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Verizon Workers Rally Across Upstate NY for New Contract; Fear of Job/Benefit Cuts Linger

Phillip Dampier March 26, 2012 Consumer News, Verizon, Video 1 Comment

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WBGH Binghamton Verizon Workers Protest 03-22-12.mp4[/flv]

Workers for Verizon Communications continued public protests outside of Verizon facilities in upstate New York as their unions complain the company has still not reached a negotiated contract agreement covering landline employees.  Protestors in Buffalo and Binghamton told local media they fear customer service operations will be outsourced overseas, other jobs will be cut, and benefits will be slashed.  “Verizon is not a hurting company,” noted one protestor in Binghamton.  Verizon counters its landline operations must become more competitive to compete with wireless services, although the largest provider in the country is Verizon Wireless, which has almost no unionized employees.  WBGH in Binghamton reports. (Loud Volume Warning!)  (2 minutes)

 

AT&T’s ‘Data Tsunami’: Upselling Customers for Higher Profits During Spectrum ‘Crisis’

Phillip Dampier March 26, 2012 AT&T, Broadband "Shortage", Data Caps, Editorial & Site News, Online Video, Public Policy & Gov't, Video, Wireless Broadband Comments Off on AT&T’s ‘Data Tsunami’: Upselling Customers for Higher Profits During Spectrum ‘Crisis’

Phillip "The Mayans Never Met AT&T" Dampier

AT&T has used the specter of a nationwide wireless bandwidth crisis to pressure Washington to adopt its agenda for additional mobile spectrum.  But talk of a looming “data tsunami” has done nothing to stop AT&T from heavily marketing their most data-hungry devices — smartphones and tablets to customers.

In fact, the “broadband shortage business” has become enormously profitable for the former Ma Bell.

Switch to a Smartphone

Wireless carriers like AT&T aggressively market smartphones because they drive the highest average monthly revenue earned from customers.  So far, the marketing push has been an unparalleled success.  PricewaterhouseCoopers reported smartphones accounted for 48% of all wireless phone sales in 2011, up from 30% in 2010.  More than half of customers upgrading their old phones chose smartphones to replace them — an enormous increase over just 36% of upgrades in 2010.  Because smartphones are designed for an online experience, most companies mandate customers subscribe to a data plan, often adding $30 or more per phone, per month to a wireless phone bill.

AT&T’s 4th quarter results told the story, and it was all smiles.  AT&T celebrated customer enthusiasm for smartphones and the data they consume with no worries about “data tsunamis” or “bandwidth crises”:

  • In 2011, AT&T’s growth engines — wireless, wireline data and managed services — represented 76 percent of total revenues and grew 7.5 percent versus 2010, led in the fourth quarter by:
    • 10.0 percent growth in wireless revenues
    • 19.4 percent growth in wireless data revenues, up $956 million versus the year-earlier quarter
  • 9.4 million smartphone sales, best-ever quarter and 50 percent more than previous quarterly record and nearly double 3Q11 sales; 82 percent of postpaid sales were smartphones
  • Best-ever quarter for Android and Apple smartphones, including 7.6 million iPhone activations

Double-Digit Growth for Wireless Revenues. Total wireless revenues, which include equipment sales, were up 10.0 percent year over year to $16.7 billion. Wireless service revenues increased 4.0 percent, to $14.3 billion, in the fourth quarter.

Wireless Data Revenues Increase 19.4 Percent. Wireless data revenues — driven by Internet access, access to applications, messaging and related services — increased by $956 million, or 19.4 percent, from the year-earlier quarter to $5.9 billion. AT&T’s postpaid wireless subscribers on monthly data plans increased by 16.4 percent over the past year. The number of subscribers on tiered data plans also continues to increase. About 22 million, or 56 percent, of all smartphone subscribers are on tiered data plans, and about 70 percent have chosen the higher-tier plans.

Wireless Margins Reflect Record Sales. Fourth-quarter wireless margins reflect record-setting smartphone sales and customer upgrade levels. This was offset in part by improved operating efficiencies and further revenue gains from the company’s growing base of high-quality smartphone subscribers.

Forcing Customers to Upgrade… Or Else

AT&T's 2G Exit Strategy Started in 2009 (Courtesy: Blackberry News)

Back in 2009, AT&T decided it was inventory clearance time, released a memo entitled “2G Exit Strategy,” and slashed prices on 2G “feature” or “messaging phones” to attract customers looking for a bargain.  A few years later, the company is now sending letters to some of them strongly recommending they upgrade to a new, potentially more expensive phone.  If they don’t, AT&T writes, “your current, older-model 2G phone might not be able to make or receive calls and you may experience degradation of your wireless service in certain areas.”

AT&T hopes many customers will adopt smartphones, because the plans that accompany them are far more expensive than the 2G “messaging” plans they replace. AT&T wants to repurpose 1900MHz 2G spectrum for other services, but sometimes customers are left holding the bag if they don’t want the designated replacement phone(s) AT&T is willing to provide.

In Grand Valley, Col. last fall, AT&T created lines outside its stores as customers were compelled to upgrade phones and service plans to continue reliable AT&T service:

AT&T isn’t actually discontinuing the 2G network — it is moving 2G service to less-favorable spectrum it owns in order to make room for improved 3G coverage.  That might work fine in areas less expansive and rugged than western Colorado, but in the Grand Valley, it means many customers will find they no longer have data service at all.

The ongoing tower upgrades have also disrupted cell service generally, and when customers arrive at AT&T’s stores to complain, the employees on hand attempt to upsell them more expensive phones to “fix” the problem.

“There is significant pressure on carriers to migrate to the most efficient networks while needing to address the issue of spectrum scarcity,” explains PricewaterhouseCoopers’ Dan Hays. “We are beginning to see carriers shut off legacy networks and force customers to migrate to new technologies.”

Internet Overcharging for Profit Without Raising Company Costs

Courtesy: Broadbast Engineering

AT&T has no worries about data tsunamis and "exafloods" when app makers or consumers are willing to pay more.

With customers seeking to get the most out of expensive wireless data plans, data usage naturally goes up. But so do prices, meaning the “data tsunami” carriers warn about is not bad for their bottom line at all.

In 2011, consumer research group Validas found average data consumption was up 34.7% for all users, from 448.8MB in January to 604.8MB by December.  AT&T responded with a price increase and an allowance boost that will benefit only a tiny minority of customers.  The most popular data plans now cost $5 a month more: $30 for 3 gigabytes, up from $25 for 2GB and $50 for 5GB, up from $45 for 4GB.  But Validas found only 5% of wireless customers use more than 2GB of data per month, with only 2.7% using more than 3GB.

That translates into higher AT&T bills for the 97% of customers who don’t come close to using even 2GB a month.  Although the price hike delivers no tangible benefit to the overwhelming majority of customers, it does deliver an extra $5 a month from their bank account to AT&T’s.

The “Anyone Pays But Us” Model for “Heavy Traffic”

With online video “clogging” the wireless airwaves, companies like AT&T should be interested in offloading as much video to wired or Wi-Fi service. But late last month, the company suggested a way customers could bypass its stringent data caps by allowing content companies to pay for the wireless traffic their customers generate.

“A feature that we’re hoping to have out sometime next year is the equivalent of 800 numbers that would say, if you take this app, this app will come without any network usage,” said John Donovan, who oversees AT&T’s network and technology. “What they’re saying is, why don’t we go create new revenue streams that don’t exist today and find a way to split them … “It’d be like freight included.”

Only wasn’t the railroad already overburdened with traffic, threatened with a nationwide slowdown?  If one is willing to flash enough money, it’s remarkable how quickly the tidal wave of wireless congestion and despair can be pushed back out to sea.  Just don’t tell Washington lawmakers.  This is a crisis of epic proportions after all.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Carriers Facing Data Tsunami 3-21-12.mp4[/flv]

Derek Kerton, principal analyst at Kerton Group, talks about increased demand for data and the impact on wireless carriers. Kerton compares it to today’s gasoline prices. Demand=higher prices.  Wall Street folks like Kerton thinks more spectrum isn’t the total answer.  Smaller cell sites and more Wi-Fi might be.  Otherwise, prepare for bill shock.  (4 minutes)

Angry Frontier Customers Launch Facebook Group: Fix Frontier DSL Now

West Virginia continues to be broadband challenged, with or without the help of Frontier Communications’ DSL service, which continues to be criticized for being woefully “oversold.”

Now some of Frontier’s most frustrated customers have found Facebook, and hope to encourage the company to deliver better speeds through their Fix Frontier DSL Now page.

Customers are especially peeved in areas where they are sold “up to 12Mbps” service, but cannot break 1Mbps during peak usage times when inadequate infrastructure cannot support customer usage demands.  Some are taking their complaints to the West Virginia Public Service Commission:

I am a long-time subscriber to Frontier Communications’ “High-speed Internet Max” DSL service. I live in the Frankford, West Virginia, telephone exchange (304-497-XXXX), which is an area that has always been served by Frontier. We never had Verizon service at my home.

When Frontier installed DSL service in our area, we immediately cancelled our satellite Internet service and signed up. Initially, we had business-class DSL which was very satisfactory. Later, we discontinued our business operation and downgraded to the residential “High-Speed Internet Max” DSL service. That remained quite satisfactory until about a year and a half ago, when service quality deteriorated to the point of being unusable.

During the evening hours, we generally log download speeds of anywhere from 150kbps (0.15MBPS) to 450kbps (0.45MBPS) , with around 300kbps (0.3MBPS) being the norm. This is barely adequate for accessing a static web page, and is totally inadequate for common tasks such as watching a video on YouTube or even streaming music. Speeds do improve, sometimes into the range of 1500kbps (1.5MBPS), in the middle of the night and the afternoons, when we are generally asleep or at work, but are consistently unusable during the evening hours when we are home.

Customers pay around $40 a month for this level of broadband service, and customers calling for assistance are being told to wait:

I have called Frontier’s tech support and opened numerous trouble tickets. Each time, a technician will come out to our house, test the line, pronounce it “perfect” from the house to the switching station, then explain that the problem is lack of bandwidth. Sometimes they say the bottleneck is in Bluefield. Sometimes they say it is between Marlinton and Ashburn, Virginia. In other words, Frontier does not have enough bandwidth available to meet customer needs.

The last time we put in a trouble ticket, the technician didn’t even come to our home. He just called and said he would put the ticket on the stack with all of the other ones, and perhaps the problem would be solved in a couple of years. A couple of years? Yet, I am constantly bombarded with ads asking me to buy Frontier’s high-speed DSL service at rates as low as half of what I pay.

As Stop the Cap! has reported previously, Frontier has acknowledged the problems in West Virginia and promised backbone upgrades to handle the influx of new customers, particularly those adopted from Verizon Communications in 2010 when the company purchased their landline network in the state.  But a schedule of promised upgrades disappeared off Frontier’s website, and according to our readers, continues to be overdue.

The loudest complainers are offered $5 monthly service credits for their troubles, but customers don’t want the money, they want something that actually qualifies as “broadband service.”

Here is how you can tell where your problem might be:

Technical Line Fault Symptoms (these can be corrected by a local technician’s service call to your home)

  1. Consistently low speeds that do not vary much with time of day or on weekends;
  2. Weather-related service interruptions or slowdowns – poor quality cables, fittings, and other problems are often most visible during the wet spring months;
  3. Loud hum or static on your voice line when making or receiving calls;
  4. Hearing conversations from other customers on your phone line;

Oversold Broadband (these problems require Frontier to regionally address problems that affect a much larger group of customers)

  1. Dramatically reduced speeds during evenings and weekends that consistently speed up later at night or during the workday;
  2. Similar speed-related issues affecting friends and neighbors in the same neighborhood or community;
  3. Pages that do not load completely, time out, or require refreshing to load properly;
  4. “Tracert” reports that indicate certain upstream connections Frontier uses to connect to its national network are timing out or require multiple attempts to get through.

Public Knowledge Wants Data Cap Investigation, But FCC Chairman “Open to New Billing Models”

As consumers continue to blow through their $30 2-3GB usage capped 4G/LTE wireless tablet plans offered by Verizon Wireless and AT&T, Public Knowledge is repeating calls for the Federal Communications Commission to launch a formal investigation into data caps.

“It’s a ridiculous situation that the carriers sell millions of these devices specifically designed to view video on one hand, while they restrict the usage of their networks for video on the other,” said Gigi B. Sohn, president and CEO of the consumer group.

Public Knowledge is specifically calling out wireless phone companies because they stand to make millions as customers rack up usage charges when using 4G-equipped tablets with the carriers’ usage-limited wireless networks.

“It is simply inexcusable that the Federal Communications Commission (FCC) has not even seen fit to ask wireless and landline carriers to explain why those caps are necessary, how they are set and how consumers are affected by them,” Sohn added. “If the Commission is truly interested in consumer protection, it will ask the crucial questions and come up with some answers before consumers start getting hit with ever-increasing bills just for using the devices they bought in good faith.”

Sohn

Although the majority of Apple iPads sold in North America only support Wi-Fi, 4G-equipped models have proven addictive, with some customers obliterating their usage allowances with AT&T and Verizon after just a few hours of use.

Wireless carriers largely blame online video for the heavy usage.

“Streaming video consumes the most data of all possible activities and is often the reason customers are among the top 5% of heaviest users,” AT&T notes on its website.

The Federal Communications Commission’s apparent lack of interest in investigating data caps may not be that surprising, however.

In releasing the Commission’s own proposed Net Neutrality rules in late 2010, FCC Chairman Julius Genachowski made it clear he was open to new billing models that charge by how much data a user consumes.  With a green light for Internet Overcharging, carriers responded with usage limits and usage-based pricing, raising customer bills in the process.

New Zippy Fast 4G iPad Burns Through AT&T/Verizon Usage Allowances in Hours

The new 4G LTE-equipped Apple iPad you picked up late last week may be burning a hole in your wallet more than you think.  Across the country, consumers are reporting shock and surprise when they discover the new, faster mobile broadband-equipped tablet is capable of blowing through AT&T and Verizon Wireless’ monthly usage caps in a matter of hours.

The culprits: online video and giant-sized app downloads.

Online video on a usage-limited mobile broadband plan simply does not last long on Apple’s newest sensation.  A Wall Street Journal article found one new iPad owner discouraged after a two hour basketball game completely obliterated his 3GB usage allowance provided by AT&T.  With $10/GB overlimit fees just around the corner, AT&T is set to earn enormous data fees from customers who use their iPads to stream video.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WSJ New Apple iPad Eats Up Monthly Data Plans 3-21-12.flv[/flv]

The Wall Street Journal reports the newest iPad has been out for less than a week and buyers are already burning through their monthly data allowances on usage capped 4G mobile plans.  (3 minutes)

USA Today tech columnist Edward Baig also blew through his allowance in less than one day:

Less than 24 hours after purchasing the Verizon Wireless version of the iPad + 4G — and choosing a $30, 2GB monthly data plan from Verizon — I was shocked by the notification on my iPad’s screen: “There is no data remaining on your current plan.”

My remaining options for the month included changing to a $50 5GB data plan or an $80 10GB plan. (AT&T offers a 250MB plan for $14.99; 3GB for $30; and 5GB for $50.)

[…] In my case, I wasn’t watching video. What nailed me, I think, is that I was wirelessly downloading a number of the apps that I had already purchased for my older iPad onto the latest model. Those apps were made available through Apple’s iCloud.

To help avoid just this situation, the new iPad has a 50MB per app download limit on 4G. Anything over that, and you’re directed to Wi-Fi. (The over-the-air download limit on 3G-capable iPads was 20MB.) But that’s a per-app limit, and all those smaller-sized apps I was moving to the new iPad collectively added up.

Storing anything on Apple’s iCloud service or other backup storage sites like Dropbox can prove costly when relying on 4G service from AT&T and Verizon.  That’s on top of Apple’s premium price for 4G-equipped iPads, which start at $629 (comparable Wi-Fi only models are priced at $499 and above).  As a result, consumers are shutting off the wireless mobile feature they paid $130 extra to receive.

“All the advantages of the iPad device are completely neutralized by [AT&T’s] two gigabyte data limit,” Steve Wells told the Journal.

Some customers are upgrading their mobile data plans to 5GB for $50 a month, offered by both AT&T and Verizon.  Others are learning to stick to Wi-Fi.  According to a study conducted by the consulting firm Chetan Sharma, nearly 90% of tablets bought in the United States are Wi-Fi only models.  The added cost for mobile-equipped tablets and the expensive data plans that accompany them are largely responsible.

Consumer Advice:

  1. You can still leverage 4G mobile broadband speeds on a cheaper Wi-Fi-only equipped iPad if your smartphone supports the “mobile hotspot” feature. When activated, your phone becomes a Wi-Fi hotspot your iPad can connect to for wireless data. If you have an unlimited mobile hotspot plan from Verizon Wireless (now difficult to obtain unless you are grandfathered on an unlimited data plan), you are not subject to Verizon’s usage limits for mobile devices.
  2. Rely as much as possible on Wi-Fi, especially for file downloads or streamed content. Since the iPad can seamlessly switch between Wi-Fi and expensive mobile data service, protect yourself by shutting off Cellular Data within the settings menu when you don’t absolutely need to use it.
  3. Turn off LTE service when not needed. 4G consumes battery life faster and its speeds encourage the kind of increased usage that can exhaust your allowance.
  4. Monitor how much data you’ve used from the settings menu. Web browsing and e-mail will not consume a lot.  Online video and giant app downloads will.

[Thanks to our regular readers Scott and Earl for sending in several stories reporting on this.]

Apple iPad in the News:

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Brown Says He Wouldnt Ditch iPad 2 for New Version 3-16-12.mp4[/flv]

Joe Brown, editor-in-chief at Gizmodo.com, talks about Apple Inc.’s new iPad, the outlook for Amazon.com Inc.’s Kindle Fire and the tablet market. Brown speaks with Jon Erlichman on Bloomberg Television’s “Bloomberg West.” (6 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WNYW New York Record Breaking Sales for iPad 3-19-12.mp4[/flv]

Shelly Palmer talks about the record-breaking sales numbers of the new Apple iPad. He discusses what is great and not so great about the new tablet on New York’s WNYW-TV.  (4 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Reynolds Sees No Danger Despite New IPad’s Higher Heat 3-20-12.mp4[/flv]

Paul Reynolds, electronics editor for Consumer Reports, talks about the magazine’s temperature test of Apple Inc.’s new iPad. The newest iPad runs “significantly hotter” than the earlier model when conducting processor-intensive tasks such as playing graphics-heavy games, Consumer Reports said on its website.  (9 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WFXT Boston New Ipad Is it Worth it 3-22-12.flv[/flv]

It’s the hottest item in the tech world – literally. WFXT in Boston also takes a look at how other tablet manufacturers are doing in competition with Apple.  (4 minutes)

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