A Verizon Wireless 4G/LTE customer that managed to consume nearly 56GB of data over a two-week period has found he has temporarily lost his 4G privileges during peak usage times on Verizon’s network.

Droid Life reports Verizon’s speed throttle apparently also works on the company’s much-faster 4G network, because the customer found his 4G speeds reduced to dial-up during peak usage periods.  The throttle reduces speeds so much, even browsing web pages becomes a painful experience.  Remarkably, the customer tells Droid Life he still has regular speed access to Verizon’s more congested 3G network, which he now uses when his 4G speeds are reduced.

Verizon Wireless specifically exempts 4G customers from wholesale enforcement of their speed throttle, but the company’s standard Acceptable Use Policy still gives Verizon broad latitude to deal with customers who create an “adverse impact” on their network:

Network disruptions and unfriendly activity: Using the Services for any activity that adversely affects the ability of other people or systems to use either Verizon Wireless Services or other parties’ Internet-based resources. This specifically but without limitation includes excessive consumption of network or system resources whether intentional or unintentional. This also includes “denial of service” (DoS) attacks against another network host or individual user. Interference with or disruption of other network users, network services or network equipment is prohibited.

Such policies are commonplace at every Internet Service Provider, but they are typically enforced only in instances where a neighborhood or region is experiencing especially heavy traffic loads.  That seems to be the case with Droid Life‘s reader, because other customers report they have managed to rack up nearly 120GB in 4G usage over 10 days with no speed reductions.  Verizon reportedly told the throttled customer his speeds were reduced because his ‘excessive downloading’ was an “abuse of the network.”

To run up tens of gigabytes of usage over two weeks usually means the customer is using a tethering application or mobile hotspot app, services for which Verizon charges extra.  We don’t know if this customer is paying for those services or using one of the third-party apps Verizon frowns on.

The selective enforcement of speed throttles may be the result of an overeager Verizon employee subjectively cracking down.  It might also result from the subscriber using services on an especially congested cell site.  We cannot be certain, and Verizon isn’t commenting on the record.  The company officially claims it is standing by the terms of its original plans to throttle the top 5% of 3G users.

With the ongoing crackdowns on what providers deem to be “excessive usage,” it is safe to assume those attempting to use any wireless broadband plan as a home or office broadband replacement is risking the wrath of their providers who consider anything beyond 2-4GB of usage per month on an “unlimited data plan” to be “too much.”

The primary backers of the ABC Plan

Today, Federal Communications Commission Chairman Julius Genachowski is scheduled to deliver a major announcement on reforming the Universal Service Fund (USF) — a federal program designed to subsidize the costs of delivering telecommunications services to rural America.

The reform, long overdue, would transition a significant percentage of USF fees every telephone customer pays towards broadband deployment — a noble endeavor.  For years, Americans have paid more than $5 billion annually to phone companies large and small to maintain rural landline service.  Small co-op phone companies depend on the income to deliver affordable service in places like rural Iowa, Kansas, and Alaska.  But large companies like AT&T and Verizon also collect a significant share (around $800 million annually) to reduce their costs of service in the rural communities they serve.

That’s particularly ironic for AT&T, which time and time again has sought the right to abandon universal rural landline service altogether.

Genachowski’s idea would divert USF funding towards broadband construction projects.  The argument goes that even low speed DSL requires a well-maintained landline network, so phone companies that want to deploy rural broadband will have to spend the money on necessary upgrades to provide just enough service to earn their USF subsidies.  The lower the speed, the lower the cost to upgrade networks and provide the service.  Some may choose wireless technology instead.  Since the telephone companies have fought long and hard to define “broadband” as anything approaching 3-4Mbps, that will likely be the kind of speed rural Americans will receive.

At first glance, USF reform seems like a good idea, but as with everything at the FCC these days, the devil is always in the details.

Dampier: Another day, another self-serving plan from the phone companies that will cost you more.

While headline skimmers are likely to walk away with the idea that the FCC is doing something good for rural broadband, in fact, the Commission may simply end up rubber stamping an industry-written and supported plan that will substantially raise phone bills and divert your money into projects and services the industry was planning to sell you anyway.

Stop the Cap! wrote about the ABC Plan a few weeks ago when we discovered almost all of the support for the phone-company-written proposal comes from the phone companies who back it, as well as various third party organizations that receive substantial financial support from those companies.  It’s a dollar-a-holler astroturf movement in the making, and if the ABC Plan is enacted, you will pay for it.

[Read Universal Service Reform Proposal from Big Telcos Would Rocket Phone Bills Higher and Astroturf and Industry-Backed, Dollar-a-Holler Friends Support Telco’s USF Reform Plan.]

Here is what you probably won’t hear at today’s event.

At the core of the ABC Plan is a proposal to slash the per-minute rates rural phone companies can charge big city phone companies like AT&T and Verizon to connect calls to rural areas.  You win a gold star if you correctly guessed this proposal originated with AT&T and Verizon, who together will save literally billions in call connection costs under their plan.

With a proposal like this, you would assume most rural phone companies are howling in protest.  It turns out some are, especially some of the smallest, family-run and co-op based providers.  But a bunch of phone companies that consider rural America their target area — Frontier, CenturyLink, FairPoint and Windstream, are all on board with AT&T and Verizon.  Why?

Because these phone companies have a way to cover that lost revenue — by jacking up your phone bill’s USF surcharge to as much as $11 a month per line to make up the difference.  In the first year of implementation, your rates could increase up to $4.50 per line (and that fee also extends to cell phones).  Critics have been widely publicizing the increased phone bills guaranteed under the ABC Plan.  In response, advocates for the industry are rushing out the results of a new study released yesterday from the Phoenix Center Chief Economist Dr. George S. Ford that claims the exact opposite.  Dr. Ford claims each customer could pay approximately $14 less per year in access charges if the industry’s ABC Plan is fully implemented.

Genachowski

Who is right?  State regulators suggest rate increases, not decreases, will result.  The “Phoenix Center,” unsurprisingly, has not disclosed who paid for the study, but there is a long record of a close working relationship between that research group and both AT&T and Verizon.

But it gets even worse.

This shell game allows your local phone company to raise rates and blame it on the government, despite the fact those companies will directly benefit from that revenue in many cases.  It’s a real win-win for AT&T and Verizon, who watch their costs plummet while also sticking you with a higher phone bill.

The USF program was designed to provide for the neediest rural phone companies, but under the new industry-written rules being considered by the FCC, just about everyone can get a piece, as long as “everyone” is defined as “the phone company.”  There is a reason this plan does not win the hearts and minds of the cable industry, independent Wireless ISPs, municipalities, or other competing upstarts.  As written, the USF reform plan guarantees virtually all of the financial support stays in the Bell family.  Under the arcane rules of participation, only telephone companies are a natural fit to receive USF money.

Genachowski will likely suggest this plan will provide for rural broadband in areas where it is unavailable today.  He just won’t say what kind of broadband rural America will get.  He can’t, because the industry wrote their own rules in their plan to keep accountability and oversight as far away as possible.

For example, let’s assume you are a frustrated customer of Frontier Communications in West Virginia who lives three blocks away from the nearest neighbor who pays $50 a month for 3Mbps DSL broadband.  You can’t buy the service at any price because Frontier doesn’t offer it.  You have called them a dozen times and they keep promising it’s on the way, but they cannot say when.  You may have even seen them running new cable in the neighborhood.

Frontier has made it clear they intend to wire a significantly greater percentage of the Mountain State than Verizon ever did when it ran things.  Let’s take them at their word for this example.

The telephone companies have helpfully written their own rules for the FCC to adopt.

Frontier’s decision to provide broadband service in West Virginia does not come out of the goodness of their heart.  At a time when landline customers are increasingly disconnecting service, Frontier’s long-term business plan is to keep customers connected by selling packages of phone, broadband, and satellite TV in rural markets.  Investment in DSL broadband deployment has been underway with or without the assistance of the Universal Service Fund because it makes financial sense.  Our customer in West Virginia might disconnect his landline and use a cell phone instead, costing Frontier any potential broadband, TV and telephone service revenue.

Under the ABC Plan, Frontier can be subsidized by ratepayers nationwide to deliver the service they were planning to provide anyway.  And what kind of service?  The same 3Mbps DSL the neighbors have.

If your county government, a cable operator, or wireless competitor decided they could deliver 10-20Mbps broadband for the same $50 a month, could they receive the USF subsidy to build a better network instead?  Under the phone company plan, the answer would be almost certainly no.

Simon Fitch, the consumer advocate of the Federal-State Joint Board on Universal Service, which advises the FCC on universal service matters, says the ABC Plan is a consumer disaster.

“Although a stated goal of the FCC’s reform effort is to refocus universal-service funding to support broadband, the industry’s ABC plan requires no real commitment to make broadband available to unserved and underserved communities,” Fitch writes. “Companies would receive funds to provide broadband with upload and download speeds that are already obsolete. States would be given no real enforcement power.”

Fitch is certain companies like AT&T and Verizon will receive enormous ratepayer-financed subsidies they don’t actually need to provide service.

Back to AT&T.

In several states, AT&T is seeking the right to terminate its universal service obligation altogether, which would allow the same company fiercely backing the ABC Plan to entirely walk away from its landline network.  Why?  Because AT&T sees its future profits in wireless.  Under the ABC Plan, AT&T could build rural cell towers with your money to provide “replacement service” over a wireless network with or without great coverage, and with a 2GB usage cap.

At the press conference, Genachowski could still declare victory because rural America would, in fact, get broadband.  Somehow, the parts about who is actually paying for it, the fact it comes with no speed, coverage, or quality guarantees, and starts with a 2GB usage cap on the wireless side will all be left out.

Fortunately, not everyone is as enamored with the ABC Plan as the groups cashing checks written by AT&T.

In addition to state regulators, Consumers Union, the AARP, Free Press, and the National Association of Consumer Advocates are all opposed to the plan, which delivers all of the benefits to giant phone companies while sticking you with the bill.

There is a better way.  State regulators and consumer groups have their own plans which accomplish the same noble goal of delivering subsidies to broadband providers of all kinds without increasing your telephone bill.  It’s up to the FCC to demonstrate it’s not simply a rubber stamp for the schemes being pushed by AT&T and Verizon.

Apple is set to announce a new iPhone or two early this afternoon, but some in the tech media notice the frenetic excitement of the newest Apple sensation has been tempered, in part because many of the new software and cloud storage features will run into usage caps for some, speed throttles for everyone else.

The imminent arrival of anticipated models iPhone 4S, expected to sell at AT&T and Verizon and iPhone 5, which is rumored to be sold exclusively by Sprint during a short sales window, remains a big deal for all three carriers.  Verizon is reportedly allowing its call center employees to take unlimited overtime in preparation for the anticipated rush of questions and orders.  Sprint, which has 33 million customers on two-year contracts, has made a commitment to sell at least 30.5 million Apple iPhones over four years, if reports by the Wall Street Journal turn out to be accurate.  That’s a lot of phones.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/Sprint Getting iPhone 10-3-11.flv[/flv]

9 to 5 Mac shows off a mock image of what the newest iPhone 5 will probably look like. Pay close attention to the rounded edges and bezel.

Reports from the Wall Street Journal, WDAF-TV in Sprint’s home base of Kansas City, and Bloomberg News discuss the implications of Sprint’s deal with Apple.  (11 minutes)

That’s also an enormous gamble for Sprint, which is guaranteed no real profits from the venture until the year 2014.  If the company does win temporary exclusivity of an iPhone model that includes support for Sprint’s 4G network, WiMax, it will also bring the company an enormous number of new customers.

Among the most important new features of the phone is iOS 5, the latest version of Apple’s mobile operating system.  It comes loaded with new ways to burn through the stingy usage caps AT&T and Verizon Wireless are now providing their customers:

1. Over the air upgrades/activations: Apple’s notoriously huge software updates can be delivered to your wireless device without syncing it on a personal computer.  That means downloading software updates that can easily exceed the 200MB “light usage” plans some carriers sell budget-conscious customers;
2. Notification Center: Puts messages from e-mail, texts, and apps in a more convenient place to access and respond, increasing usage;
3. NewsStand: Leverages newspaper and magazine content in a single app, downloading content pushed to your phone, increasing usage;
4. Safari Sync: The Safari web browser will now sync with other instances of the browser on other devices to keep your reading list updated;
5. iMessage: Send texts, photos, and bandwidth-hogging video to friends and family, potentially driving up usage considerably;

But nothing is expected to spike wireless data usage like Apple’s new iCloud and iTunes Match, both of which manage and sync multimedia content and app purchases between devices “over the cloud.”  Unfortunately, repeated journeys of this type will burn through your usage allowance, and those with significant-sized libraries of photos, music, or videos are at serious risk of blasting past their usage cap.  Even customers who use more than 4-5GB on “unlimited data plans” sold by AT&T and Verizon will face the scourge of the speed throttle, which will reduce your zippy new phone to speeds that resemble dial-up.

AT&T and Verizon Apple iPhone customers are at the highest risk of facing the speed throttle, because Apple is not expected to support either company’s 4G data network.  Verizon only exempts 4G customers from the speed throttle when they use the 4G network.

The one company well-positioned to capitalize on these realities happens to be Sprint, which is keeping its truly unlimited data plan.  If Apple comes through with 4G support for Sprint, customers could not only say goodbye to AT&T and Verizon’s slower 3G speeds, they would also be able to rest easy knowing they won’t experience bill shock or a month in the dial-up speed penalty corner if deemed to be using “too much” service.

Customers of the two biggest carriers need to get familiar with switching to Wi-Fi as often as possible, and avoid using data-intensive features on usage-limited plans.  For Verizon and AT&T, it’s the best of all worlds — another two year contract for a usage-limited data plan that guarantees increased revenue and reduced costs.  For you, it’s an improved phone you can never use to its full potential.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/Little Buzz Over New iPhone 10-4-11.flv[/flv]

The Wall Street Journal reports there isn’t as much buzz over this year’s newest iPhone.  Bloomberg talks about the software changes in the new phone, and WWLP-TV in Springfield notes Verizon’s unions are calling on Americans to boycott the new phone until Verizon workers get a fair contract.  (8 minutes)

Update 2:00pm ET:  The Wall Street Journal reports the Sprint iPhone will not support their 4G network: According to people familiar with the company’s plans, the hotly anticipated device won’t operate on long-term evolution or WiMAX fourth-generation networks. Those wireless networks promise speedier downloading to mobile devices of episodes of television programs, as well as cute baby photos. The people said the device will work on 3G networks, which are broadly in use today and are the standard for the current iPhone 4. AT&T says its HSPA+ network has 4G-like speeds.

Update 4:00pm ET: The announcement event finally concludes with news the iPhone 5 is vaporware for now.  Sprint will end up with the same Apple 4S phone AT&T and Verizon will sell on their respective networks. The San Jose Mercury News was not thrilled with the event:

At a rollout that lacked some of the thrills and surprises of past product releases — and disappointed some in attendance who expected a completely made-over iPhone 5 — Siri stood out as the sexiest new feature on an iPhone that, contrary to speculation, isn’t any thinner or different looking on the outside than its predecessor, the iPhone 4.

“This phone is better than the iPhone 4 in many ways, even though it looks the same,” said Avi Greengart, an analyst with Current Analysis on hand for the unveiling before several hundred reporters, bloggers, analysts and other guests. “Sales will be wildly successful, but Apple fanboys’ expectations probably were not met today.”

The new phone, which will be available Oct. 15 after pre-orders begin Oct. 7, will cost $199 for a 16-gigabyte version, $299 for 32GB and $399 for 64 GB. It had been center-stage in the tech blogosphere for months, as pundits weighed in with what they saw as the most obvious bells and whistles Apple would unleash on their growing fan base. Tuesday, some were surprised by how wrong that had been.

The phone that everyone thought would be thinner than the iPhone 4, pretty much resembled its older sibling. But as analysts had suspected, the new phone is much faster, thanks for the new A5 chip inside it, and it has plenty of consumer-pleasing attributes, most of them inside the case.

A ZCom owned Verizon Wireless store in New Jersey

Verizon Wireless executives forced independent authorized resellers of the company’s prepaid wireless service to buy cheap phones and activate them with their own money, fraudulently boosting the number of so-called “new activations” Verizon reports to its stockholders.

That is the chief allegation in a new lawsuit filed not against Verizon Wireless itself, but its largest franchisee, ZCom.

The NY Post reports Verizon Wireless executives who managed independent New York Verizon retailers masterminded the alleged scam by suggesting Verizon Wireless’ biggest franchisee, ZCom, “fraudulently increase the number of Verizon Wireless new account activations through the fabrication of fraudulent prepaid accounts,” the suit charges.

ZCom, which sub-leases authorized retail locations for Verizon products, was the defendant in the suit because ZCom can make or break independent store owners who sub-lease, staff, and manage the retail stores.

Plaintiff Shelly Bhumitra, who sub-leased several Suffolk County stores from ZCom, told The Post he was pressured to fraudulently activate pre-paid phones when a Verizon Wireless executive came to his store with ZCom’s owner, Iminder “Vikas” Dhall.

“They suggested that with our own money we should buy inexpensive phones [not smartphones],” and then load them with $30 of prepaid minutes, he said in an interview.

Bhumitra said he was then told to “give them away as bonus phones” to customers so that when used they would count as new activations.

The store owner said he was also instructed to load prepaid minutes onto phones that customers were throwing away and activate them with fictitious names. He was told to keep them in a drawer and make calls on them once or twice a month, echoing charges in the suit.

A store owner would ultimately earn $55 from each activation — enough to more than make up for the $30 outlay.

The three Verizon Wireless executives outed for allegedly taking part in the scheme have all recently resigned, according to the lawsuit.

Verizon itself is taking several measures to distance itself from the case.  Not being named as a defendant has allowed the company to avoid commenting, claiming it would be “inappropriate.”  The company also canceled its contract with ZCom, which generates $150 million in revenue for Big Red every year and holds the “master lease” to 130 Verizon Wireless stores, which are all over downstate New York.  For now, those store locations will remain open.

ZCom’s lawyer denied the allegations in the lawsuit.

Quarterly financial reports can make all the difference for shareholders who can make or break a stock based on financial results.  Verizon Wireless has had an increasingly challenging time managing to grow its prepaid division, which industry observers say used to charge more than its competitors for no-contract plans.  By inflating the number of new activations in company results, shareholder value is artificially protected.  Store owners can be convinced to play along because of lucrative new customer signing commissions, and to meet required sales targets.  Poorly performing store manager/owners can find their leases terminated and, in a worst-case scenario, the store location itself can be closed.

Bhumitra claims he was intimidated into going along with the alleged scam.

Verizon Wireless has tried to compete more aggressively in the prepaid category in 2011, with some success.  After creating new monthly packages bundling voice minutes with data and texting at lower pricing, the company added 879,000 new prepaid customers in the first quarter, and 1.3 million in the second, the Post reports.

The Barstow Verizon Superpages

Verizon Communications today announced it was ending more than 100 years of residential telephone directory distribution, instead directing callers to online listings services or a CD-ROM, available free for California customers.  The White Pages will still be available upon request in print form, but the company expects many Californians will skip the request, keeping an estimated 1,900 tons of paper per year out of the California waste stream.

But if Verizon’s intent was to avoid excessive paper use, the effort comes up short.  The company will still automatically distribute the much larger, and much more lucrative Yellow Pages on every customer doorstep whether they ask for it or not.

Verizon asked the state Public Utility Commission to stop automatic distribution of the White Pages last October.  The PUC granted the request on June 9.  The last automatically delivered edition of residential listings will be the 2011-2012 Barstow Regional and High Desert Verizon Superpages in November.

Despite the discontinuation of the automatic delivery, customers will be able to order free residential print and CD-ROM versions of white pages directories by calling 1-800-888-8448 as each local yellow pages directory begins delivery.  In addition, all white pages listings are accessible at www.verizon.com/whitepages.

Telephone customers across the country, regardless of provider, can opt-out of all telephone directory delivery by visiting a website sponsored by the Association of Directory Publishers.