WTTG's "Ask Allison" segment answers a question about unwelcome mandatory data plans

Ever wonder why your cell phone bill seems to keep increasing when you renew your contract?

American wireless phone companies have discovered that subjecting an increasing percentage of customers to required data plans can create a revenue bonanza for companies, whether customers use many data services or not.

Many customers are just learning of new, mandatory data plans now required by all four of the country’s major carriers.  Verizon, AT&T, Sprint, and T-Mobile now compel customers upgrading to new “smartphones” — designed to be used for accessing online services — to also choose an extra add-on plan to cover their data usage.  In some cases, that can add an additional $30 a month to monthly cell phone bills.

Some Verizon customers have learned about this the hard way when they tried to buy a new phone at the end of their two year contracts.  For those longstanding Verizon customers grandfathered on service plans developed five or more years ago, being forced to switch to one of Verizon’s current plans carries quite the sticker shock, especially for those who only occasionally send text messages or use data features.

The insistence by Verizon that Smartphone owners commit to their $29.99 unlimited data usage add-on plan adds considerably to monthly bills.  Many Verizon customers don’t care about increasing sizes of calling allowances — Verizon customers already enjoy free night and weekend calling and free calls to other Verizon Wireless customers (of which there are many — Verizon is now the nation’s largest wireless provider).

Here is a comparison between two near-equivalent Verizon Wireless calling plans, ones from 2005 and the other currently in effect.  There is a dramatic difference in pricing, particularly for those who would find a 250 text message allowance, and data usage counting against your minutes allowance more than sufficient to meet their needs:

AMERICA’S CHOICE II FAMILYSHARE PLAN (2005)

Plan Details

Promotion details

UNLIMITED N&W MINUTES, UNLIMITED VERIZON-TO-VERIZON CUSTOMER CALLING, MOBILE WEB – WEB USAGE COUNTS AGAINST MINUTE ALLOWANCE

Additional features

250 MESSAGE TEXT PLAN, INCLUDING TEXT AND VIDEO ($5 PER MONTH)

NATIONWIDE FAMILY TALK & TEXT SHAREPLAN (2010)

Plan Details

Promotion details

UNLIMITED N&W MINUTES, UNLIMITED VERIZON-TO-VERIZON CUSTOMER CALLING, UNLIMITED TEXT, PICTURE, AND VIDEO MESSAGING

Additional Features

REQUIRED UNLIMITED DATA PLAN (SMARTPHONE) ($29.99 PER MONTH)

Before taxes, fees, and surcharges, Verizon Wireless customers holding onto their legacy FamilyShare plan from 2005 would pay $65.00 per month for two lines sharing 700 minutes of calling, with one line also getting 250 text, picture, or video messages, and a data plan that ate from your minutes allowance, instead of charging you per megabyte.

Today’s plan costs far more — $129.98 — more than double, for most of the same features.  The only difference is that Verizon Wireless doesn’t presently limit your data usage or messaging on their SharePlan.

No wonder consumers are getting sticker shock when upgrading their phones.  The paradigm shift to a “required data plan” forces customers away from older service plans onto new ones.  The result is a much higher monthly bill.

All this and the same companies that have figured out how to effectively double your cell phone bill in five years are also contemplating taking away the “unlimited” part of the required data plan.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WTTG Washington Is It Legal to Require A Phone Data Plan 5-7-10.flv[/flv]

WTTG-TV’s “Ask Allison” feature recently answered a question from a viewer who just discovered the “mandatory data plan” as an unwelcome part of her new phone purchase.  The Washington, D.C. viewer wants to know if that’s legal.  Allison educates viewers in the nation’s capital that isn’t the only trick or trap cell phone companies have in store for you.  Bottom line: maybe you don’t want that new phone after all.  (3 minutes)

Verizon, like AT&T, is seeking to eventually make the printed White Pages telephone directory a thing of the past.

Last Friday, the company appealed to the New York State Public Service Commission to cease automatic delivery of the directory to residents in New York State.  It is the first among 40 phone companies serving New York to do so.

Verizon cites a Gallup study that suggests only 11 percent of households still use the printed White Pages, with the rest going online or using directory assistance to obtain listings.

New York State telecommunications law requires that all phone companies provide a free set of telephone directories to every subscriber in the state.  While phone companies earn millions from Yellow Pages advertising (which is why Verizon is not seeking to stop automatic delivery of those books), they technically lose money on residential listings found in the White Pages.

Verizon claims New York White Pages consume more than 5,000 tons of paper per year and that they are unwanted by many customers.

What the company does not say is that consumers can already request that automatic delivery of telephone directories be stopped.  Few consumers select to opt-out of directory delivery, however.

Verizon, like AT&T, proposes an opt-in system where a copy of the White Pages will only be dropped on New York doorsteps if a subscriber specifically requests one.  It will also be available on a CD-ROM or online.

Verizon is so confident of its forthcoming success with the Commission, it even included pre-written press releases in its filing announcing the imminent demise of the printed listings.

The prospect of the end of the New York White Pages made news in some pages of a different kind — in the New York Times:

In its petition to regulators, Verizon is emphasizing the environmental benefits of the move. Most of the cost savings would be realized by SuperMedia, the publisher of the directories, which once was a division of Verizon but is now a separate company.

Scott W. Klein, the chief executive of SuperMedia, which is based in Dallas, declined to say how many directories his company estimated it would still deliver in New York if distribution was no longer mandatory — or how much it would save. But, he added, “We’re not talking about millions and millions of dollars.”

SuperMedia would continue to print and distribute the real money-maker, the Yellow Pages, which charges businesses that want prominent display, and the business White Pages, which also generate revenue from display advertising, he said. Those directories would include listings for government offices.

Verizon’s proposal reflects technological progress and a new way of thinking in the telecommunications industry, Mr. Klein said.

Not long ago, he said, the industry’s attitude was, “By gosh, we’re going to deliver this book to you whether you want it or not.” Even if the Public Service Commission rejects Verizon’s proposal, New Yorkers who do not want the White Pages can notify the company that they want delivery halted.

“We made a conscious decision to make it easy for people to not get the book,” Mr. Klein said. “We only want to create and provide products that people want to use.”

Of course, the one group that never realizes any savings from an end to telephone book distribution are individual ratepayers.

Verizon has a similar request before telecom regulators in New Jersey.

[flv]http://www.phillipdampier.com/video/WICZ Binghamton No More White Pages in New York 5-10-10.flv[/flv]

WICZ-TV News in Binghamton was among several TV newscasts telling viewers across the state that the White Pages may be an endangered species.  (1 minute)

AT&T has discovered marketing gold.  What do you do when you run one of America’s worst-rated mobile networks — the one that drops your calls, doesn’t provide uniform reception and is often woefully overloaded — and don’t want to spend what it takes to upgrade?  How about developing a “Home Cell Tower” device that helps solve AT&T’s problems, but adds to yours by charging you $150 for the privilege of owning one.

AT&T’s 3G MicroCell shouldn’t need to exist.  If AT&T had reliable coverage, nobody would need to own a device that helps their bottom line far more than yours.

The MicroCell is sold to customers who are stuck walking their AT&T mobile phone over to the nearest window in order to get a signal from AT&T.  The unit, manufactured by Cisco, plugs into your home broadband connection and effectively creates a tiny “home cell tower.”  Suddenly, you now have five bars of reception indoors and can make and receive calls and reliably use the data features of your smartphone.  AT&T effectively moves your service off their own congested, weak-signal mobile network,  and routes everything over your Internet connection instead.

AT&T 3G MicroCell

It’s a win-win for AT&T.  They get to charge you a substantial markup for a device that costs far less than $150 to manufacture and reduces the urgency to commit to needed upgrades to solve congestion problems.

But AT&T’s marketing department has also figured out a way to earn an even bigger bonus along the way.

Customers who do not choose a special added-cost AT&T MicroCell add-on plan (a ludicrous $19.99 per month plus a $1.25 monthly bill-padding-“regulatory recovery fee”) will be shocked to discover AT&T deducts minutes from your calling allowance even when using the MicroCell to provide you with service.  It takes a special kind of nerve to charge customers for making and receiving calls that don’t even use the company’s mobile network.  It’s like AT&T setting up a kiosk in front of the nearest Verizon payphone and charging you $1 for the privilege of paying Verizon 25 cents to make a call.  The $20 a month add-on plan doesn’t even cover data usage, which means AT&T charges you for accessing data and text messages sent and received over your own home broadband connection.

The Associated Press reviewed AT&T’s 3G MicroCell and seemed unimpressed.

Despite marketing claims it will deliver more bars in more places within 5,000 square feet, the AP found the MicroCell only managed a less impressive 40 feet. AT&T admits concrete or brick walls can also reduce coverage. For all practical purposes, don’t expect the device to provide much help out in the yard.

AT&T also claims MicroCell users can initiate calls from the MicroCell and have them “seamlessly” transferred to AT&T’s mobile network when they walk out of range.  The AP found more times than not, AT&T simply dropped the call, forcing the customer to start a new call.  Even worse, customers initiating a call on AT&T’s mobile network will find the MicroCell can’t take over when they arrive home, making the primary reason for getting the device irrelevant the moment you walk in the door and risk dropping the call.

The only good news is that introductory promotions can knock down the upfront price.  Customers committing themselves to the $20 MicroCell add-on calling plan qualify for a $100 rebate when purchasing the MicroCell.  If you also sign up for new AT&T DSL or U-verse service when buying the MicroCell, you can get an additional $50 rebate, effectively making the MicroCell free to own.  AT&T broadband customers will also get $10 off the MicroCell add-on calling plan.

There is nothing inherently wrong with offering customers these devices, known in the industry as femtocells, but companies like AT&T should be providing them at-cost and be grateful when customers use them.  Instead, the company treats these customers as nothing more than another profit center, ripping them off with a ludicrously priced add-on calling plan to avoid watching call allowances erode away, even when calls don’t travel over AT&T’s mobile network.

[flv width=”586″ height=”310″]http://www.phillipdampier.com/video/ATT MicroCell Demo.flv[/flv]

This video covers how AT&T markets their MicroCell device and accompanying add-on plan and also includes a brief tutorial on how the device works.  (4 minutes)

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/AP ATT’s Home Cell Tower Delivers an Added Cost 5-5-10.flv[/flv]

The Associated Press reviewed the AT&T MicroCell and ultimately wondered why customers had to pay for a device to improve service you already pay to receive.  (2 minutes)

[Updated 2:30pm — Coverage area correction made.]

We have the complete video of last week’s Revenue Laws Study Committee meeting which featured the introduction of a draft bill that would dramatically restrict any entrant into North Carolina’s broadband marketplace unless they were a private industry provider.  The de-facto municipal broadband ban legislation comes courtesy of retiring Senator David ‘Fiber is Obsolete’ Hoyle (D-Gaston), who sprung the proposed bill minutes before debate was to begin.  Despite the fact opponents (and consumers) were left unprepared to push back against Hoyle’s anti-consumer legislation, a few legislators and citizens rallied to the cause.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/NC Rev Laws Study Comm 5.5.10-1.mp4[/flv]

North Carolina Revenue Laws Study Committee Meeting (May 5, 2010 — 47 minutes)

A Viewer’s Guide

Senator Daniel G. Clodfelter (D-Mecklenburg) wants both sides to “turn the volume down,” apparently not appreciating the fact a retiring senator pushing through an anti-consumer telecommunications company dream-come-true draft bill would likely provoke a consumer backlash.

Rep. Weiss was the loudest opponent of the proposed legislation to stop municipal broadband

Clodfelter is surprised the debate has become so polarized.  It shouldn’t be, considering this debate is hardly a new one.  Consumer advocates have seen providers use the same road map to enact anti-consumer municipal broadband prohibitions in more than a dozen states.  The same talking points and arguments appear every time this issue comes up.  Consumers are fed up with the corporate protectionism these bills represent, and they become extremely angry when those elected to represent them instead represent the interests of big corporate telecom companies.

Clodfelter’s ultimate vote spoke louder than his pleas for civility — he voted for the draft that guarantees North Carolina consumers will continue to pay high prices for telecommunications services.

Senator David Hoyle’s eyes rarely left his carefully prepared talking points.  Perhaps that’s because he’s not as familiar with the issues as he claims to be.  When a legislator is forced to keep his eyes on his remarks, seeming to stumble through several important points, it suggests unfamiliarity with the issues.  That’s hardly a surprise when legislation is introduced by a telecom-friendly legislator who knows only as much as the accompanying information packet of talking points allows.

We saw that first hand last year with Ty Harrell, who introduced legislation that he so fundamentally didn’t understand, he was later forced to repudiate his own bill.  Watch Hoyle and ask yourself — is this a legislator who understands municipal broadband, or is this a senator carrying water for big telecom?

Hoyle’s testimony contained many interesting comments we’d like to rebut:

“The level playing field aspect is gone.”  He’s got that right.  His proposed draft bill mires municipal providers with terms and conditions no private provider ever endured.  Where is your referendum about whether or not you wanted to pay Time Warner Cable for dozens of channels you never asked for, and don’t want?  Where is your referendum about whether or not you want the incumbent cable and phone companies to continue providing service in your town?  Does the phone company need to hold a referendum to replace phone wiring on the poles?  No?  Then why does Hoyle’s bill demand referendums for municipal system repairs and upgrades?

Rep. Luebke characterized Hoyle's proposal as premature and urged his colleagues to support further study on this issue

Hoyle misrepresented the financing of municipal broadband projects, most of which are not financed at the expense of every local taxpayer.  His carefully crafted suggestion that citizens should vote for such projects is a nice concept, but remember incumbent providers can use unlimited amounts of money they’ve earned from overcharging you for years to bombard residents with misinformation.  Meanwhile, your local government cannot spend a penny to rebut them.  Is that a fair vote or one engineered to provide victory to incumbent providers?

Senator Hoyle suggested unnamed interests have said he has a vendetta against cities — that he doesn’t like cities.  That’s an example of a politician constructing a false straw-man argument to shoot down.  Of course his real “vendetta” is against North Carolina consumers.  With Hoyle not seeking re-election, he doesn’t have to answer to them.

Hoyle brought up the sale of bankrupt Adelphia Cable’s systems to the local governments of Mooresville and Davidson, and then demagogued it with cherry-picked talking points, conflating an old, outdated cable system with construction of state-of-the-art fiber systems as proposed in communities like Salisbury.

Adelphia Cable’s founders and chief corporate executives are sitting in a federal penitentiary.  A court found both John and Timothy Rigas guilty of more than a dozen counts of fraud and conspiracy in 2004, a decision largely upheld in 2008, and both continue to serve 12 and 17 year sentences respectively.

Every Adelphia Cable system put up for sale by the Bankruptcy Court was littered with problems.  In San Diego, inspectors found more than 3,000 improperly grounded cable connections in customer homes.  Company records were in chaos as well, and the result was major headaches for buyer Time Warner Cable.

The North Carolina Adelphia systems were not much different.  The communities had been victimized twice by providers who delivered broken promises, fewer channels at higher prices, and bad service.  When Time Warner Cable proposed to take control of the systems and wouldn’t meet the communities needs, Mooresville and Davidson decided to exercise right of first refusal and purchase the systems themselves.

What they found after closing the deal were the same kinds of problem Time Warner Cable and Comcast were dealing with in other former Adelphia communities.  The difference is the cable companies just raised customers’ rates to defray the costs of cleaning them up.  They also left many towns with cable systems built based on economy more than customer needs.  With limited competition, where could dissatisfied subscribers go?

Mooresville and Davidson both faced:

A significant number of subscribers who stopped paying for service from Adelphia much earlier and faced no consequences or service suspension.  When MI-Connection, the municipal provider, began billing for services rendered, they canceled.  Of course, the sellers never disclosed the fact there were many non-paying customers getting service for free.  When the towns purchased the systems, it assumed subscriber numbers provided represented paying customers.  It turns out many weren’t.

Then there were more surprises:

Sen. Stein suggested legislation that could keep the United States behind in broadband adoption was of concern to him.

• Leamon Brice, Davidson town manager, told the Davidson News, “After the borrowing, but before the closing, Time-Warner, custodian of the system for one year, announced there were many more customers in the system than originally thought. As a result, the towns had to spend $12 million of the $80 million to buy those additional customers. This left less money for the upgrade of the system, so the towns borrowed an additional $12 million to complete the necessary improvements.”
• An economic crisis which is driving down subscriber rates for cable services nationwide.
• The early unavailability of a “triple play bundle” combining telephone, video, and broadband service on one bill.  Bundling is the economic driver of today’s telecommunications industry, and the two communities were late to get in on it.
• The high cost of system upgrades, especially with a system administered by Adelphia, which let most of its cable properties fall into disrepair long before bankruptcy.

Although Hoyle called out both communities for their losses, his numbers don’t add up.  He claimed the systems will lose $6.8 million dollars a year, based on one quarterly loss statement he chose to multiply by four.  In fact, the communities are seeking a one time $6.4 million allocation in the 2010-11 budget year, of which Davidson’s share is $2 million, to make up for the losses associated with all of the drama surrounding the Adelphia system purchase and upgrades.

Hoyle ignored the potential for MI-Connection, now that the upgrades are near completion and the company has introduced an aggressive triple-play package.  Revenues are up nearly 10 percent over the same period last year — an impressive result during an economic crisis.  Most of that growth came from newly launched broadband and telephone services.

The system needs only a few thousand additional customers to erase the losses.  Offering a compelling triple play bundled service package should help them achieve that goal.

Despite the difficulties associated with Adelphia’s legacy cable systems, most of the municipal broadband projects Hoyle seeks to stall are actually 100 percent fiber-based and are designed to service both residential and business customers with service far beyond what the local cable and phone companies are willing to provide.

The committee then heard input from speakers in the audience, with a two minute limit.  Unfortunately, that was too long for at least some committee members who chatted audibly as speakers tried to make their points.

One of those speaking in favor of the proposed draft was Octavia Rainey, once again seated with the lobbyists from Time Warner Cable and AT&T.  She arrived at the microphone with her practiced talking points.

After Rainey’s prior comments on this issue, we reached out to Ms. Rainey to get a better understanding of her point of view and establish a dialogue. When I attempted to speak with Rainey, she first hung up on me only to call back several minutes later to accuse me of being a “white supremacist,” even though I had revealed to her I also serve as a Human Relations Commissioner in Greensboro and fight against racial prejudice daily.

Such over-the-top accusations are not unheard of in this policy debate, particularly with some civil rights groups who attempt to shut down debate with accusations of bias when their public policy positions do not comport with the stated founding principles of that group. Usually, when this card is played, it comes when you’ve successfully called out the empty rhetoric and fact-challenged talking points most of these groups use to defend big telecom. Rainey is just another example of a well-meaning local community activist who has been duped by telecom astroturfing efforts, and AT&T’s financial involvement in causes helpful to her public profile don’t hurt either.

The litmus test for astroturf snowjob detection is simple:

• Will the constituents these individuals and groups claim to represent be well-served with a protected duopoly in broadband that prices service out of their reach?
• Has the group fully and publicly disclosed their financial contributions from telecommunications companies and the amounts given?
• Are there telecom company representatives serving on the board of the group?

Too often, following the money is all that’s required to understand the allegiance some groups and individuals have to adopting the telecom agenda.

At the end of the discussion, a vote was held and the draft bill passed.  There were only two audible “no” votes — from Representatives Jennifer Weiss (D-Wake County) and Paul Luebke (D-Durham).  I was told Senator Josh Stein (D-Wake County) also voted no, stating he did not “shout it out, but I definitely voted against the bill.”

The draft bill now goes to the House and Senate leadership to be assigned to committees.  If it survives the committee process, it moves to the full House and Senate.  I understand that leadership in both the House and Senate do not want anything controversial in the short session to follow, so let’s let them know nothing is more controversial than legislation that guarantees slow and expensive broadband from existing providers, indefinitely.

Make sure you let the North Carolina legislature know that now is not the time to ram through a provider-friendly municipal broadband bill from Senator Hoyle.  Tell Speaker Hackney and President Pro Tempore Basnight the issue requires further study, and the bill should be referred back to appropriate committees for further review:

Speaker of the House Joe Hackney (D-Chatham, Orange, Moore) 919-733-3451 [email protected]

President Pro Tempore Marc Basnight (D-8 Coastal Counties) 919-733-6854 [email protected]

While several residents of Mound, Minnesota try to negotiate to keep their broadband service from Frontier Communications after the company sent them letters threatening to cut off their service, a Rochester, N.Y. television station handed over five minutes of airtime during its morning newscast that was little more than a promotion piece for Frontier’s broadband packages, right down to quoting inaccurate pricing, but no time to mention to viewers the company maintains a 5GB “appropriate usage limit” in its Acceptable Use Policy.

WHAM-TV ran a virtual infomercial (thanks to PreventCAPS for the tip) that was supposed to be about changing service providers, but devolved into a promotional puff piece for Frontier.  Among the services promoted were high bandwidth applications you can ostensibly use with Frontier DSL, despite the company’s continued insistence on defining an acceptable amount of usage at a level so low, you can’t possibly use those applications much and stay within the limits.

Michael Johns, from Frontier’s Network Operations Center misquoted Frontier’s own rates for DSL service, claiming the company sells service for between $18-26 a month, which seemed quite low.  We called Frontier Communications this morning to ask for those prices, telling the representative we saw them on WHAM’s sister CW Network station “CW16.”  The customer service representative in DeLand, Florida didn’t know what we were talking about.

In fact, we were quoted a far higher price for Frontier High-Speed Internet Lite – 768kbps service, with no term commitments starting at $39.99 a month. The representative claimed they could reduce the price, but only with a multi-year term commitment and a service bundle that included phone service. Even with those discounts, the price was still more than $20 a month. Considering Frontier’s term commitments carry a steep early disconnect penalty, there isn’t much value to be found here.

For standard 10Mbps DSL service, $26 a month isn’t going to get you far. In fact, Frontier wants around $45 a month for the service, not including a modem rental fee/equipment charge of $4 per month. Again, there were some discounts available for bundling, but they always carried those pesky term commitments and never brought the price down to what Johns claimed was available.

Michael Johns (left) from Frontier speaks with WHAM reporter Evan Dawson (right)

Also along for the ride was a hard sell for add on products like “anti-spam technology,” hard drive backup, technical support for your computer and Internet service — each carrying an additional monthly price.

Getting Frontier pinned down on prices is next to impossible as the representative kept coming back with new offers when I didn’t agree to “begin the sign up process today.” Apparently there is plenty of room for negotiation when signing up for Frontier service in a market where Time Warner Cable eats their DSL service for breakfast.

But the most fun came last when I asked about Frontier 5GB monthly usage allowance. The representative promised me “we don’t do that in your area so you can ignore that,” and “we’re never going to hold you to that. It’s there so we can control the pirate downloaders.” When I asked why Mound, Minnesota was apparently a hotbed of pirates (who knew?) the representative didn’t understand what I was talking about. When I explained, she put me on hold and came back apparently now acquainted with Frontier’s experimental hard capping in Mound, and asked me how I found out about that.

How did I, indeed.

If such experiments are deemed successful by the company, all of Frontier’s customers will find out about them soon enough.

[flv]http://www.phillipdampier.com/video/WHAM Rochester Changing Your Internet Provider 5-3-10.flv[/flv]

On Monday, WHAM-TV’s sister station “CW16” handed over five minutes of the morning news for an extended-length commercial for Frontier Communications.  Judge for yourself whether this story was about how to change providers or how to change to Frontier DSL.  (5 minutes)