While cell phone companies tell you the only fair way to price wireless data is to charge you for what you use, these same companies are now considering how to reverse that argument and force you to buy more expensive “unlimited voice calling” plans you may not want or need.

The Wall Street Journal reports that AT&T is the most vocal proponent of ditching “tiered minute plans” for voice calls, which let consumers pick cheaper plans with fewer calling minutes. With Americans talking less and less on their cell phones, customers have been downgrading voice plans to less expensive options.

Industry trade group CTIA-The Wireless Association notes the average cell phone call dropped from 3.03 minutes in 2006 to just 1.78 minutes in 2011. Customers who rely entirely on their cell phone and no longer have a landline used to talk an average of 826 minutes per month in 2007.  Last year, that number dropped to 681 minutes, according to CTIA.

Verizon Wireless sells customers 900 minutes for $59.99. But the company does not count minutes used during nights and weekends or when placing/receiving calls to or from other Verizon Wireless phones. If a customer now talking less still pays $60 for a 900 minute plan, they could shave $20 a month off their monthly bill if they kept their daytime calling to 450 minutes a month. Many do. In fact, younger customers use their smartphones for talking even less, with some not even reaching one hour of voice calling a month.

Verizon's cattle call? Will the company herd all of its wireless customers to unlimited voice calling at a higher price?

Given the option to downgrade, customers are jumping at the chance. With voice revenue declining 2-4% in the first quarter, Wall Street has been pressuring carriers to act.

The answer that works for them, although probably not for you, is forcing all customers to purchase an unlimited voice calling plan at contract renewal time. At today’s prices, that could add an extra $30 a month for customers used to paying $40 for a basic 450-minute calling plan.

“The industry’s definitely moving towards unlimited,” AT&T Mobility Chief Executive Ralph de la Vega said in a recent interview. “Especially as more people adopt smartphones that have voice capabilities over the Internet, segmented voice plans will become less relevant.”

Ironically, cell phone companies that have spent the last year or two defending the end of unlimited mobile data as “fair” because customers can “choose exactly the plan they need,” are adopting a completely different strategy to push for unlimited voice calling.

“It’s more important to offer a complete solution to consumers which is really, truly unlimited,” said T-Mobile USA Chief Executive Philipp Humm in a recent interview. “The new world is a completely unlimited, worry-free world.”

Sprint agrees, although its insistence on preserving an unlimited data experience for its customers protects the company from charges of hypocrisy.

Fared Adib, head of product development for Sprint, told the Journal eliminating tiered voice options makes sense because it simplifies choices for customers. “People like the freedom of not having to worry about either data or voice,” he said.

No cell phone company would go on the record as the first to discard tiered voice plans, but AT&T led the way to ending unlimited data, and the company is increasingly vocal about ending tiered voice calling as well.

At current prices, consumers could pay substantially higher cell phone bills as a result.

Both AT&T and Verizon Wireless currently charge $70 a month for unlimited calling. Sprint charges $99.99 for its combined unlimited calling and data plan. T-Mobile charges $60 for unlimited talking and texting. Compelling customers to adopt unlimited calling plans will likely bring smartphone monthly charges well above $100 a month when factoring mandatory data plan add-ons, taxes, surcharges, and fees.

Customers who find this pricing intolerable will likely gravitate to prepaid calling plans, which is where an increasing number of occasional and light cell phone users have already ended up.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WSJ Voice Calling Plan Changes 6-5-12.flv[/flv]

The Wall Street Journal explores why cell phone companies want to compel customers to choose unlimited voice calling plans.  (4 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WRC Washington Bitten by Gigabytes 5-21-12.flv[/flv]

WRC-TV decided to visit with local Washington, D.C. consumers and ask them if they knew what a “gigabyte” was and how many they were using on their cell phone data plan.  Few knew, and even fewer wanted to know, preferring to pay a flat price for worry-free, unlimited data service. Unfortunately, AT&T and Verizon have discontinued their unlimited data plans (Verizon is preparing to throw people off of grandfathered plans when customers upgrade their phones), and T-Mobile throttles customer speeds to near-dial-up after their monthly allowance is reached. Only Sprint sells truly unlimited data, but many customers find Sprint’s data speeds lacking. Consumer reporter Liz Crenshaw visits with Public Knowledge to help educate consumers about what the average 2GB plan really buys.  (3 minutes)

Data provided by OSHA statistics

A new joint investigation by Frontline and ProPublica reveals serious lapses in safety for America’s cell tower workers, a career now considered one of the most hazardous and life-threatening in America.

In the last eight years, 50 climbers have died, with many more injured installing and servicing cell sites for AT&T, Verizon Wireless, Sprint, and T-Mobile. The investigation finds many of these deaths and injuries were preventable, but as America’s profitable cell phone companies outsource jobs to cut-rate subcontractors (and the sub-contractors they often use themselves), safety measures take a back seat to low-ball bidding and profits.

Efforts to hold companies accountable are stymied by the byzantine layers of third party companies hired to do the work, an under-equipped federal safety agency, and difficulty assessing where the responsibility lies when things go wrong.

From ProPublica and Frontline:

From their perch atop the contracting chain, carriers typically set many of the crucial parameters for work on cell sites, including deadlines, pay rates and even technical specifications, down to the exact degree an antenna should be angled. An analysis of cell tower deaths by ProPublica and PBS “Frontline” showed that tight timetables and financial pressure often led workers to take fatal shortcuts or to work under unsafe conditions.

“We’ve had a number of situations where we think that accidents were caused by companies trying to meet deadlines and … cutting corners on safety in order to meet those deadlines,” said Jordan Barab, OSHA’s deputy administrator.

But Barab said it’s difficult for the agency to hold cell companies responsible for safety violations involving subcontractors. In most cases, federal officials have interpreted OSHA regulations to mean that carriers can be held accountable only if they exercised direct control over subcontractors’ work or were aware of specific unsafe conditions.

OSHA has not sanctioned cell carriers for safety violations implicated in any subcontractor deaths on cell sites since 2003, a review of agency records by ProPublica and PBS “Frontline” found.

Most of OSHA’s enforcement efforts have focused on a transient cast of small subcontractors, though they, too, typically have eluded significant penalties. Over the last nine years, the median fine levied for safety violations linked to a fatal tower accident was $3,750, an analysis by ProPublica and PBS “Frontline” showed.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/PBS Frontline Cell Tower Deaths 5-23-12.flv[/flv]

Watch this segment from PBS Frontline exploring ‘Cell Tower Deaths,’ and what can be done to stop them.  (30 minutes)

Hesse

Sprint CEO Dan Hesse believes the march to a consolidated wireless world in the United States will carry on, despite last year’s failed attempt by AT&T to buyout Deutsche Telekom’s T-Mobile USA.

Hesse told an investor conference Sprint may be among the buyers, but would prefer to wait until the company’s network upgrades are finished in 2013. Other players in the market may not wait that long, and Hesse said the company would pull the trigger sooner if a consolidation frenzy appears imminent.

“It’s not an ideal time for our equity because of the big investments we’re making now,” Hesse said.

Sprint already attempted a buyout of regional carrier MetroPCS in February, but the company’s board of directors nixed the deal at the last minute.

Wall Street has been calling for additional industry consolidation to reduce duplication of networks, and the amount of money spent to construct them.  Investors also believe a more consolidated marketplace can lead to higher prices, which will drive revenues… and profits higher.

Hesse believes both the Federal Communications Commission and the Department of Justice are amenable to consolidation deals, as long as the buyers are not AT&T or Verizon Wireless, which together dominate the market.

Hesse rejects contentions the federal government wants at least four national carriers competing for America’s wireless business.

“I honestly don’t believe there’s a magic number of four at all,” Hesse said.

Among the most likely targets for consolidation: Leap Wireless’ Cricket, MetroPCS, U.S. Cellular, C-Spire (formerly Cellular South), Alaska Communications, General Communication (GCI), and regional units of Cellular One.

Your contract with Sprint ends in June, but why wait, beckons the cell phone company, when you can upgrade your phone today (with a new two-year service agreement).

Two years earlier, providers wheeled and dealed upgrade-reluctant customers, particularly those considering their first smartphone, thanks to the bill shock that results when customers see a $30 mandatory data plan added to their monthly bill.  Sprint went one step further, handing 4G-capable customers Clearwire WiMAX — a technology even Russian cell phone companies can’t wait to abandon — and added a $10 premium data surcharge for the privilege.

In Sprint’s favor: their willingness to deal discounts on phone upgrades and their truly unlimited data plans. But while Sprint continues to bank on unlimited data, the bill on cheap phone upgrades may now be coming due.

The American wireless industry is increasingly taking a page from the airlines, adopting irritating fees and surcharges while curtailing the perks and rewards that used to come with customer loyalty and family plans that routinely run into the hundreds of dollars.

Equipment Upgrade Fees

Sprint, Verizon, AT&T, and T-Mobile all have a nasty surprise in store for customers who have not upgraded their smartphones in the last year or so: the equipment upgrade fee.  Sprint and AT&T both charge $36 per phone, Verizon Wireless now charges $30, T-Mobile $18.

Verizon customers are especially peeved because that wireless company used to reward loyal customers with a $50 credit off any new phone at contract renewal time. Today, instead of getting “New Every Two” discounts, Big Red will charge you $30 for every new phone when you renew your contract.

Verizon’s excuse is that the new fee will be used to offer customer “wireless workshops” and “online educational tools,” according to Verizon spokeswoman Brenda Rayney. The company also claims the fees will cover more sophisticated consultations with “company experts” that are trained to provide advice and guidance on today’s sophisticated smartphones. In other words, these fees are supposed to compensate Verizon’s store and kiosk employees.

For people like my cousin, upgrading to a new Sprint phone at contract renewal time is an exercise in frustration. In addition to the $149-199 subsidized equipment price, Sprint now tacks on a $36 upgrade fee (per phone).  What miffs him is that Sprint is treating new customers better than existing ones, willing to waive one-time activation fees (coincidentally the same $36) for new customers, but steadfastly refusing to credit equipment upgrade fees for existing loyal customers.

Sprint will tell you they are not alone charging upgrade fees, and they would be right. All four major national carriers now charge the fees, effectively a penalty when customers decide to upgrade their phones.

Many also find it nearly impossible to get companies like Verizon Wireless to waive the fees, even when some of their best customers ask.

“Verizon Wireless was willing to throw away my 12 year account, earning them more than $500 a month in revenue, over the upgrade fee issue,” reports Stan Dershau. “Our contract expired this month and it was time for new phones, and Verizon absolutely insisted that we pay $150 in upgrade fees for new equipment on our account, even after the $600 they’ll collect from the smartphones we intended to buy.”

Dershau found absolutely nobody willing to relent on Verizon’s upgrade fees. Even supervisors told him the company has a no-waiver policy that is strictly enforced, and they could do little more than offer a token service credit even if Dershau threatened to take his business somewhere else.

“I haven’t decided what to do yet, but I canceled my upgrade plans for now,” he reports.

Dershau was always able to get Verizon to waive earlier fees because of the monthly business he brings them, but those days are over.

“It’s a whole different attitude with them now,” Dershau says. “They just want money.”

AT&T's fine print.

Ben Popken recently wrote about his efforts to avoid Verizon’s $30 upgrade fee, with mixed results.

Verizon’s suggested solution is to sell your old phones back to the company through their trade-in program, using the money to offset the equipment upgrade fee. But unless you own an iPhone, Verizon’s trade-in offers are strictly low-ball, often under $30 on non-Apple phones. That leaves you with a slightly lower upgrade fee and the loss of your old phone, which Verizon may recycle or resell refurbished to someone else.

Popken explains he found one convoluted way around Verizon’s fees:

First, start a new line of service with the new phone you want. Then, port your old phone number to a 3rd party service, like Google Voice (here’s a guide from Lifehacker on doing so). Lastly, cancel the line with the old phone and port the old phone number back onto the new phone, thus keeping the new phone, the old number, and dodging the fee. But there’s a catch. It only works if you wait three months to port the number back. If you do it before then, Verizon’s system treats it like you’re continuing the same service, and they hit you with the $30 upgrade fee. Curses.

Popken forgets, however, that Google itself charges a $20 fee to port cell phone numbers to Google Voice, eliminating 2/3rds of your potential savings.

In fact, outside of purchasing a phone at the full, unsubsidized price from a third party, Verizon’s $30 fee will be visiting your phone bill sooner or later, if you decide to upgrade.

The Phone Subsidy: Slaying North America’s Sacred Cow Wireless Business Model

Consumers who crave the newest smartphones should thank their lucky stars they live in Canada or the United States, where the wireless industry heavily discounts the upfront cost of the phone when customers sign a service contract. But phone companies like AT&T and Verizon are not giving you a gift. In return for fronting a discount of as much as $400, companies set their monthly rates higher to recoup that subsidy over the life of your two-year contract.

That worked fine when cell phone companies only paid a few hundred dollars for basic phones. But today’s most popular smartphones can cost companies $400 each, and that upfront revenue hit has annoyed Wall Street for years. Even worse, while providers hand you a discounted phone, they’ve already paid the asking price to companies like Apple and Samsung, who book that revenue immediately and never have to worry about a customer skipping out on their contract.

Wall Street has been putting pressure on companies to do something about the expensive phone subsidies, and companies are responding. The equipment upgrade fee, increased activation fees, and rising monthly service charges are all a part of a greater plan to discourage customers from upgrading their phones and increase profits.

Wall Street analysts love every part of it, especially if companies can do away with equipment subsidies -and- maintain today’s pricing:

“Optimism has increased that we are witnessing the leading edge of a more disciplined, and more profitable, future,” Craig Moffett, a telecom analyst at Bernstein Research, wrote in a recent research note. The question now, he wrote, is how much carriers can increase their profits thanks to “increased discipline and pricing power.”

The answer could be quite a lot. A marketplace experiment in Spain is being closely watched by wireless phone companies worldwide and could be coming to Canada and the United States before your next two-year contract is up for renewal.

In March, Telefónica SA, Spain’s largest cell phone company, stopped subsidizing smartphones for new customers. Vodafone, which co-owns Verizon Wireless, quickly followed.

As a result, Spanish customers looking for an iPhone will now pay $800 to purchase the phone at full price, or they can sign up for an “installment plan” that will add $45 a month to their cell phone bill for the next 18 months. Both companies say the new policy won’t apply to existing customers, in an effort to discourage them from switching companies.

Telefónica anticipates the changes will slash as least 25% off of their spending. Instead of fronting subsidies to attract new customers, the phone company will increase subsidies for existing customers who agree to stay. Unfortunately for Telefónica, early results are not promising. More than 500,000 customers left the same month the new policy was announced.

A handful of smaller Spanish players see the move by both major companies as a competitive opportunity to win over new customers. Orange, for example, has not stopped offering subsidies and as a result Telefónica has lost potential new customers who signed with Orange instead. The “churn rate” of customers coming and going remains a concern for company executives. But so far, Telefónica considers getting rid of phone subsidies more important than the customers they have forfeit over the new policy.

“We are pretty firm on our strategy of trying to change the paradigm of the sector, […] devoting the bulk of our efforts to our existing customers and, therefore, trying to move away from incentivizing churn of our customers either from us or from the others,” said company CEO Cesareo Alierta Izuel. “We are very firm on this new handset strategy. We need to fight to see if the trend is going to the right direction. And again, we think it is.”

The Wall Street Journal reports Telefónica’s bold plan has caught the attention of Verizon CEO Lowell McAdam, who sees it as a potential profit booster, and McAdam expects Verizon may cautiously follow the Spanish company’s lead.

“We’ll probably offer some things like that, and then we’ll see what the adoption is like,” McAdam said. “You can’t push this on customers before customers are ready for it.”

For now, some customers are not even ready for equipment upgrade fees. My cousin’s upgrade plans remain on hold for now, as are those of the Dershau family.

“I am not going to be browbeaten into paying these unjustified fees,” Dershau said. “Where does it stop?”

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WSJ Dodging Verizon’s New 30 Upgrade Fee 5-9-12.flv[/flv]

Ben Popken talks about trying to avoid Verizon’s $30 equipment upgrade fee.  (3 minutes)