When otherwise intelligent writers get sucked into industry propaganda and advocate against their own readers’ best interests, the blowback can become substantial.

VentureBeat is about to learn that principle firsthand as it bungled a piece about wireless carrier mobile data growth into a confusing article claiming “Net Neutrality” will be used by AT&T and Verizon to “drive Sprint and T-Mobile into the ground.”

What?

Authors Tim Chang and Matt Marshall then journey across the landscape of mobile data networks in the United States, regularly stopping to hammer home the requirement for limits on usage, blaming it mostly on online video.  The factual potholes litter the landscape, unfortunately:

What that means is the country’s major wireless carriers — Verizon, AT&T, Sprint and T-Mobile — are going to have to abort the all-you-can-eat mobile data plans most of us take for granted. It’s just getting too costly for them to give us the service on their networks for the pricing they offer today.

Video 'is the big problem' justifying Internet Overcharging for wireless mobile data, yet one of the nation's largest providers sees no problem providing its own video service on its network.

Actually, none of these carriers provide unlimited all-you-can-eat mobile data plans.  They either explicitly or implicitly (buried in the fine print) limit consumption, usually to 5GB of usage per month.  What happens beyond that does vary by carrier.  The big four impose overlimit penalties at punishing prices.  Some smaller carriers, like Cricket, simply throttle your connection or suspend service on a case-by-case basis.

The reasons for these limits:

• Limited spectrum (the frequencies the provider operates on) may not sustain demand using currently available technology and network design. Could additional spectrum, new technology standards, and more localized delivery of data reduce network congestion?
• Lack of competition.  The two primary carriers, AT&T and Verizon, have essentially provided nearly-equivalent pricing.  Their robust coverage areas make either a natural choice for most users who travel.  Sprint and T-Mobile have larger gaps in coverage.  Spectrum auctions, which is how carriers obtain new blocks of frequencies, raise huge sums for the government, but those costs inevitably do get passed down to customers.
• Psychological: Consumers accustomed to limited wireless broadband from the outset are less likely to complain if it is taken away later.
• Economical: Data packages with low limits produce profitable results, with the future possibility of earning even higher profits from subscribers who routinely exceed them and pay penalties and fees, or for carriers to create and market “additional usage packs.”

Jon Metzler, an industry consultant who has conducted research for the CTIA, says he’s heard estimates that a YouTube video of 3-5 minutes costs $1 for a carrier to handle. At this rate, a carrier would be killed when a typical user streams a mere two videos a day. That day is coming soon, because of the race by the smartphones to offer these cool video services.

Of course Metzler works for the CTIA-The Wireless Association, an industry trade and lobbying group.  They have a vested interest in pushing the “bandwidth flood” theory to preserve carrier pricing models.  The factual basis for this YouTube assertion has been challenged as well, once even by a VentureBeat reader.

Verizon doesn’t see wireless mobile video as the harbinger of doom — it sees it as a feature it can rake profits from, charging $13-25 a month extra for access to VCAST Mobile TV, a Verizon Wireless portal filled with video clips and streams.

It’s always ironic when carriers complain about the impact of services like video, while also heavily marketing their own services that, by their nature, impact their network.  YouTube bad, VCAST good.

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From $199 to much more, Apple & AT&T expect premium prices for iPhone addicts.

High demand for a product often carries a premium price to acquire and use it.  The Apple iPhone, one of those few mobile products that can generate lines extending out the door of a retailer, is one such product.  AT&T Mobility, which still holds an exclusive contract with Apple for iPhones in the United States, has made it clear it will not be making any price changes to its wireless data plans with the introduction of the Apple 3G S on June 19.  Speculation about lower pricing started with AT&T Mobility CEO Ralph de le Vega, who spoke at a conference last month indicating he was amenable to “limited data plans for lower fees.”  That message was soon modified into a more generic ‘price cut’ as the story traveled.

“We’ve been very happy with our pricing,” AT&T spokesman Mark Siegel told Dow Jones Newswires.

AT&T already charges a pretty penny for iPhone users on their network.  Customers signing up for service face a minimum voice plan of 450 minutes for $39.99.  An “unlimited” data plan, required for the iPhone, adds $30 per month.  AT&T claims the average iPhone customer spends about $90 per month for voice and data.  The company also reserves the right to crack down on excessive data usage and limits some applications.

Should de le Vega’s tolerance of limited data plans become reality, plans with more specific usage limits may be forthcoming, at a moderately discounted price.

AT&T has had a bad week in the public relations arena, as current iPhone owners continue to object to the full-price upgrade price they may have to pay if they are in a two year contract.  Thousands have signed a Twitter petition and have filled AT&T’s online support forums with complaints about AT&T “price gouging” loyal customers.

AT&T has enjoyed significant revenue from their exclusive arrangement with Apple.  But iPhone users are dedicated to their combination phone and data device, and try to get their money’s worth.  That has put pressure on AT&T’s network, and despite the company’s revenue from its premium priced plans, has been criticized for not keeping up with that demand.

Verizon Wireless, AT&T’s biggest competitor, trashed AT&T’s proposed upgrades as inadequate:

Verizon Wireless CEO Lowell McAdam characterized AT&T’s promises as “too little too late”. He said that AT&T’s “ceiling for their network will be the floor for our network.” McAdam called AT&T’s announcement on its network upgrade old news—about a year old. He also noted AT&T’s promises to upgrade speed are spin.

Grande Communications serves 148,000 and 147,000 Texas residential and business customers, respectively.

Grande Communications, the San Marcos, Texas company competing against Time Warner Cable and AT&T, will effectively be sold to ABRY Partners, an investment banking firm based in Boston, for an undisclosed sum.

Grande, familiar to Stop the Cap! readers in Austin, ran advertisements back in April and May against Time Warner Cable and AT&T touting their broadband service as being free from Internet Overcharging schemes.  The company has managed to build its fiber optic network to reach approximately 20% of homes in the Austin area, mostly in the northeast and eastern areas, as well as Tarrytown.

Growth had been slow for the “overbuilder” due to financing difficulties.  Investors feared a three-way competition between cable, telephone, and fiber-based Grande, because heavy competition usually results in lower prices and profits, decreasing their potential return.

With ABRY effectively helping refill Grande’s bank accounts to allow them to accelerate the building of their network, Grande hopes to achieve one million homes passed by their network in a few short years.

ABRY has experience in the broadband market with their ownership of Atlantic Broadband, the nation’s 15th largest cable operator serving customers in Florida, Maryland, Delaware, South Carolina and central Pennsylvania.

The deal requires internal review from Grande’s board of directors and external review by the Federal Communications Commission, the Texas Public Utilities Commission, and others.

March ended with yet another public hearing on the seemingly endless series of problems customers in New Hampshire were experiencing from FairPoint.  The Public Utilities Commission sent FairPoint a letter in April laying out benchmarks it expected the company to comply with to address the problems once and for all.

Meanwhile, a FairPoint spokesperson pushed the goal post even further away, now claiming the company’s “plan all along” was to resolve problems by June 30, 2009.  WMUR summed up the problems, and what New Hampshire regulators hoped would finally be the solution.

[flv width=”320″ height=”240″]http://www.phillipdampier.com/video/WMUR Manchester FairPoint Says It’s Working To Improve Performance 04-10-09.flv[/flv]

By May of this year, FairPoint finally started putting a dent in the number of customer complaints filed with Public Utilities regulators in Maine, Vermont, and New Hampshire.  Billing problems were now the biggest challenge for the company.  Customers receiving incorrect bills (or not receiving them at all) started refusing to pay until an accurate bill could be sent.  Many others found they were still being billed for lines disconnected weeks or even months earlier.

Wall Street, and credit rating agencies were following the chaos in New England, and didn’t like what they saw.  Customers were fleeing to the competition in high numbers.  The company cannot pay its debt without paying  customers.  The stock price had been declining as well.  Considering all of those factors, along with FairPoint’s quarterly earnings report, a range of rating services downgraded FairPoint’s credit rating, with one openly speculating FairPoint could face bankruptcy.

WCSH in Portland, Maine picks up the story on May 8th:

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We are still tracking down some nuisance bugs, and have had a report of at least one browser crash when trying to visit our site.

The bug we are currently aware of, particularly for those running Mac OS 10.5 and Safari 4 is:

Error #2044: Unhandled IOErrorEvent:. text=Error #2124: Loaded file is an unknown type.

We *think* that is related to one of the video players (the one that shows a blank screen before starting a video).

If you are experiencing that error, let me know if you can clear it and still access video, or if it completely disrupts your visits here.

Any other error reports should include:

• Your operating system (XP, Vista, OS10, etc.)
• Your browser & version
• If the error occurs only in one browser, some, or all browsers.
• If you are disabling Macromedia Flash (if you know)
• The exact error message you see, if you see one.
• If there is a specific action you take which routinely causes the error problem.

Because some errors might impact your ability to use our contact form, you can e-mail me directly at:  bugswat (-at-) phillipdampier.com or reply as a comment here.

You should replace the (-at-) with @ like you would with any e-mail address ([email protected]).   I use this format to keep those spam e-mail address harvesters from picking up my e-mail address and blitzing me.

When we are confident the bug(s) are gone, this message will disappear.

Thanks for your help.