the Cap! agrees delivering an unlimited wireless broadband service remains a difficult challenge with the current limits on wireless capacity, Virgin Mobile’s about-face comes uncomfortably fast — just six months after unveiling and heavily promoting its “unlimited” service.  Just as with Clearwire, Sprint has managed to oversell its network and not invest sufficiently in expanding it to meet customer demands.  Nor has either company educated customers about the inherent limitations wireless broadband has, especially on an overcrowded network.

Sources tell us Virgin Mobile, much like Clearwire, suffered from some customers trying to use peer to peer software, sometimes for days on end (simply a ridiculous endeavor on most of the wireless networks we’ve experienced).  But the company did little to explain to customers that such software often does not work well on these types of networks, and using it 24/7 is likely going to create issues not only for that customer, but for others as well.  Instead, blanket usage limits punish everyone.

Customers deserve more than platitudes from Virgin Mobile.  Any customer that wants to cancel their service should be given a full refund by Virgin for equipment costs they incurred when signing up.  Further, Virgin Mobile’s customer policies do not generally allow money on account, but as of yet unspent, to be refunded to departing customers.  That policy should be waived in this instance.  Any unspent funds should be credited back to the customer’s credit card or refunded by check.

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Virgin Mobile Gives Up on Unlimited Wireless Broadband: Will Adopt 5GB Cap Feb. 15

Your unlimited experience is about to hit a roadblock.

Sometimes being popular isn’t the best thing in the world.

When Virgin Mobile introduced an unlimited, prepaid wireless broadband plan in August, it created a small media frenzy and shocked an industry that assumed usage-capped wireless broadband was the only way to survive the incredible demand for wireless data.

The company’s introduction of a $40 monthly unlimited-use broadband plan, with no term contract and month-to-month billing was a dream come true for casual vacationers and business travelers who don’t need a two year contract for pricey broadband-on-the-go from one of the major carriers.

When the company unveiled the unlimited broadband plan, as Stop the Cap! reported last summer, the demand was so great it brought the company’s network to its knees.  The prepaid provider, a division of Sprint, has struggled ever since to keep up with customer demand.  This week they announced they were throwing in the towel, quietly notifying would-be customers in the fine print of Radio Shack ads effective with all renewals after Feb. 15, a monthly limit of 5GB would be enforced on its Broadband2Go service.  Several of our readers noticed, including Greg, Sam, Jenny, and others.

“Customers who use BB2Go for typical email, internet surfing and reasonable downloading will likely not be impacted/notice any difference,” Virgin Mobile’s Corinne Nosal told PC Magazine by email.

But those who manage to consume just over 200MB daily will notice when the network speed throttle kicks in for those who “use too much.”  Speeds will be slashed to as low as 256kbps.  If you can’t live with that speed, you can pony up an additional $40 to “renew your account” (even if your month isn’t up yet) and the speed throttle will be removed, until you hit 5GB of usage again.

“So much for Virgin Mobile — 5GB means the service is no better or worse than the other players in the market, and considering the problems Virgin has had with reliable service, I’ll probably go back to using Cricket,” writes our Buffalo reader Lance.

Virgin Mobile relies on Sprint’s 3G network which already gets quite a workout from existing Sprint customers, as well as those using Clearwire (and several “private label” wireless broadband services).  Cricket owns and manages their own network, exclusively for the use of its own customers.

“Cricket will also throttle you if you hit 5GB, but you rarely run into overwhelmed cell tower sites like you do with Sprint’s network,” Lance says.

PC Magazine’s Sascha Segan notes the new usage limits makes using Virgin Mobile broadband a difficult proposition if you love multimedia:

The problem comes if you like video or downloads. Streaming Netflix at 1000kbps (if you can get that speed on the Virgin/Sprint 3G network), you use up about 450MB per hour. Some Windows updates can be up to 200MB alone. Want a TV show from your favorite legal downloading Web site? That’ll be 350MB, thanks.

While there are some small wireless ISPs in some parts of the country, Virgin’s abandonment of truly unlimited high-speed data leaves Sprint 4G/Clear as the only remaining major player willing to take on the wired-Internet oligopoly with an unlimited high-speed, wireless solution.

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Virgin Media to Game Developers: It’s All Your Fault You Assumed We Weren’t Going to Throttle You

Virgin Media broadband customers in the United Kingdom who spend free time playing the highly addictive World of Warcraft (WoW) suffered some serious withdrawal episodes after game developers released a major software patch (v4.0.1).  Just after installation, customers noticed their game play started slowing to a crawl, resulting in game performance worthy of a Noob popping Xanax.  With online ‘street cred’ at risk on the multiplayer game environment, WoW players rushed to Virgin’s support forums inquiring about the sudden slow lane performance:

Ever since this patch I have experienced very high latency (around 2-4k ms) whilst being in combat in 25-man raids. This latency causes me to disconnect from the game after around 10 seconds of very lagged out combat. Outside of raids I seem to yo-yo up and down. I have been as low as 70ms and as high as 1kms.

I have tried everything I can think of game related. I have ensured all the correct ports are opened via port forwarding on my router.  I have tried running the game in its default state with all add-ons removed. I have done virus scans, disabled my firewall and I am running out of options. No one else in-game seems to have the same problems as I do. Admittedly, a couple of them are Virgin Media customers too and have no problems but I cannot think what else it could be.

Now stuck in the slow lane on Virgin Broadband

Virgin Media customers and staff initially seemed at a loss about what could cause just WoW traffic to become very un-WoW.  Virgin’s terms of service includes a virtual paddle to spank customers who “excessively utilize” their broadband connections, and the patch itself — amounting to at least 7GB with accompanying updates — was worthy enough to put some customers in the time-out corner.  But even as company support officials were asking impacted customers to do the problem-solving sleuthing for them, a growing number of customers suspected the provider’s “intelligent network traffic shaping” technology was the real culprit.

Traffic shaping is a term Americans are just getting acquainted with.  It’s essentially a virtual traffic cop that can identify different types of online traffic and assign different levels of priority for different applications.  The broadband industry claims traffic shaping is a net plus for broadband consumers because it forces traffic gorgers like peer to peer file sharing to the back of the line, making room for more predictable performance of Internet phone calls, video, and other time-critical Internet applications.  Virgin even markets its broadband service as enhancing online game play by giving the highest possible priority to game-related traffic.

But when traffic shaping goes bad, it can create a nightmare for broadband customers who find roadblocks that ruin their online experience.

Virgin initially denied it was responsible for traffic shaping WoW to the point of unusability. Eventually, Virgin admitted it -was- responsible for the game traffic throttles, but passed the blame to WoW’s game developers, Blizzard Entertainment.  At one point Virgin suggested the company might want to recall the latest patch, just to get the game to work again on Virgin’s broadband network.  When that didn’t fly, company officials eventually released a statement taking responsibility, but telling customers it will be weeks before their “traffic management supplier” can create a workaround:

Since the latest World of Warcraft update we have seen that the type of packets used by Blizzard to deliver the on-line gaming has changed significantly.  This means that Virgin Media’s National (ADSL) traffic management system is unable to recognise the packets as gaming traffic and assumes that they are peer to peer traffic.  Due to this the traffic management system does not place the packets within the gaming queue which has the highest priority and lowest latency within the VM network, instead they fall into the peer to peer class which gets a low level of priority within our network and by default a higher level of latency.

We are working to try and rectify this as soon as we can with our traffic management supplier however it will take us a few weeks to upgrade the traffic manage solution so that is can recognise the new traffic class and correctly classify it as gaming.  Unfortunately due to the nature of most traffic management solutions we can not manually move these packets into the gaming queue as the solution can not work out which ones to move.

We appreciate that some customers will have noticed a similar issue with the previous World of Warcraft update.  The reason behind this is because gaming companies are not prepared to share the updates with Virgin Media or traffic management suppliers prior to its release and so the first time we see the new packets is when people start to use the new updates.  We are trying to change this view point of the gaming companies however at present they are un-willing to work with us.

We apologise for the affect that this has on your gaming experience and we will update you when we have a confirmed fix date for this.

By that time, many WoW enthusiasts will have probably fled Virgin for another provider.

Our reader James, who alerted us to this story, notes it takes a special kind of nerve for a broadband provider running speed traps to blame software developers for the problem.

“So, wait — Virgin is blaming the game developers because their code runs on the assumption that all traffic is treated equally and because they don’t verify their updates with the ISP before pushing them out to consumers?” James incredulously asks.

Virgin could always discontinue their faulty un-intelligent network traffic shaping scheme until a solution can be found, but that hasn’t happened.  It could interfere with “preferred content partnerships” — clients who pay to avoid the speed traps and throttles and always get special treatment.

Paying customers?  They can wait two or three weeks.

A Blizzard representative said Virgin’s buck (or is it pound?)-passing was inexcusable because the game producer -has- made efforts to reach out to ISPs in the past:

“In our defense, most of our previous attempts to work with ISPs have been shut down by the ISP management. I’m going to avoid naming actual ISP names for obvious legal reasons. We’re not the ISP’s actual customer so they rarely care what we have to say.”

And that is a perfect real-world example of what happens when Net Neutrality is not the law of the land.  Providers claim their traffic management schemes benefit their customers, but in reality they are only responsive to the “preferred content partners” that pay them to be responsive.

If Americans want to enjoy a similar level of service from their Internet Service Providers, just oppose Net Neutrality, sit back and wait… and wait… and wait.

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Revisiting Virgin Mobile Wireless Broadband: Supper Time Blues

Last week, Stop the Cap! took a look at Virgin Mobile’s new unlimited $40 prepaid wireless broadband service.  Early testing looked promising, with speed test results that were well within economy tier DSL service and better than expected.  But by early this week the story began to change.

We’ve continued testing the service here and have noticed that while Virgin Mobile’s service turned in respectable performance during the business day (East Coast time), once people started heading home, it’s a completely different story.  For the last five days the service has deteriorated to the point of unusability by dinnertime.

It had gotten so bad, we went back to using Cricket’s wireless broadband.

So what’s happening?

First, it’s important to distinguish that these problems are impacting only Virgin Mobile.  Sprint’s postpaid customers can use the same cell tower and backbone network and not experience any performance issues.  Virgin Mobile’s home location on Sprint’s data network is in San Francisco, and until September 2nd, all traffic headed for the Bay Area to what is basically a virtual LAN on Sprint’s network.  The IP address we were assigned was actually an internal address for that virtual LAN.

Our problems started appearing Monday afternoon when we noticed web pages refused to load completely.  Since many web pages are composed of content from a variety of different web hosts (Google Analytics, advertising, embedded content, etc.), if parts of the page refuse to load, the page itself may not appear at all.  Advertising blocks were the worst problem, often leaving one staring at a blank web page waiting for the ad content to render.

By Wednesday, this problem simply made using Virgin Mobile for broadband untenable.  Few pages — even Google’s home page, refused to load reliably.  When pages did appear, they took longer than dial-up in many cases.  We tried to perform some diagnostics but found trace-routing impossible after the third hop and speed tests could not be loaded, much less run reliably.

The fact the worst problems occurred in the late afternoon and evening hours point to a network completely overloaded with customers.

And indeed, Virgin Mobile admitted as much when it replied to some tweets indicating it had quadrupled capacity by the end of this week.  Some users also reported they no longer connected exclusively through the San Francisco (Walnut Creek) location.

As of Thursday, anecdotal reports indicated some service improvements, but the service is still prone to slowdowns during peak usage times.

A few things are evident now that a week has passed:

  1. Virgin Mobile Wireless Broadband does not share the better performing Sprint postpaid data network those customers receive.  Virgin Mobile customer traffic shares a much smaller “pool of bandwidth” because of the limitations imposed by its routing.
  2. The company needs to either abandon its current routing scheme or dramatically modify it to accommodate the traffic.
  3. Refunds for disgruntled customers are often available for the hardware, but don’t expect to get a refund for data usage.
  4. The service problems come regardless of the device used or the number of signal bars you receive.
  5. New routing cities have popped up since Thursday to supplement San Francisco — Charlotte, N.C., New York, Atlanta, Boston, Southfield (Mich.), Los Angeles, Philadelphia, and a few others.  Feel free to share yours in the comments section.

On Friday, Virgin Mobile suffered a major outage caused by a power failure that has stopped or seriously delayed delivery of text messages.  The outage is also affecting some data connections and customer service availability.  Angry customers have been pelting the company’s Facebook page with hostile remarks since the outage began.

If you signed up for Virgin Mobile wireless broadband, please share your experiences in our comments section!

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Virgin Mobile’s Unlimited Broadband2Go Service Reviewed; Had Cap of 400GB per Month Until We Complained

It’s alive.

After a day or so of stumbling, Sprint-owned Virgin Mobile’s prepaid, unlimited Broadband2Go service went live early this morning, and Stop the Cap! gave it a try and has some tips to share to save you time and money.

More importantly, a “hidden soft usage cap” of 400GB a month, visible early this morning, disappeared by this afternoon after we made inquiries about whether “400GB” actually meant “unlimited.”  More on that below.

Buying Advice

Virgin Mobile keeps it simple with two mobile broadband devices — the Ovation MC760 ($79.99), about the size of a USB flash drive and the MiFi 2200 ($149.99), a portable “hotspot” that connects to Virgin Mobile’s wireless broadband 3G network and then converts the signal into standard Wi-Fi to share with up to five nearby computers.

We tested Broadband2Go using the Ovation MC760.

Virgin Mobile's USB modems are about the size of a typical USB Flash Memory device

Our first recommendation is to hurry on down to Radio Shack if you intend to purchase Broadband2Go service.  Best Buy, the other retailer selling the service, inexplicably sells the Ovation MC760 for $99.99, twenty dollars more than Virgin Mobile charges itself.  We didn’t bother to check Best Buy’s in-store price which might be lower because we put together a far better deal at Radio Shack.

You can manage to grab the MC760 for as low as $59.99 by following these steps:

  1. If you are new to Radio Shack’s website, your first visit to their homepage should bring a “pop-up” offering $10 off your next purchase of $40 or more (if it doesn’t try clearing out your cookies or launching the site from a different web browser).  Simply supply an e-mail address new to Radio Shack and in a few minutes the coupon will arrive in your inbox.  It can be printed and redeemed in-store or used online.  This cuts the price of the MC760 to $69.99.  But wait, there’s more.
  2. Until August 28th, Radio Shack is running a sale offering a $10 instant discount off the MC760.  We first saw this online, but when we visited a local Radio Shack store, we found the same savings in-store.  That brings the price down further to $59.99 because you can combine the coupon with the instant savings, until it expires Saturday night.
  3. Many Radio Shack stores insist that you buy at least $10 in “top-up” funds when buying the MC760.  Although this increases your out-the-door price, it’s money you would spend anyway for the $40 a month service.  An incredibly long receipt will print at the register, including your PIN activation number to redeem your “top-up” funds on Virgin Mobile’s website.

Radio Shack offers up to $20 off the Ovation MC760 - $10 off for responding to this pop-up on their website and another $10 instant discount good until Saturday night.

Radio Shack stores stock both the old box-format packaging for the MC760, and a newer plastic security-sealed “clamshell” package (the one you’ll slice your fingers on when trying to get the thing open.)  There is no real difference between the two other than the packaging.

Getting It Activated

Although Virgin Mobile claims the Ovation MC760 works with Windows XP, Vista, Windows 7 and Mac OS X, 10.3 & higher, we found advice for Mac owners using older versions of the OS.  Check out this information for how to bootstrap the MC760 to work with your older Mac computer (your results may vary and don’t expect Virgin Mobile technical support to provide assistance.)  Linux users using Ubuntu found some success installing the MC760 as well from this website and this blog.  Let Google be your friend if you are running an unsupported operating system.

For new Virgin Mobile customers, the activation process is very simple.  You just plug in the device and the included software will automatically load and prompt you for installation.  After the process is complete, you will see a connection manager pop up.  Your first indication of signal strength will also be apparent, but do not be alarmed by the indicator showing only a connection to Sprint’s 1xRTT network.  Users do not access Sprint’s faster 3G EV-DO Revision A network until activation is complete.

Several slowly loading screens will appear during activation asking for your contact information, the zip code of where you intend to use the service the most, and payment details.  At the end, you are assigned a broadband “phone number” which serves as your account number, based on the zip code you provided earlier.

Things get complicated, however, for existing Virgin Mobile customers.  Many of those who anticipated the arrival of the service and pre-loaded their voice accounts with additional “top up” funds will discover there is no way for Virgin Mobile to activate your Broadband2Go service under your existing Virgin Mobile account.  A separate, new account must be established for the broadband service.

However, with the help of a customer service representative, you can transfer funds between your existing voice account and your new Broadband2Go account.  You’ll need to call a special toll-free number which will take you directly to Broadband2Go’s customer service department — 1-877-877-8443.  At the voice prompts, indicate you are a new customer and that you want “tech support.”  Expect at least 10 minutes of hold time and an overseas call center representative to answer.  There is no elevator music on hold with Virgin Mobile either.  You’ll hear plenty of rap and alternative music mixed with greetings from current hit artists.

The tech support representative will handle your Broadband2Go activation over the phone.  Have the device and a pen and paper handy.  Allow 10-15 minutes minimum for the representative to gather information or transfer details from your existing account to the new account.  The tech support rep will then transfer your call to the business office to handle the transfer of funds between accounts.

Our Experience

Phonenews also discovered Virgin Mobile's "unlimited" service had a 400GB usage cap this morning...

After activation, the device reset and we found ourselves suddenly connected to Sprint’s EV-DO network with an average of three bars of signal strength.  Sprint’s nearest tower is about 0.75 miles away from our home in a flat terrain residential area.  Still, we found indoors the signal level could decline to the point the connection fell back to the far slower 1xRTT connection.  Outdoors, the connection manager’s signal level spiked to full strength.

Although Virgin Mobile sells the service as “unlimited,” the website included a usage counter this morning that stated we had just over 400GB of usage remaining.  While extraordinarily generous, that’s still not “unlimited” in our book and we asked Virgin Mobile about it.  Their explanation? It was a “soft usage cap,” and although they didn’t expect anyone to actually hit that level of usage on a relatively slow broadband connection, if they did, customer service would reset it to zero upon request.  We asked why it was included at all on an unlimited service?  We were told it was a software issue — the website was designed for usage-limited broadband measurement.  Considering the performance of 3G wireless networks, it’s not likely many would ever hit it, especially because you would need to be running traffic almost continuously across the connection to reach it.

Nevertheless, we’re pleased to report that as of this afternoon, the 400GB limit is gone, replaced by a usage counter that plainly states “unlimited.”  We applaud Virgin Mobile for rapidly responding to concerns that “unlimited” didn’t actually mean “unlimited.”

...but not for long. As of this afternoon, even that generous usage cap was gone.

One concerned reader dropped a note to Stop the Cap! wondering about something seen in the terms and conditions about “unlimited mobile Internet (but not unlimited downloaded content).”  We couldn’t find those terms and conditions, and if they were included as part of the online activation process, that’s something we missed as we had to activate by phone.  We can only think that may have something to do with the company’s Acceptable Use Policy for data products.  Like other wireless providers, Virgin Mobile does not want customers using their service for “web camera posts or broadcasts, automatic data feeds, automated machine-to-machine connections or peer-to-peer (P2P) file sharing or other systems that drive continuous heavy traffic or data sessions.”  P2P traffic, in particular, is usually a painful experience for both the wireless user and provider.  These kinds of terms and conditions are commonly found in wireless provider agreements.  We’d have a problem with Virgin Mobile if they joined some wireless ISP’s in banning use of online video, but they have not.

So does Virgin Mobile’s marketing of its unlimited Broadband2Go service pass the Stop the Cap! Honest Marketing Test?

The company claims: “Speed varies based on location and coverage with average downlink data speeds between 600 and 1400Kbps. Virgin Mobile does not restrict your speeds based on data usage caps.”

At first glance, we suspected that 600Kbps speed might be a little higher than what real-world users would actually encounter.  Signal strength can steal a lot of speed and if Sprint’s nearest cell tower encounters heavy usage at peak times, speeds can drop dramatically.

We ran several speed tests from different server locations, because results can vary dramatically.  Here is what we found from our location in Rochester, N.Y.:

Speedtest.net recommended a speed test server in the San Francisco area. Our first test showed reasonable 3G speeds.

Interestingly, using a local speed test site showed better downstream results, although upload speeds suffered somewhat.

Finally, a speed test result using a Los Angeles test server that performed well.

Virgin Mobile’s speed and marketing claims do pass the Honest Marketing Test, although we feel they should more openly disclose the ban on P2P traffic.  It’s likely not enforced, if only because most users would grow impatient with the poor results.  Although we have not had a chance to test the robustness of Sprint’s data network and how well it hands off data signals between tower sites or peak usage, the browsing experience was definitely superior to that of the other wireless broadband service we tested — Cricket Wireless.  The speeds were better, too.

There is no way to tell whether Virgin Mobile’s owner Sprint will ultimately be able to sustain the service should a flood of new customers saturate their 3G network.  It’s a shame that although Virgin Mobile uses Sprint’s network, they do not currently allow access to Sprint’s much-faster 4G network.

Our Recommendation

For those lucky enough to have good wireless signal coverage from Sprint and are currently stuck with Hughes or Wildblue satellite fraudband service — your day has come.  Stop the Cap! can heartily recommend Virgin Mobile’s unlimited service as a great alternative to either provider.  We can also recommend this service to those stuck on .768-1.5Mbps DSL, especially if the phone company is charging you more than $40 a month for tortoise-slow DSL service.  For those on the go, this is also a great choice, assuming where you go is within Sprint’s coverage area.  Broadband2Go can even provide an effective backup if your primary Internet provider goes down.  But we do not recommend it as a replacement for higher speed DSL, cable, or fiber delivered broadband.

Because Sprint’s coverage is more spotty than AT&T or Verizon, it is important to consider where you will use the service.  Those on the edge of coverage areas may experience considerably poorer service, or none at all, when indoors.  Sprint locates their towers inside major metropolitan areas and along major highways that connect those communities.  If you are uncertain whether Broadband2Go will work where you want to use it, you can consider buying the MC760 with $10 worth of usage, which will provide 100MB of usage within 10 days.  If it doesn’t work well for you, return the modem and be out only $10 worth of usage.

Those who like the service can either top-up your account automatically to cover the $40 monthly fee with no interruption in service, or just pay for the service when you need it.  There is no activation/re-activation fee.

Overall, our first impressions are positive, although we wished existing Virgin Mobile customers could link the service to their existing accounts.  Over the next few days, we’ll take the service on the road and see how it fares.

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