AT&T has been mailing letters to customers caught tethering without the benefit of an add-on plan that if they don’t stop, they will be automatically enrolled in a $45 tethering-data plan this Saturday.  But Stop the Cap! has learned some tethering customers have already been scheduled for enrollment in the pricey plan, even though they abandoned the use of the tethering application that got their account flagged.

The warning letter, dated May 31st, gave Stop the Cap! reader “K” less than 10 days to notify AT&T they are not authorized to make any plan changes without our reader’s explicit consent.  When “K” called AT&T, the company explained the account had been flagged for the ‘tethering violation’ and was scheduled to be enrolled in the $45 DataPro 4GB for Smartphone Tethering data plan this Saturday.

“K” is not the only reader discovering AT&T has plans to change their account this weekend, resulting in dramatically higher bills.

Kai from San Francisco noted he started receiving text warning messages about tethering starting last month, discontinued use of the app that allowed him to avoid paying AT&T’s tethering prices, and still received AT&T’s letter and further text message warnings anyway.  He says it is a good thing he called AT&T.

“I didn’t believe AT&T’s claim that I would not be auto-enrolled in this tether plan if I stopped the tethering, especially after receiving their letter,” Kai writes.  “Sure enough, AT&T had already scheduled my enrollment, which I was able to stop by calling them.”

AT&T is quoting some callers portions of their terms and conditions:

The company has also told some callers complaining about the tethering crackdown that use of third party applications to tether without payment to AT&T already represents a breach of the customer agreement, so waiving an early termination fee may not be an option.

Stop the Cap! recommends consumers who have received text warning messages from AT&T about unauthorized tethering call AT&T and explicitly opt out of any data plan changes scheduled by the company.  This is particularly important for customers grandfathered in AT&T’s unlimited smartphone data plan, because once forfeited (even by AT&T’s own actions), the company has declared you cannot get it back.

See the entire letter from AT&T below the jump.

… Continue Reading

The $49 "cap" plan isn't your maximum monthly fee, it's the MINIMUM monthly fee. The company selling it was fined for misleading advertising.

Banking on the fact most consumers do not understand what a “gigabyte” represents, much less know how many they use per month on usage-capped broadband plans, large telecommunications companies enjoy a growth industry collecting enormous overlimit fees that bear no relation to their actual costs of delivering the service.

The social implications of “usage cap and tier” pricing are enormous, according to Australia’s Communications & Media Authority.  Australia remains one of the most usage-capped countries in the world, and broadband providers have taken full advantage of the situation to run what the ACMA calls a broadband Confusopoly.

As a growing number of mobile broadband customers in the United States and Canada approach the allowance limits on their mobile data plans, Australia’s long experience with Internet Overcharging foreshadows a North American future of widespread bill shock, $1000+ telecom bills, and families torn apart by finger-pointing and traded recriminations over “excessive use” of the Internet.

Not helping matters are providers themselves, some who distort and occasionally openly lie about their plans.  In Australia, Optus was fined $200,000 for advertising a “Max Cap $49” plan that led many to believe their maximum bill would amount to $49.  But not so fast.  Optus turned the meaning of the word “cap,” typically a usage limit, upside down to mean a capped minimum charge.  Indeed, the lowest bill an Optus customer could receive was $49.  Using data services cost extra.  The company also claimed customers could use accompanying call credits “to call anyone,” another fact not in evidence.

Another common marketing misconception is the “unlimited mobile broadband” plan — the one that actually comes with significant limits. In most cases, providers want “unlimited” to mean there are no overlimit fees — they simply throttle the speed of the service down to a dial-up-like experience once a customer exceeds a certain amount of usage.  Companies like Cricket disclose their usage triggers.  Others, like Clearwire, do not — and they are applied arbitrarily based on customer usage profiles and congestion at the transmission tower.  While annoying, at least these plans do not impose overlimit fees which lead to the growing problem of “bill shock.”

Bill Shock

North Americans getting enormous mobile data bills remains rare enough to warrant attention by the TV news.  Often the result of not understanding the implications of international roaming, customers can quickly run up thousands of dollars in mobile bills while touring Europe, cruising, or even just living along the Canadian-American border, where accidental roaming is a frequent problem.

But as Americans only now become acquainted with usage-capped mobile data plans with overlimit fees, bill shock may become much more common.

In Australia, which has had a head start with usage-capped mobile data, an incredible 58 percent of customers exceeded their usage allowances at least once in a calendar year, and this statistic comes from April 2009.  The bill shock problem has now become so pervasive in Australia, in 2010 the office of the Telecom Ombudsman received more than 167,955 consumer complaints about the practice.

In the United States, one in six have already experienced surprise data charges on their bills — that’s 30 million Americans.  The Federal Communications Commission found 84 percent of those overcharged said their cell phone carrier did not contact them when they were about to exceed their allowed service limits. In about one-in-four cases, the overlimit fee was greater than $100.

Sen. Tom Udall (D-N.M.) proposed legislation that would require a customer to consent to overlimit fees before extra charges accrue for voice, data, and text usage.

The Cell Phone Bill Shock Act of 2011 would also require carriers to send free text messages when a customer reaches 80 percent of their plan’s allowance.

“Sending an automatic text or email notification to a person’s phone is a simple, cost-effective solution that should not place a burden on cell phone companies and will go a long way toward reducing the pain of bill shock by customers,” said Udall, a member of the Senate Commerce Committee. “As more and more cell phone companies drop their unlimited data plans, this problem only stands to get worse. I am proud to stand up for cell phone consumers and reintroduce this important legislation.”

In Australia and North America, legislation to warn consumers of impending overlimit fees has been vociferously fought by the telecommunications industry.

Udall

The CTIA-Wireless Association in Washington said such measures were completely unnecessary because consumers can already check their usage by logging into providers’ websites.  Even worse, they claim, bills like Udall’s threaten to destroy innovation and harm the industry by locking a single warning standard into place.  CTIA claims that wouldn’t help consumers.

But Australian regulators, who have years of experience dealing with unregulated carriers’ usage limit schemes say otherwise, noting industry efforts to self-regulate have been spectacular successes for the industry’s bottom line, just as much as they are a failure for consumers who end up footing the bill.

Even worse, unregulated providers taking liberties with marketing claims can have profound social implications when customers find they can’t pay the enormous charges that often result.

The Brotherhood of St. Laurence, a charity, reported one instance of an elderly client who received a $1,200 broadband bill he couldn’t pay outright.  Even as he negotiated a monthly payment plan with the provider, the company shut off his home phone line without warning.

“His telephone service was particularly important because he used a personal alarm call system, which entailed wearing a small electronic device that he could activate in the event of a medical emergency,” noted a report on the incident.

The Australian Competition and Consumer Commission found a long-standing competitive feud by two large mobile providers in Australia — Telecom and Optus — has only brought more instances of marketing excesses that ultimately don’t benefit consumers.  The Commission increasingly finds it lacks the resources to keep up with the slew of questionable advertising.

Some industry critics suspect providers treat ACCC’s fines as simply a cost of doing business, and some like Optus have been rebuked more than once by the regulator for false advertising.

The ACMA says the longer government waits to protect citizens from provider abuses, the more consumers will be financially harmed, especially as data usage grows while usage caps traditionally do not.

Verizon Communications is a study in contrasts.  It runs one of the most advanced wired broadband services in the country that wins rave reviews from consumers and businesses, is on the verge of ending its unlimited use data plans for smartphone customers on the wireless side, and has launched a major “police action” against individuals that are using their smartphones as wireless hotspots without paying an additional $20 a month for the privilege.

Verizon Says No to Data Caps and Consumption Billing

When you run an advanced fiber to the home network like FiOS, the concept of data caps is as silly as charging for each glass of water collected from Niagara Falls.  That’s a point recognized by Joseph Ambeault, director of media and entertainment services for Verizon.  Talking with GigaOm’s Stacey Higginbotham, Verizon continues to insist their network was built to handle both today and tomorrow’s network demands.

“Our network is always engineered for big amounts of data and right now there are no plans [to implement caps], but of course you never want to say never because things could change.”

However, in the same conversation he talked about how the FiOS service has gone from offering a maximum of 622 Mbps shared among 24 homes in the beginning to tests of 10-gigabit-per-second connections in individual homes that Ambeault mentioned. For now, Verizon is testing 10-gigabit-per-second-shared connections and offering up to 150 Mbps home connections. This kind of relish for massive bandwidth is not evident in conversations with folks at AT&T or even those cable firms deploying DOCSIS 3.0. Which is why when Ambeault added, “We don’t want to take the gleam off of FiOS,” as his final say on caps, I tend to believe that Verizon may be the last holdout as other ISPs such as AT&T, Charter and Comcast implement caps.

Verizon Says Yes to Ending Unlimited Smartphone Data Plans

Verizon is among the last holdouts still offering unlimited data plans for smartphone customers.  Priced at $30 a month per phone, these plans have proved very profitable for Verizon in the past, in part because they are mandatory whether you use a little data or a lot.  But now as data consumption grows, Verizon’s profits are not as luxurious as they once were, so the “unlimited plan” must and will go, probably within the next three months.

Verizon has always been hesitant about following AT&T’s lead for wireless data pricing, which delivers a paltry 2GB for $25 a month.  AT&T still sells its legacy unlimited plan, grandfathered for existing customers, for just $4 more per month.  So while AT&T can claim they’ve reduced the price for their data plans, they’ve also introduced a usage allowance.  Those exceeding it will find a much higher bill than the one they would have received under the old unlimited plan.

Verizon will probably echo AT&T’s tiered data plans, perhaps with slightly more generous allowances, but the real excitement came from Verizon CFO Fran Shammo, who told attendees at the Reuters Global Technology Summit it was prepared to finally introduce the much-wanted “family data plan,” which would allow every family member to share data on a single plan.  That’s a potential smartphone breakthrough as customers resistant to paying up to $30 a month per phone for each individual data plan might see their way clear to buying smartphones for everyone in the family if they all shared a single family-use data plan.

“I think it’s safe to assume that at some point you are going to have megaplans and people are going to share that megaplan based on the number of devices within their family. That’s just a logical progression,” Shammo said.

Of course, the devil is in the details, starting with how much the plan will cost and what kind of shared allowance it will offer.

Verizon Says ‘Oh No You Didn’t Tether Your Phone Without Our $20 Add-On’

Phandroid posted this copy of a message Verizon customers are receiving if they are using unauthorized third party tethering apps. (Click to enlarge.)

Earlier today, Verizon Wireless customers using popular third-party tethering apps to share their smartphone’s built-in Wi-Fi Hotspot with other nearby wireless devices began receiving the first of what is expected to be a series of warnings that the jig is up.

Tethering allows anything from a tablet computer to a netbook or laptop to share a Verizon Wireless data connection without having to pay for individual data plans for each device.  Third party software applications bypass Verizon’s own built-in app, the 3G Mobile Hotspot, which involves paying an additional $20 a month for a secondary data plan delivering a 2GB monthly usage allowance.

Just as AT&T hated to see the possibility of lost revenue passing them by, Verizon has begun ferreting out customers using these apps and sending them friendly reminders that tethering requires an official Verizon Wireless add-on plan.  While the third party apps are not yet being blocked, most expect Verizon to gradually crack down on their use if customers persist in using them.  Verizon can also block the sale of the apps from the Android Market and can also insert roadblocks to prevent their use.  Or they can follow AT&T’s lead and threaten (perhaps illegally) to automatically enroll customers caught using tethering apps in their paid tethering plans.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/TVNZ Sam Morgan Interview Digital Future 5-29-11.flv[/flv]

Southern Cross has the monopoly for international fiber connections between New Zealand and the rest of the world.

Three companies — Telecom New Zealand, Verizon, and Optus jointly own the single underseas fiber network that connects New Zealand with the rest of the world.  Unless a second underseas fiber provider provides competition, the monopoly control on international connectivity may guarantee New Zealand an ultra fast fiber broadband network for domestic use, but leave consumers heavily usage-capped and subjected to monopoly price-gouging for international traffic.  Those are the claims of Sam Morgan, a venture capitalist and philanthropist who advises Pacific Fibre, the company that wants to bring that second underseas fiber cable to New Zealand.

American and Canadian providers routinely point to Australia and New Zealand as examples of countries with usage-caps firmly in place, arguing this provides justification to do likewise in North America.  But usage caps in the South Pacific are a product of international capacity shortages — a problem not found in either the United States or Canada, so their claims have no merit.

Morgan explores the implications of a second fiber cable reaching New Zealand — the imminent removal of the hated Internet Overcharging schemes.  The clip comes courtesy of TV New Zealand.  (17 minutes)

David Lazarus in the Los Angeles Times relays southern California consumer horror stories regularly in his twice-weekly column, but this week’s news that Verizon provides a 50% discount for past due balances owed by those who have passed away represents a whole new level in customer service failure.

It seems Betty Howard forgot to include disconnecting her Verizon Internet service as part of putting her affairs in order before passing away after a valiant battle against breast cancer.  Verizon ended up billing Howard’s survivors $110.80 for three months of broadband service she was unable to use… because she was dead.

Lazarus reports Verizon considered that an insufficient excuse to waive the charges:

This was the final insult for Howard’s daughter-in-law, Marilynn Loveless, who’d been battling with the phone giant for months over what she termed broken promises and questionable bills, not to mention an inability to grasp that its former customer was no longer among the living.

“I don’t like bullies,” Loveless told me. “That’s what this seemed to be. They bully you and bully you until they get what they want.”

Verizon cut Howard’s bill to $54.82 but then turned it over to a debt-collection firm. Loveless started getting calls from debt collectors trying to recover the cash from her dead mother-in-law.

As the collection calls started coming, Loveless reached out to Lazarus in hopes of giving the story enough exposure to get Verizon to pay attention.  Lazarus quickly uncovered the fact Howard was being double-billed for Internet service — once as part of a standalone account and a second time as part of a bundle Loveless herself pays for.  Neither account worked for even a single day.

No matter, Verizon would now only pony up a credit to reduce the bill to $42.75, even after understanding a reporter from the Times was witnessing this publicity train wreck in the making.

Shortly thereafter, Verizon finally relented and issued a full credit and a brief statement:

“Mistakes were made,” a Verizon spokesman said. “We apologize.”

Lazarus ponders whether Verizon will learn from any of this:

A good first step would be to empower its service reps — many of whom are overseas — to actually deal with specific issues, rather than follow scripts and hope a problem goes away.

Like I say, there’s a reason many consumers view big companies as heartless and unbending. It’s not because these businesses are misunderstood.

It’s because their actions speak for themselves.