Amazon.com has quietly introduced a 50 megabyte usage cap on Kindle owners using 3G-equipped models to browse web pages over AT&T’s 3G wireless network. Customers exceeding the limit after July 1 reportedly began receiving this pop-up message on their device:

The Experimental Web Browser is currently only available for some customers outside of the United States and may be limited to 50MB of browsing over 3G per month. This limit does not apply when customers are browsing over Wi-Fi.

The new usage cap does not affect users browsing Amazon.com, Wikipedia, and the Kindle store.

Web browsing on an electronic ink display instinctively has a built-in cap: the limited patience of the user trying to browse websites that were never designed for the Kindle experience.

But some enterprising hackers managed to jailbreak the Kindle device and turn its free 3G connection into a wireless mobile hotspot.

That means Amazon was footing the bill for Kindle owners who have re-purposed the device to provide Internet connectivity to wireless phones, laptops, tablets, and other Wi-Fi enabled devices.

At AT&T’s prices, Amazon decided to pull the plug after 50MB, which is barely enough for a few dozen busy web pages accessed during the month.

AT&T lost 649,000 DSL customers in three months.

AT&T’s broadband customers are taking their business elsewhere as second quarter results show the phone company lost 649,000 DSL customers in the last three months, while only picking up 553,000 new U-verse Internet users to replace those leaving. The result was a net loss of nearly 100,000 broadband customers in a single quarter. The company also only managed to attract 155,000 new U-verse television customers away from satellite or cable operators during the quarter.

AT&T blames the losses on “seasonality” — code language for part-time residents, college students, and other fluctuations that occur as customers come and go. Total broadband connections dropped 0.2% for AT&T, with 16.43 million remaining customers.

Landline customers also continue to depart AT&T in droves. More than one million home phone customers pulled the plug on AT&T this quarter. AT&T has lost nearly 11 percent of their landline customers over the past year.

For those remaining, a combination of rate increases, cost cutting and fierce marketing of bundled packages of services are keeping revenue growing on both the residential and business side.

AT&T is getting closer to announcing a “rural landline solution,” which some analysts predict will be the company’s exit from the rural landline business.

Executives continue to hint the company is reviewing its future in the rural landline business. AT&T lobbyists have shepherded new laws in several states that would allow them to abandon rural landline customers where the company is no longer required to be “the carrier of last resort.”

AT&T U-verse is turning out to be not much of a threat to cable and satellite operators, only achieving a 17.3% penetration rate in areas where the service is available.

The real money for AT&T is being made in the wireless sector, where increasing prices, changes to service packages, and data usage-based billing are all paying off  — revenue for wireless data alone is up 18.8% to $1 billion during the second quarter. AT&T earned $14.3 billion from its wireless business in just the second quarter alone.

At the same time, the company is slashing investments in parts of its network and cutting employees.

Capital expenditures in the second quarter amounted to $4.48 billion, down 15% from the $5.27 billion AT&T spent a year ago. AT&T also cut its workforce by 6.4% since June 2011, with a reported 242,380 total remaining employees.

Despite the company’s talking points, AT&T’s upgrade fee is designed to slow down customers considering upgrading their smartphones.

In other highlights:

• Wall Street analysts are praising AT&T’s stricter upgrade policies and device upgrade fees. In fact, at least one analyst wants to see AT&T raise the fee to $50 for every phone upgrade. The fees discourage customers from upgrading their phones, which dramatically reduces AT&T’s costs. AT&T subsidizes phones for customers. The longer customers hold off from upgrading, the more revenue AT&T keeps for themselves and shareholders. AT&T has made it clear it will continue to “introduce discipline”  in the handset market to enforce “rational pricing,” which means customers will continue to see further reductions in device subsidies and face higher prices when upgrading phones.
• Much of AT&T’s investment will be in its LTE 4G network. AT&T’s spending on wireline services including U-verse is on the decline.
• AT&T admitted its policy of monetizing data usage for profit is well underway: “[We are getting] ourselves set up for revenues that are going to be tied to usage, which will then be tied to our capital requirements and a really profitable situation.”
• AT&T is aggressively pushing customers to upgrade to smartphones so they can earn additional revenue. “Smartphone subscribers now number 43 million and make [up] 62% of our total postpaid base. But smartphones accounted for 77% of postpaid sales during the quarter, showing continuing opportunity for growth. And when you look at our total smartphone base, we’ve added 9 million high-value smartphone customers in just the last 12 months.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ATT 2Q2012 Results.flv[/flv]

AT&T spins its 2nd Quarter results for shareholders in the best possible light. Although revenues are up, the number of customers leaving AT&T for other providers may challenge future growth and earnings. (4 minutes)

Still not listening

Around the beginning of July, Time Warner Cable invited customers facing the imminent arrival of their 5GB-usage capped “Internet Essentials” plan the opportunity to participate in “conversations” with the cable operator on a special website.

As we near the end of the month, despite readers sending a number of comments to Time Warner about the plan, the company has chosen to publish just one, which has nothing to do with the issue:

Ann McGarity
I am very upset at the loss of channel 9. We were without it before when we had Dish for a while and one of the reasons we returned to TWC was to get it back. Now we have to put up with Maine news and will have no idea about important NH issues. This is very disturbing, particularly in this political season. Can anything be done?

Apparently Time Warner isn’t too interested in what customers have to say, even on a website that was supposed to be all about dialogue.

A new forecast from an industry research firm predicts sales of tablets with built-in LTE-4G connectivity will continue to drop because of high prices for wireless data from the nation’s cellular phone companies.

CCS Insight notes (via FierceWireless) that only 48 percent of tablets shipped in 2011 were enabled with built-in cellular capability. The researcher predicts that number will drop to 37 percent by 2016.

“Most users do not regard cellular connectivity in tablets as a must-have, especially given the current price of tablets and mobile data subscriptions,” CCS reports.

Customers simply do not find the $100+ price premium for a cellular-enabled tablet worth the expense, especially when they also face costly data charges to use the service. Most tablet owners prefer to rely on Wi-Fi, often provided free of charge. Among those who acquire a cellular-enabled tablet, nearly half never bother to activate the wireless service from the supported carrier.

“In the future, the share of cellular-enabled tablets will be determined by three factors: the availability and attractiveness of multi-device tariffs from mobile operators; the availability of public Wi-Fi networks; and the difference between the retail prices of cellular and Wi-Fi-only tablets,” CCS found.

Carriers like Verizon and AT&T hope their new “family share” data plans will ease the pain for customers who want to use their tablets on cellular networks, but companies still have to overcome the substantially higher price cell modem-equipped tablets carry and the expensive price tag for data usage, shared or otherwise. Verizon Wireless is not making it any easier. It discontinued selling subsidized tablets to customers this month.

AT&T’s new Mobile Share plan offers virtually identical pricing to Verizon.

AT&T this morning announced its own widely-anticipated pricing shift for its wireless phone customers, largely mimicking Verizon’s “Share Everything” plan and pricing, with minor differences.

AT&T’s Mobile Share plan, available in late August, emphasizes the fact families can now share a single data plan, but will also require customers to pay for unlimited voice and texting services. But unlike Verizon, current AT&T customers grandfathered on other plans can continue to keep their current plan, even after their next subsidized phone upgrade. AT&T also says it is not discontinuing existing individual and family plans.

While Verizon’s plan emphasizes the cost to add various devices on its “Share Everything” plan, AT&T asks customers to select a plan based on anticipated data usage. Customers can add up to 10 devices on an AT&T Mobile Share plan, one of which must be a traditional smartphone.

Like Verizon, AT&T is eliminating the extra-cost tethering option on its new plans. Tethering customers will now use their smartphone data plan allowance.

AT&T and Verizon: The Doublemint Twins of Wireless

AT&T’s pricing is designed to appeal to bigger spenders.

“The larger the data bucket you choose, the less you pay per gigabyte and the less you pay for each smartphone added to the shared plan,” AT&T says in a news release.

Wall Street seems to approve.

“The ‘more you share, the more you save’ concept is one that will resonate well with customers because of the value provided through the Mobile Share data plans themselves and in smartphone connection fees,” said Roger Entner, Founder and Lead Analyst of Recon Analytics. “AT&T also is providing its customers with flexibility and choice by keeping its existing data plans and not requiring customers to move to Mobile Share unless they want to. It’s a win-win for both AT&T and its customers.”

But customers hoping to shop around will find little difference in pricing between Verizon Wireless and AT&T, who will charge nearly the same thing for each of their family share plans.

Verizon charges $40 for each smartphone, $30 for basic/feature phones, mobile broadband modems and wireless-equipped laptops cost $20, and each tablet adds an additional $10.

AT&T will charge a maximum of $45 for each smartphone, $30 for basic/feature phones, wireless modems and wireless-equipped laptops cost $20, and each tablet runs $10.

AT&T gives customers with a large appetite for data a break on the monthly equipment fee for smartphones. Choosing a basic 1GB data plan with AT&T means you will pay $40 for the data and $45 for each smartphone on the account. Upgrade to a 4GB shared usage allowance and AT&T lowers the monthly fee on smartphones to $35. If you select a data plan of 10GB or larger, the smartphone device fee drops to $30 a month for each phone.

The prices for data are similar between the two carriers on lower-end plans (AT&T’s overlimit fee will be $15/GB, the same Verizon charges now):

Customers hanging onto long-grandfathered unlimited data plans tied with budget-priced voice minutes and texting allowances will probably want to take those plans to the grave, especially if they are using moderate amounts of data on each smartphone.

For those already caught in Verizon or AT&T’s usage pricing schemes, want unlimited voice and texting, and depend on the costly tethering add-on may find some savings, at least in the short term. But for average families with two smartphones and a basic phone for grandma, shopping around for a better deal with either Verizon or AT&T is pointless. With Verizon, those three phones with a 1GB data plan will run $160 a month — with AT&T, $160 a month. Upgrading to a 4GB usage allowance on both carriers also means an identical bill: $180 a month.

Cell phone customers of both carriers probably wish “competition” meant more than a race to see which would gouge customers with higher bills first. The other will surely follow, evidenced by today’s developments.