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Federal Trade Commission Suing AT&T Over Unfair Speed Throttles for Unlimited Data Customers

throttleThe Federal Trade Commission today filed a lawsuit against AT&T for its practice of subjecting grandfathered unlimited data customers to speed throttles that dramatically cut speeds up to 90 percent after customers use more than 3GB of data on AT&T’s 3G network or 5GB on its 4G network. Thus far, according to the FTC, AT&T has throttled at least 3.5 million unique customers a total of more than 25 million times.

The FTC’s complaint alleges that the company failed to adequately disclose to its customers on unlimited data plans that, if they reach a certain amount of data use in a given billing cycle, AT&T reduces – or “throttles” – their data speeds to the point that many common mobile phone applications – like web browsing, GPS navigation and watching streaming video –  become difficult or nearly impossible to use.

“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” said FTC Chairwoman Edith Ramirez. “The issue here is simple: ‘unlimited’ means unlimited.”

FCC chairman Thomas Wheeler publicly complained about Verizon’s plans to start a similar throttling program on its wireless network, questioning the fairness of cutting speeds for certain customers while exempting others. Both Verizon and AT&T have claimed speed throttles are part of a fair usage policy that allows all customers to share its wireless resources. Broadband providers have often painted a picture of a “bandwidth hog” taking a disproportionate share of network resources away from other customers, but there is no evidence heavier users are creating conflicts for other users, especially as wireless carriers encourage customers to use more data.

throttle att

From AT&Ts website

The logic of rationing Internet use for unlimited customers while providing unlimited access to those willing to pay usage-based charges escaped the FTC, which is what brought the suit.

According to the FTC’s complaint, AT&T’s marketing materials emphasized the “unlimited” amount of data that would be available to consumers who signed up for its unlimited plans. The complaint alleges that, even as unlimited plan consumers renewed their contracts, the company still failed to inform them of the throttling program. When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars.

The FTC alleges that AT&T, despite its unequivocal promises of unlimited data, began throttling data speeds in 2011 for its unlimited data plan customers after they used as little as 2 gigabytes of data in a billing period. According to the complaint, the throttling program has been severe, often resulting in speed reductions of 80 to 90 percent for affected users.

According to the FTC’s complaint, consumers in AT&T focus groups strongly objected to the idea of a throttling program and felt “unlimited should mean unlimited.” AT&T documents also showed that the company received thousands of complaints about the slow data speeds under the throttling program. Some consumers quoted the definition of the word “unlimited,” while others called AT&T’s throttling program a “bait and switch.” Many consumers also complained about the effect the throttling program had on their ability to use GPS navigation, watch streaming videos, listen to streaming music and browse the web.

The complaint charges that AT&T violated the FTC Act by changing the terms of customers’ unlimited data plans while those customers were still under contract, and by failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans.

FTC staff worked closely on this matter with the staff of the Federal Communications Commission.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of California, San Francisco Division.

Comcast Prepares to Launch All-Out Attack on C Spire’s Irritating Competition in Mississippi

comcast crushThe sleepy deep south isn’t often a battleground for an all-out broadband competition war, but Ridgeland, Miss.-based C Spire, a regional cell phone company with fiber broadband aspirations, has gotten too big for its britches and Comcast is preparing to demonstrate its size and resources can run even a home state provider into the ground.

C Spire is building a statewide fiber-to-the-home network, city by city, on its pre-existing fiber backbone which extends to C Spire’s cell towers across the Magnolia State. As the fiber network expands, talk of doing something in a “Mississippi Minute” will be a thing of the past as C Spire prepares to deliver gigabit broadband speeds far in excess of what competitors like Comcast, AT&T and Cable One are prepared to offer.

Communities already on the construction list include: Batesville, Clinton, Corinth, Hattiesburg, Horn Lake, McComb, Quitman, Ridgeland and Starkville.

But C Spire’s network caught the attention of Comcast earlier this month when it announced Jackson, the state capital, was going to get fiber service.

C Spire is following Google Fiber’s model, attempting to get enough residents in a neighborhood to pre-register with a refundable $10 deposit. Online pre-registration for the service began in Jackson last month, and several hundred residents applied even before the fiber network expansion was announced, ready to tell Comcast to take a hike.

Jackson neighborhoods that reach sign-up levels set by C Spire will be the first to get the new generation of fiber services, the company says.

“Gigabit infrastructure can create a new economic reality for the city of Jackson,” Duane O’Neill, president & CEO of the 2,100-member Greater Jackson Chamber Partnership, told the Mississippi Business Journal. “In the handful of U.S. cities where this infrastructure is deployed and widely available, it has generated thousands of jobs, millions of dollars of new investment, boosted home values and improved the overall quality of life.”

c spire fiberC Spire’s plans could cost Comcast a significant number of cable customers across Mississippi, and it isn’t taking that lightly.

Departing from its usual tradition of focusing new technology on large northeastern cities, Comcast will begin saturating Jackson with its Wi-Fi hotspot service, starting with 200 public hotspots slated for launch before the end of this year. The company only had a handful of Wi-Fi hotspots in Jackson before. Jackson will also get significant cable service upgrades, including the introduction of a new “smart home” service, a cloud-based service integrating Comcast’s cable, Internet, and home-security.

Comcast says it has plans to turn Jackson into a “truly connected city,” and if that means competitively disconnecting C Spire from its nascent fiber customer base, all the better.“This is the kind of threat that would frighten competitors,” said industry observer Jeff Kagan. “Comcast can be a heavy-duty competitor when they want to be. So why is Jackson and other Mississippi cities getting this kind of attention from Comcast and C Spire? I think it’s a matter of competition and C Spire’s aggressive move in the state of Mississippi played a role in the Comcast decision to turn up the heat.”

Kagan also expects Comcast will cut prices to undercut C Spire. That would be consistent with Comcast’s customer retention policies that dramatically lower rates for customers threatening to leave. Rate-cutting will benefit consumers, but if Comcast engages in below-cost predatory pricing, those savings will be short-lived.

“It’s starting to look like that old nursery rhyme, Jack and the Beanstalk,” said Kagan. “Watch out Jack, the Giant is waking up.”

If that battle becomes cut-throat, C Spire’s fiber aspirations may end up nothing more than pipe dreams if the company retreats, deciding it cannot survive in a battle with Comcast, the Giant of all cable companies.

Fly the Stupid Skies: American Airlines Grounds Flight Over “Al Quida” Wi-Fi Hotspot

airplane panicAmerican Airlines left passengers stewing for more than three hours on board a flight from LAX to London before finally returning to the gate. The reason? A passenger reported a functioning Wi-Fi hotspot labeled “Al Quida Free Terror Nettwork” and complained to a flight attendant.

Flight 136’s passengers were questioned, the aircraft was torn apart by security and airline cleaning crews, and passengers were eventually handed hotel vouchers to stay overnight after nothing was found and the flight was canceled.

Police admitted no crime was committed and no further action will be taken. It is not illegal to misspell the name of the infamous terror group as your Wi-Fi hotspot, nor is it illegal for a passenger to freak out and report it. But the wisdom of both is open to serious question.

“It must have been somebody on the aircraft,” passenger Elliot del Pra told KABC. “Thank goodness that we did not fly because you just don’t know. It’s very scary to think somebody would actually do that, especially on an international flight.”

But the likelihood of an actual terrorist openly calling attention to his bad grammar and spelling skills and his affiliation with a terror network while surfing the net in first class are slim to none.

“It was a stupid prank and everyone completely overreacted,” a British passenger countered, frustrated after being left on the tarmac for hours only to see his flight home canceled. “It’s clear American Airlines won’t be my next flying choice because common sense eludes them completely.”

http://www.phillipdampier.com/video/KCAL Los Angeles LAX Al Quida WiFi 10-27-14.mp4

Terror on the tarmac? Not quite. KCAL-TV in Los Angeles reports the obvious — someone was pulling a bad prank (and are behind the times) naming their Wi-Fi hotspot after Al Qaeda, long after being eclipsed by ISIS in the headlines. (1:55)

FCC Delays Wireless Spectrum Auction; Hires Investment Banker to Pitch Stations to Sell and Sign-Off

fcc2The Federal Communications Commission announced Friday it will postpone an important spectrum auction until 2016 after broadcasters filed suit against the regulator challenging its proposed format.

The FCC wants your free, over-the-air television dial to be a lot smaller with a deal that will pay broadcasters to sign-off their channels for good to benefit the wireless industry. Remaining stations will be moved to VHF channels 2-13 and UHF channels 14-30. The spectrum covering UHF channels 31-51 would likely then be sold in pieces to major wireless carriers including AT&T, Verizon Wireless, Sprint, and/or T-Mobile.

To entice broadcasters to voluntarily switch off their transmitters, the FCC has designed a spectrum auction that would provide tens of millions in proceeds to smaller stations and up to $570 million for a UHF station in Los Angeles to get off the air. Technically, stations giving up their channels don’t have to sign-off — they can move to low/lower-powered broadcasting, share channel space with another television station on a digital subchannel, or move to cable television exclusively.

To sell stations on the deal, FCC Chairman Tom Wheeler hired Greenhill, a Wall Street investment bank, to prepare a presentation sent to every eligible television station in the country, encouraging them to sell their channels for some eye-popping proceeds:

(These numbers refer to full-power stations; in some markets there are also Class A stations, low-power stations that meet certain programming requirements. The estimated value of their spectrum is lower.)

In millions of dollars
MARKET Full-Power Stations
Maximum Median
New York $490 $410
Los Angeles $570 $340
Chicago $130 $120
Philadelphia $400 $230
Dallas-Fort Worth $67 $53
San Francisco-Oakland-San Jose $140 $110
Boston $140 $93
Washington, D.C. $140 $130
Atlanta $91 $65
Houston $52 $45
West Palm Beach $100 $93
Providence, R.I. $160 $110
Flint, Mich. $100 $45
Burlington, Vt. $58 $17
Youngstown, Ohio $95 $90
Palm Springs, Calif. $180 $100
Wilkes-Barre-Scranton $150 $140

Source: The FCC

 

getoffThere is so much money to be made buying and selling the public airwaves — at least twice as much as broadcasters originally anticipated– spectrum speculators have also jumped on board, snapping up low power television station construction permits and existing stations with hopes of selling them off the air in return for millions in compensation. Wireless customers are effectively footing the bill for the auction as wireless companies bid for the additional spectrum. Television stations will receive 85% of the proceeds, the FCC will keep 15%.

take the moneyMajor network-affiliated or owned stations in major cities are unlikely to take the deal. But in medium and smaller-sized markets where conglomerates own and operate most television stations, there is a greater chance some will be closed down, moved to a lower channel, or transferred to a digital sub-channel of a co-owned-and-operated station in the same city. The most  likely targets for shutdown will be independent, CW and MyNetworkTV affiliates. In smaller cities, multiple network affiliates owned by one company could be combined, relinquishing one or more channels in return for tens of millions in cash compensation.

In Los Angeles, the stakes are especially high with auction prices estimated at up to $570 million for a high-powered UHF station like KDOC-TV.

“There is some real money to be had,” Bert Ellis, chief executive of Ellis Communications, which owns KDOC-TV, told the Wall Street Journal. “I think every broadcaster should take a very close look at this.”

Estimates show at least 80 significant U.S. cities will likely lose one or more channels, especially when the bid price well exceeds the value of an independent, ethnic or religious station. Many of these will go dark, move to cable or a less desirable lower power VHF channel, or sign an agreement with a remaining station to carry its programming on a sub-channel.

The National Association of Broadcasters filed suit against the FCC’s auction in August. The NAB wants the FCC to guarantee that stations that wish to stay on the air will not have their coverage area reduced or forced to pay to move to a new channel number assigned by the FCC as the regulator “repacks” a much smaller UHF band.

“We’ve said from day one, if stations want to volunteer to go out of business, that’s their prerogative. But for those stations that choose to remain in business, they should be held harmless,” NAB spokesman Dennis Wharton said.

The spectrum auction is designed to address the wireless industry’s claim of a spectrum crisis, warning that if more frequencies are not found, wireless users will eventually see their service degraded.

Sprint Realizes Not Everyone Wants a $200 Cell Phone Bill: Announces $20, 1GB Family Data Plan

budgetIf your family budget cannot handle a $200 monthly cell phone bill from AT&T or Verizon and you can keep your data usage to around 1GB, Sprint has a deal for you.

On Wednesday, Sprint unveiled a low-end family data plan offering 1GB of data for $20 a month, an improvement over the 600MB data option Sprint used to offer. It’s also a better deal than the 500MB $20 buys you on Verizon’s network or the piddling 300MB AT&T delivers on its budget plan.

“This entry-level sharable data allowance reinforces Sprint’s commitment to offering customers the best value in wireless,” said Marcelo Claure, Sprint CEO. “We’re offering customers a choice – whether they need a small amount of data or are a high-end data user.”

Customers can build their own plan in three steps. First, choose the shared data allowance. For 1GB, it’s $20 per month for up to 10 lines. Second, add data access for phones with unlimited talk and text while on the Sprint network. The data access charge for non-discounted phones is $25 per month per line for 1GB through 16GB. Third, add your tablet devices for $10 per month per line and mobile broadband devices for $20 per month per line. There is no early termination fee and no annual service contract with non-discounted phones.

In addition, when customers switch their number to Sprint, a family with up to 10 lines can get 20GB of shared data and unlimited talk and text for only $100 a month through 2015.

This chart reflects a 2GB shared data plan for two lines that amounts to $75 a month before taxes, fees and surcharges.

This chart reflects a 2GB shared data plan for two lines that amounts to $75 a month before taxes, fees and surcharges.

Since wireless carriers discovered reports of a spectrum crisis were vastly exaggerated, they have fallen all over each other with “double your data” promotions and other allowance boosters. Sprint’s family plans allow customers to divide up an inexpensive data plan across all phones on the account. If you spend most of your time on Wi-Fi or share an account with parents or grandparents not accustomed to using much data, Sprint’s plan may deliver enough data to satisfy.

Sprint has hemorrhaged its high-end customers for several quarters, mostly because its 3G data service is barely usable and its new 4G LTE network has rolled out at the typical speed of a glacier and its performance has not always impressed. Sprint has cut prices and is trying to find a stable niche among budget-conscious postpaid customers unwilling to pay AT&T and Verizon’s asking price but are willing to tolerate reduced coverage in favor of a better price. Sprint and T-Mobile are both competing for these customers. Verizon says it cannot be bothered being seen as a discount carrier, and AT&T is committed to keeping its average revenue per customer numbers growing.

Half of AT&T’s Customers Are Paying $100 for 10GB Data; Unlimited Customers Still Throttled After 3-5GB

Speed bump

Speed bump

More than half of AT&T’s wireless customers are paying at least $100 a month for 10GB or more of wireless data on AT&T’s Mobile Share Plans at the same time AT&T continues to throttle its legacy unlimited data customers who use more than 3GB of data on its 3G network or 5GB of data on its 4G LTE network.

AT&T claimed in 2012 it implemented its “fair usage policy” for unlimited customers to assure all could receive reasonable service during peak usage times when cell towers become congested.

AT&T also blames “a serious wireless spectrum crunch” for the speed throttling, implying access to more spectrum could help ease the problem. But there is a much faster way to overcome AT&T’s “spectrum crunch:” agree to pay them more money by ditching that $30 unlimited plan for a tiered plan.

John Stephens, AT&T’s chief financial officer, told investors Wednesday that nothing boosts revenue more than pushing customers into usage-cappped data plans that customers are regularly forced to upgrade.

“On the ARPU (average revenue per user/customer) story, I think the biggest issue with the improvement is people buying the bigger [data] buckets and buying – upping plans,” said Stephens. “We had over 50% of the customer base at the 10GB or bigger plans.”

Stephens added that AT&T benefited from customers upgrading to 4G LTE devices that are handled more efficiently by AT&T’s mobile data network.

Increased usage and upgraded data plans delivered a 20% increase in data billings over the last quarter.

Since 2012 AT&T has paid out more than $50 billion to shareholders through dividends and share buybacks. The company benefited from nearly $20 billion a year in free cash flow and asset sales over the last two years and is expected to repeat those numbers this year. Consolidated revenue at AT&T grew to $33 billion, up $800 million since the same time last year.

Miraculously, despite the “alarming spectrum crunch,” AT&T found more than enough spectrum to award its best customers with a “double data” promotion that turns a 15GB data plan into a 30GB plan, a 20GB plan to 40GB, a 30GB plan to 60GB, a 40GB plan to 80GB, or a 50GB plan to 100GB. Importantly, AT&T boasts its double data promotion won’t “explode” — their language for “expire” — on customers until their contract ends.

Lowering the bar on "unlimited use" customers.

Lowering the bar on “unlimited use” customers.

“Those exploding offers — customers hate those offers,” said AT&T Mobility CEO Ralph de la Vega at a recent investor conference. “Unless they change their mind, we won’t offer those kinds of promotions.”

But de la Vega doesn’t mind leaving the company’s most loyal legacy customers in the penalty box if they cling to their grandfathered unlimited data plans. The throttles stay and the allowances have remained unchanged since first announced, despite the bountiful spectrum obviously ready and available to serve AT&T’s deluxe customers. Unlimited customers are regularly reminded they can easily avoid the throttle — just abandon that unlimited data plan. According to Stephens, more than 80% of AT&T’s customers already have.

The excuses for wireless speed throttles and killing off unlimited data plans at AT&T and Verizon Wireless don’t seem to wash with FCC chairman Thomas Wheeler, who demanded Verizon offer the “rationale for treating customers differently based on the type of data plan to which they subscribe, rather than network architecture or technological factors,” after it announced it was planning speed throttles for its remaining unlimited data plan customers. Verizon canceled the plan after Wheeler began scrutinizing it, but the throttles are still in place at AT&T.

AT&T’s 10GB Mobile Share Plan starts with a $100 data plan. Customers also pay:

  • $10 a month for each auto-based smart-locator;
  • $10 a month for each tablet, camera or game device;
  • $15 a month for each basic phone;
  • $20 a month for each wireless home phone replacement;
  • $20 a month for each connected Internet device;
  • $40 a month for each connected smartphone.

A family of four with four smartphones, a tablet, and AT&T’s wireless home phone replacement would be billed $290 a month before at least $39 in taxes, fees, and surcharges — well north of $300 a month for most.

T-Mobile: AT&T Gouges Us With Data Roaming Rates 150% Higher Than Average

bill shockT-Mobile has asked the Federal Communications Commission to investigate AT&T’s “artificially high roaming rates” charged when its customers travel outside of T-Mobile’s home service area.

T-Mobile is heavily reliant on AT&T for roaming service outside of major cities and the country’s smallest national wireless carrier complains AT&T is using their market power to put it at a major disadvantage, which could force new limits on roaming access in some areas.

T-Mobile provided examples of the damage already done by AT&T’s roaming rates:

“Limitless Mobile has severely restricted its customers’ access to AT&T’s network ‘for the sole reason that AT&T’s data roaming rates are too high and by continuing roaming access, Limitless could not maintain a commercially competitive retail wireless data offering to the general public,’” T-Mobile told the FCC.

The Rural Wireless Association noted that competing carriers “cannot sustain the provision of data roaming services if [they] must provide that service at a loss.”

The problem of data roaming rates is getting larger as carrier agreements are due for renewal at many mobile providers. Independent cellular companies are finding AT&T unwilling to renew at prices and terms comparable to their existing contracts. Instead, they face renewal rates that average a minimum of 10 and as much as 33 times higher than the national carriers’ retail rates.

For example, T-Mobile’s agreement with AT&T includes a data roaming rate that is now 150 percent higher than the average domestic rate that T-Mobile pays for data roaming.

This is one thousand percent higher than the data roaming rate negotiated between Leap Wireless and MetroPCS prior to their respective acquisitions, wrote T-Mobile.

With the stark price increases, carriers have begun imposing limits, including speed throttling and data caps, on customers when roaming on AT&T’s network.

t-mobile-set-recordBecause of AT&T’s artificially high roaming rates, T-Mobile wireless customers roaming in South Africa have a better user experience than customers roaming on AT&T’s network in South Dakota, argues T-Mobile. Their speed is twice as fast, and their data usage is unlimited.

T-Mobile is asking the FCC to intervene by establishing some type of standard about what constitutes “commercially reasonable” roaming rates as part of its 2011 Data Roaming Order, designed to protect competition.

This year, carriers dependent on Verizon Wireless or AT&T to help deliver “nationwide coverage” are negotiating roaming access to the companies’ 4G LTE networks for the first time. Most roaming agreements used to only cover 3G service, delivered at a slower speed.

If carriers like Sprint and T-Mobile are unable to negotiate fair terms, both companies will be at a major competitive disadvantage, relegated to providing only regional coverage or charging higher prices for roaming service.

AT&T vice president of regulatory affairs Joan Marsh said T-Mobile’s request bordered on being illegal, in direct violation of the Telecommunications Act. Marsh argued T-Mobile and other carriers should be incentivized to build their own networks instead of relying on cheap roaming access from companies like AT&T. Marsh added any move by the FCC to set rates or benchmarks would be beyond the FCC’s mandate. Wireless carrier rates are deregulated and not subject to common carrier regulation.

Shell Oil Tries to Buy Some Love With Irish Fiber Broadband Network Along Its Corrib Gas Pipeline

Phillip Dampier October 21, 2014 Public Policy & Gov't, Wireless Broadband No Comments
Protestors oppose the Shell Oil natural gas pipeline in western Ireland.

Protestors oppose the Shell Oil natural gas pipeline in western Ireland.

Shell Oil is trying to turn Irish environmentalists’ frowns upside down by donating a high-capacity fiber broadband and Wi-Fi network to appease local critics unhappy about hosting a natural gas pipeline they say won’t benefit any of the local communities it passes.

Shell will spend just shy of $1 million on the 132-kilometer fiber network and Wi-Fi system that will be laid in ducting placed next to the Corrib gas pipeline. Shell will donate the network to the Department of Communications, Energy, and Natural Resources upon its completion to support regional communications in western Ireland.

Local environmentalists dismissed the project as “propaganda.”

“It’s a pittance in comparison to the damage they have done to the environment,” said Betty Schult of the Kilcommon Lodge in Pullathomas. “It’s beside the point. There hasn’t been any social benefit. We have been given footpaths and street lights, but half the homes are unoccupied because we don’t have the infrastructure to keep them. They gave us flower baskets, but nobody watered them. It’s all propaganda.”

The Corrib gas pipeline has been controversial from the start and relations between Shell and nearby affected communities have been strained to the breaking point. More than 100 complaints about the project’s security staff have been received by the Irish government, with alleged acts of violence and intimidation committed against the protestors coming under serious investigation.

At one point, a “rape tape” emerged which contained a recording of several gardaí (the Irish police) joking about raping and deporting one of two women arrested for public order offenses during a protest against the project.

Protestors object to Shell’s project because it will disrupt the local environment, will likely never pay a penny in tax, and has left local and national politicians falling all over themselves responding favorably to Shell’s requests.

Independent Teachta Dála (Member of Parliament) Clare Daly claims certain gardaí monitoring the project were acting as “hired hands” for Shell Oil and were “arresting people without charge.”

Shell’s new fiber and wireless network will be available to everyone in the region, with the exception of the towns of Rossport and Pullathomas, the home of some of the fiercest protests against the pipeline for almost a decade.

Local protestors noted the oversight and suggested it was hardly an accident.

“It’s like all Shell initiatives; it’s not for our benefit. It’s like the gas, it will leave here and go elsewhere,” said Schult.

Maura Harrington added, “Shell says it will spend €750,000 (tax-deductible), big deal. Shell again clicks its fingers and [Irish Prime Minister] Enda Kenny comes toadying to do the needful.”

Shell to Sea, an opposition group, also dismissed Shell’s announcement “as a fistful of beads and baubles in comparison with the billions of euros worth of gas that was gifted to them in the Corrib Gas field.”

Rural America: Welcome to Verizon LTE Broadband – $120/Mo for 5-12Mbps With 30GB Cap

They are coming.

With both AT&T and Verizon petitioning various state regulators for permission to switch off rural landline phone and broadband customers and force customers to use wireless alternatives, getting affordable broadband in the countryside is becoming increasingly difficult.

Last week, Millenicom — a reseller of wireless broadband service specializing in serving rural, long-haul truckers, and recreational vehicle users notified customers it was transferring their accounts directly to Verizon Wireless and will no longer have any role selling discounted Verizon Wireless broadband service.

Reports indicate that Millenicom’s contract renewal negotiations with Verizon did not go as expected and as a result customers are facing potential price increases and long-term contracts to continue their wireless broadband service.

Both AT&T and Verizon have told regulators they can satisfactorily serve rural customers with wireless LTE broadband service as an alternative to maintaining rural landline infrastructure. Neither company likes to talk about the price rural customers will pay if they want to keep broadband in their homes or businesses.

Some Millenicom customers have been invited to preview Verizon Wireless’ Home LTE Installed Internet plans (formerly known as HomeFusion) and many are not too pleased with their options:

lte1

lte2

Verizon’s overlimit fee is $10/GB for those that exceed their plan limit. According to several Amazon.com reviews of the service (it received 1.5 stars), customers are quickly introduced to “Verizon’s shady usage meter” that consistently measures phantom usage. Bills of $400-500 a month are not uncommon. One customer was billed for 18GB ($180) in extra usage despite following Verizon’s suggestion to stop using the service when it reported he reached 29GB of usage.

verizon bill

This bill includes more than $3,000 in data overlimit fees.

“The bill came with the bogus data charges, and it was twice as much as the meter detected,” the customer reported.

In fact, the phantom usage has become so pervasive, Verizon customers have dubbed the phenomenon “ghost data,” but the overlimit fees Verizon expects customers to pay are very real.

“[It] went out more than my DSL and my first bill from Verizon was $1300+,” reported Jill Kloberdanz. “I want this demon out of my house.”

“According to [Verizon], I used over 65GB in just one week,” reported Aron Fox. “And they want almost $800 for it. My wife and I are two 60-somethings that never game and rarely stream.”

“Definitely stay away [...] unless you like to see your data charges skyrocket (in my case more than doubling) when your use doesn’t,” reported Richard Thompson. “I’ve pulled the plug on it — literally.”

“We have the same problem – huge data overages, meter does not match our usage,” writes Heather Comer. “We turn the router off at night and when we check the next morning, it is still accumulating data.”

There are close to a dozen more complaints about Verizon’s usage meter, all stating they were charged for usage even when the equipment was switched off.

While both Verizon and AT&T stand to save millions disconnecting rural landline customers, they stand to earn even more switching rural customers to their more costly (and profitable) wireless alternatives.

5+ Years After Fraudulent Cramming Fees Began, AT&T Agrees to Pay $105 Million Fine/Restitution

AT&T aids and abets cramming fraud by making it hard to identify on customer bills.

AT&T aids and abets cramming fraud by making it hard to find on customer bills.

More than five years after complaints began rolling into AT&T from wireless customers finding unauthorized charges on their monthly bills, the Federal Trade Commission and Federal Communications Commission today announced those customers deserve a refund, and AT&T has agreed to pay $80 million towards restitution for their complicity in bill cramming.

As part of a $105 million settlement with federal and state law enforcement officials, AT&T Mobility LLC will pay $80 million to the Federal Trade Commission to provide refunds to consumers the company unlawfully billed for unauthorized third-party charges, a practice known as mobile cramming. The refunds are part of a multi-agency settlement that also includes $20 million in penalties and fees paid to 50 states and the District of Columbia, as well as a $5 million penalty to the Federal Communications Commission.

In its complaint against AT&T, the FTC alleges that AT&T billed its customers for hundreds of millions of dollars in charges originated by other companies, usually in amounts of $9.99 per month, for subscriptions for ringtones and text messages containing love tips, horoscopes, and “fun facts.” In its complaint, the FTC alleges that AT&T kept at least 35 percent of the charges it imposed on its customers, a lucrative incentive for AT&T to keep the cramming charges coming.

“I am very pleased that this settlement will put tens of millions of dollars back in the pockets of consumers harmed by AT&T’s cramming of its mobile customers,” said FTC chairwoman Edith Ramirez. “This case underscores the important fact that basic consumer protections – including that consumers should not be billed for charges they did not authorize – are fully applicable in the mobile environment.”

Beginning today, consumers who believe they were charged by AT&T without their authorization can visit www.ftc.gov/att to submit a refund claim and find out more about the FTC’s refund program under the settlement. If consumers are unsure about whether they are eligible for a refund, they can visit the claims website or contact the settlement administrator at 1-877-819-9692 for more information.

This case is part of a larger FTC effort to clamp down on mobile cramming. This is the FTC’s seventh mobile cramming case since 2013, and its second against a mobile phone carrier this year. The FTC filed a complaint against T-Mobile in July, and that case is ongoing. The Commission also issued a staff report on mobile cramming in July. The FTC mobile cramming cases build on the FTC’s extensive law enforcement work over the last decade to combat cramming on landline phone bills.

The FTC’s investigation into AT&T showed that the company received very high volumes of consumer complaints related to the unauthorized third-party charges placed on consumer’s phone bills. For some third-party content providers, complaints reached as high as 40 percent of subscriptions charged to AT&T consumers in a given month. In 2011 alone, the FTC’s complaint states, AT&T received more than 1.3 million calls to its customer service department about the charges.

According to the complaint, in October 2011, AT&T altered its refund policy so that customer service representatives could only offer to refund two months’ worth of charges to consumers who sought a refund, no matter how long the company had been billing customers for the unauthorized charges. Prior to that time, AT&T had offered refunds of up to three months’ worth of charges. At that time, AT&T characterized its change in policy as designed to “help lower refunds.”

In February 2012, one AT&T employee said in an e-mail that “Cramming/Spamming has increased to a new level that cannot be tolerated from an AT&T or industry perspective,” but according to the complaint, the company did not act to determine whether third parties had in fact gotten authorization from consumers for the charges placed on their bills. In fact, the company denied refunds to many consumers, and in other cases referred the consumers to third-parties to seek refunds for the money consumers paid to AT&T.

The structure of AT&T’s consumer bills compounded the problem of the unauthorized charges, according to the complaint, by making it very difficult for customers to know that third-party charges were being placed on their bills. On both the first page of printed bills and the summary of bills viewed online, consumers saw only a total amount due and due date with no indication the amount included charges placed on their bill by a third party. The complaint alleges that within online and printed bills, the fees were listed as “AT&T Monthly Subscriptions,” leaving consumers to believe the charges were part of services provided by AT&T.

Under the terms of its settlement with the FTC, AT&T must notify all of its current customers who were billed for unauthorized third-party charges of the settlement and the refund program by text message, e-mail, paper bill insert and notification on an online bill. Former customers may be contacted by the FTC’s refund administrator.

In addition to the refund requirements, AT&T is also required to obtain consumers’ express, informed consent before placing any third-party charges on a consumer’s mobile phone bill. In addition, the company must clearly indicate any third-party charges on the consumers’ bill and provide consumers with the option to block third-party charges from being placed on their bill.

The Commission vote authorizing the staff to file the complaint and approving the proposed stipulated order was 5-0. The FTC filed the complaint and proposed stipulated order in the U.S. District Court for the Northern District of Georgia. The proposed stipulated order is subject to court approval.

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