Verizon Wireless has a problem with customers who look for the cheapest possible plans for their most capable phones.  Those days are over, as the company introduces ‘mandatory’ data plans for customers using what they define as “enhanced multimedia phones.”

Going forward, phones that meet these four qualifications will be defined as such:

Enhanced Multimedia Phone

1. “Enhanced” HTML Browser
2. REV A
3. Launched on of after September 8, 2009
4. QWERTY keyboard

The first phone to achieve this distinction is the Samsung Rogue, due for release on September 9th.

Customers who try to purchase this, or other phones that “qualify” for this status will be required to choose either a service plan that already bundles “unlimited data” (defined as 5GB per month), or choose from one of these mandatory add-on plans:

A-la-carte data – No usage allowance — $1.99/megabyte
25 megabytes per month — $9.99/month
75 megabytes per month — $19.99/month

The one option not available to customers is a block on all data services, to prevent any billing at any of these prices.

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Verizon Wireless' Data Pricing "Refresh" (Courtesy: Boy Genius Report)

What will also no longer be an option is the $15 VCAST Vpak add-on, providing streaming video and includes unlimited data.  Customers signing up for VCAST Vpak before September 8th will be grandfathered in and be able to keep this add-on.  After September 8th, customers will find a $10 VCAST Video on Demand package on offer instead.  It provides unlimited video access, but no data allowance.  Customers will have to buy one of the add-on plans mentioned above.

Verizon Wireless’ internal marketing slides, leaked to The Boy Genius Report, speak to Verizon’s motivation for making these changes — money.  One slide notes that “over 60% of new activations would require a data plan next year” if the customer wanted access to both data and video on their new phone.  Additionally, the change “alleviates HTML capable handset subsidy pressures,” which essentially means they will be able to sell a more advances handset for less money, knowing they’ll make up the difference with a mandatory data plan charged over the life of a two year contract.

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Marketing Slide Shows Verizon Pushing Customers to Unlimited Data Option as a Better Value

Verizon defends the changes by noting prior to the mandatory data plans, customers who used their browser-capable phones had to either pay the $1.99/megabyte a-la-carte rate, choose a premium unlimited data plan, or get VCAST Vpak.  The company feels the 25 and 75 megabyte options may work for customers with light usage, but enough that would bring their data usage over five megabytes per month ($10 on the a-la-carte option).

Realistically, this is another example of a data provider providing consumption billing options at ever-greater pricing.  With the loss of the VCAST Vpak option, consumers are now pushed into more expensive options, and will likely be heavily marketed bundled services that include data, just to avoid the pricey mandatory 25/75 megabyte add-ons.

Customers should anticipate marketing of bundled plans and little, if any, mention of the “a-la-carte” option that does not add a monthly fee to the customer’s bill.  Indeed, the slides obtained from BGR don’t show the a-la-carte option at all on the “Choosing the best plan” slide.  Instead, it pushes customers to the unlimited data option “for just one penny more” for customers choosing the popular second level Verizon Wireless Select plan (with the data plan add-on), which includes 900 talk minutes.

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Verizon Select's Popular 900 Minute Option, Before the $9.99+ data add-on becomes effective.

Some Verizon Wireless customers relive better days, as they remain grandfathered on truly unlimited data plans chosen before the era of usage caps.  It’s just additional evidence that when usage capped broadband hits the scene, it’s only a matter of time before prices increase, and the usage cap allowances decrease.

Opponents of Net Neutrality regularly dismiss concerns about providers blocking, interfering with, or rejecting content as little more than scare-mongering.  Even in the case of competitors, they assure us, no provider would ever consider getting between the customer and the services they choose to use.  Therefore, we don’t need Net Neutrality provisions enacted into law.

Wouldn’t you know, Cablevision-owned Newsday, a newspaper on Long Island, just unknowingly illustrated what happens when a company puts its own competitive and ownership interests ahead of not only the customer, but also newspaper common sense.

As any newspaper reader knows, the local cable and phone companies are not shy about advertising their products.  For years, Verizon has been spending several hundred thousand dollars a year to run full page ads touting its FiOS service on Long Island.  Such regular advertisers are hard to find these days in the ailing newspaper industry.  Last year, Newsday itself was put up for sale, acquired by Cablevision for $650 million dollars.

Now that the local cable company owns Newsday, they’ve decided to reject advertising from Verizon for its FiOS service. Verizon is now Cablevision’s biggest competitor, providing fiber optic service for television, broadband, and telephone service across Long Island.

The New York Times reports that Newsday has basically told Verizon “don’t call us, we’ll call you” when the phone company inquired about advertising space.

Newsday won’t comment about the reasons why Verizon’s ads were rejected, other than issuing a generic statement:

“We do not comment on specific ads except to say that Newsday, like every other media company, including The New York Times, accepts or rejects advertising at its own discretion,” said Deidra Parrish Williams, a Newsday spokeswoman.

Eric Rabe, a senior vice president of Verizon, told the Times that was fine with him, noting that’s money from Verizon’s pockets not going to feed Cablevision’s pervasive presence across Long Island.

The Dolan family, which runs Cablevision, dominates Long Island, running the cable system, a popular news channel – News 12, and is still the primary place consumers go to acquire broadband service.  Now they also own the biggest newspaper on Long Island as well.

This hasn’t been the first instance that Cablevision-owned Newsday has gotten embroiled in ethical controversy.  The Times notes:

In January, the top three editors at Newsday did not report for work for a few days amid reports that they had been fired or had resigned in a dispute with Cablevision over the paper’s coverage of the New York Knicks basketball team, which is also owned by the company. The editors returned to duty, and neither they nor the company offered a full explanation of what had happened.

Newsday also recently rejected advertising from the Tennis Channel, which is upset with Cablevision because it will not carry the channel.  The Tennis Channel was rebuffed by Newsday when it tried to buy ads inviting viewers to find the network on Verizon FiOS or satellite.

Kelly McBride, the ethics group leader at the journalism foundation Poynter Institute, was troubled by Newsday‘s antics.

“Newspapers accept ads at their own discretion, but they generally set the bar pretty high for rejecting advertising, because they don’t want to be seen as denying access to free speech,” she said. She added that appearing to deny an ad for competitive business reasons, rejecting an ad that is not obviously offensive or failing to explain the rejection, could undermine a paper’s credibility.

Could a company that considers it has the discretion to reject competitors’ access to its properties also extend that notion to its broadband service?  If a competing video provider used broadband to deliver access to its channel lineup, would a competitive threat like that be welcome on Cablevision’s Optimum Online?  How about criticisms of the company or its assets?

Newsday has chosen loyalty to its owner over lucrative advertising revenue to help sustain the paper.  That has disturbing implications for the broadband world as well.

Enacting Net Neutrality protections into law guarantees a company never finds itself in a quandary over where loyalties lie.  These protections guarantee that providers do not hamper, block, or interfere with the online services customers want to utilize.  No “competitive reasons” need ever be used as an excuse to block service from consumers.

Cablevision has not engaged in any online bad behavior to date, but why wait around to find out what the future holds?

Photo by K. Ciappa for GPTMC

The city of Philadelphia will witness a three-way battle for your broadband dollar in the coming months as three competitors race to upgrade their networks to deliver the kind of “blazing fast speeds” only dreamed about in much of the rest of the country.

Comcast, the dominant cable provider in Philadelphia, today announced 50Mbps broadband service for greater Philadelphia residents for $99 a month.  The new, faster speeds are available because Comcast’s Freedom Region has been upgraded to the DOCSIS 3 standard.  Comcast’s Freedom Region includes metro Philadelphia and the counties of Bucks, Chester, Delaware, and Montgomery, as well as northern Delaware and southern New Jersey.

Comcast also doubled the speeds of many of its broadband customers today.  Here’s a roundup of the affected tiers:

Performance — 12Mbps/2Mbps — $42.95/month
Performance Plus — 16Mbps/2Mbps — $52.95/month (no change of upload speed from previous tier)
Ultra — 22Mbps/5Mbps — $62.95/month
Extreme 50 — 50Mbps/10Mbps — $99/month

*DOCSIS 3 modem upgrade required.

Meanwhile, cable overbuilder RCN, which serves parts of Philadelphia and the Lehigh Valley to the west announced it was aggressively moving to upgrade its own network to DOCSIS 3, and is taking the dramatic step of dumping all of its analog channels from the lineup, switching to all-digital cable, starting in Allentown.  RCN has already confirmed it will offer up to 50Mbps service in upgraded areas, but has the capacity to expand to 100Mbps service if needed.  RCN had been planning to launch upgraded DOCSIS 3 service starting in New York and Boston, but market conditions in Philadelphia will make it necessary to expand there as well.

The newest player in town is Verizon, whose fiber to the home FiOS service is capable of the fastest download and upload speeds in the marketplace.  Verizon has offered packages with equal download and upload speeds (20Mbps/20Mbps being the most common) in the past, but is capable of achieving even faster speeds.  It currently provides 50Mbps/20Mbps service in many areas.

“We have a lot of work ahead of us. We will wire the entire city with the nation’s most advanced fiber-optic network, starting with Chestnut Hill, and we expect the first customers to have FiOS services by later this year,” Verizon spokesman Eric Rabe wrote in a blog post. “Other neighborhoods where we will begin building soon are Brewerytown, East and West Mount Airy, South Philadelphia, and the Kensington sections of the city.”

Verizon expects the entire city to be FiOS-ready by 2016, reaching about 660,000 houses and apartment buildings. It is already available in 182 communities surrounding the city.

Preston County, WV

Verizon issued a press release this morning celebrating the availability of DSL service to nearly 200 new lines in Albright, West Virginia.  They even pinpointed the service expansion to “areas along Coal Lick Road near the intersection of Route 22 and 26.”

Satellite image showing the sparsely populated Coal Lick Road/Rt. 26 Intersection (click to enlarge)

While that presumably makes residents on Coal Lick Road happy, vast areas of West Virginia remain unserved by DSL or any other broadband service option, except for prohibitively expensive satellite Internet.  Preston County has 30,000 residents spread 0ut over 651 square miles, and is typical of many sparsely populated counties in West Virginia.  The nearest large city is Pittsburgh, Pennsylvania.

Verizon has stopped referring to its broadband solution for copper wire telephone networks as “DSL,” now marketing it as “Verizon High Speed Internet” instead.  Speed is in the eye of the customer, however.  Like most rural areas with Verizon DSL, the entry level tier offers speeds only up to 1Mbps downstream and 384kbps for the upstream.  Customers willing to pay more can select the “premium” service offering up to 3Mbps downstream and 768kbps upstream.  In larger towns and smaller cities, service up to 7.1Mbps may be available.

“Verizon is enabling more residents and businesses across West Virginia to make the high-speed connections that are important to them,” said B. Keith Fulton, president of Verizon West Virginia.  “Verizon’s investment in the Albright area means that more customers have access to affordable High Speed Internet service, backed by the reliability and security of Verizon’s network.”

Verizon is also demonstrating its commitment to West Virginia by leaving the state, intending to sell off its telephone service to Frontier Communications, a deal still pending regulatory approval.

For West Virginia, broadband expansion to just a few hundred homes, warranting a press release, demonstrates the incremental, slow progress of broadband expansion outside of urban America.

Last November, residents in Morgan County, West Virginia became so exasperated with Verizon’s unwillingness to provide high speed DSL service in this rural region of the state, residents took to the streets holding signs proclaiming “Verizon neglects rural West Virginia” and “Honk for Broadband Internet.” A website called Abandoned By Verizon was launched to highlight the problem.

The problem? Verizon is spending its time, attention, and money on rewiring America’s larger cities with advanced fiber optic networks while selling off their rural customers to independent telephone companies.

Last year, Jennifer Carpenter-Peak and her husband Bob organized a public protest after being strung along by Verizon for more than three years for DSL broadband service. Each time they inquired about availability, they were told it was coming sometime later. Last fall, they were told to wait until sometime this year.

Of course, if the Peak family and their neighbors wanted service any quicker, they could always pony up the $10,000-100,000 the company wanted to wire their neighborhood, or opt for a slow T-1 commercial service line for around $500 a month.

Bob Peak told The Morgan Messenger it has been impossible to e-mail his photos and graphic designs from home. He takes his laptop and drives to town or to Cacapon State Park to send files.

“It’s become increasingly difficult to do business because all of my clients and vendors expect it,” Peak said of high-speed internet.

The Carpenter-Peak family also relied on some map data produced by Connected Nation’s ‘Connect West Virginia’ which broad-brushed Morgan County in April 2008 with lots of broadband service in the western and northern parts of the county. Of course, such service is not consistently available in all of the areas ‘Connect West Virginia’ claims, which is another reason why groups like this, well-connected with telecommunications industry players, should not be drawing maps for anyone.

One didn’t need a map to find area residents who agreed with the Peak family’s predicament:

Jim Hoyt said Frontier Communications had made a big effort to provide DSL to its telephone customers in the western end of the county. He wondered why the U.S. 522 Business Park didn’t have DSL.

Angela Petry said a lot of people are working from home and have a need for high-speed internet. It will keep dollars in the county, she said.

Bibi Hahn said one family in their subdivision would spend more time here if they had DSL.

“We need it. We need leadership to get it. We need commissioners and the governor demanding it,” Hahn said.

Getting high-speed broadband internet access throughout the county is the highest priority, said County Administrator Bill Clark.

Broadband was the top issue at the county’s Economic Development Authority summit and is of great importance locally, Clark said.

Clark has been working with all county providers to try and make headway, but it’s just not happening as fast as everyone would like it to, he said.

“It takes infrastructure,” Clark said.

Verizon has expanded its internet presence in the county and Frontier has DSL in some fairly isolated places, he said.

It will take people like last week’s protestors as well as petitions and surveys to get high-speed internet to more county areas, he said.

A new telecommunications committee is also trying to get a handle on the problem, Clark said.

What the Peak family probably didn’t realize is that Verizon was hard at work on a plan of a different kind:  to throw the state of West Virginia, and the Peak family themselves, under the proverbial bus by selling off their operations and getting out of the Mountain State. That’s because Verizon doesn’t consider West Virginia worth the effort to rewire with the advanced fiber network it deploys in other larger states, so why spend millions of dollars when they can let the company that buys those assets deal with it?

On July 2nd, Verizon announced it was going to offer DSL service to another 1,800 lines in Morgan County, expecting to reach parts of the following areas: Route 522, near the Morgan County Business Park; Route 9 East in the River Road and Clone Run Road areas; the Johnsons Mill Road area that includes parts of Highland Ridge, Duckwall, Spriggs and Rupenthal roads; Great Cacapon, including the Maidstone and Cacapon River Meadows communities; Spruce Pine Hollow area, including Chestnut Grove and Spruce Pine Hollow communities, plus parts of Burnt Mill, Potter, Michael’s Chapel and Victory Lane roads; the River Road area, including Sleepy Creek Farms community and parts of Rover, Householder, Crone Lane and Poole roads; parts of Pious Ridge, Culp and River roads; Mountain Run Road area, including New Hope Acres and Deer Run Woods communities, and parts of Mountain Run, Shades Lane, Swaim Lane and Duckwall roads; Winchester Grade Road in the area of Sleepy Creek Forest community and parts of Virginia Line, Highland Ridge, Posey Hollow and Barnes Lane roads; and Spohrs Cross Road area, including areas along Route 9 and parts of Spohrs and Potomac roads.

Verizon’s entry-level DSL service offers speeds of up to 1 Mbps (megabits per second) downstream and 384 Kbps (kilobits per second) upstream. Consumers who want faster speed can order Verizon’s offering of up to 3 Mbps downstream and 768 Kbps upstream.  No guarantee for customers actually achieving those speeds is provided, however.  Providing service at speeds better than that will be up to the new owner of West Virginia’s telecommunications future.

That company will be Frontier Communications, if a deal can be approved by state regulators.

Frontier Communications is aggressive about deploying DSL broadband service to its mostly-rural customers. That’s because broadband is one of the company’s growth areas. Frontier wired telephone line customers are declining as customers switch to competitors or rely on their mobile phone for telephone service. But broadband service is a bright spot for Frontier, as it’s often the only player in town beyond incredibly cumbersome and expensive satellite broadband services in rural areas.

Will Frontier bring DSL to the Peak family and their neighbors if the deal is approved? Almost certainly, eventually. For West Virginia, the question of what kind of broadband service Frontier will provide is an entirely different, but equally important question.

Frontier continues to rely on increasingly dated ADSL standard service across most of its service areas. It’s a technology more than a decade old, with plenty of limitations and little room for growth. Frontier should be willing to provide at least ADSL 2+ service in less populated areas, and either VDSL service or fiber-to-the-home in more populated town and city centers. Both DSL “standards” are improvements over the original, and can often provide substantially faster speeds and room for growth well into the future. It also creates the potential for equity of access for rural and more urban consumers, or at least something approximating it.

In rural areas, standard DSL speeds often don’t exceed 1.5Mbps, and are sometimes even slower. Installation costs can be substantial, along with the monthly subscriber fees, taxes and surcharges, and modem rental costs. The further away one lives from the telephone company central office, the slower and less reliable the service becomes. Some customers living more than 18,000 feet from a central office will not be able to obtain the service at any speed.

Additionally, Frontier Communications continues to define an acceptable amount of residential broadband usage at a paltry 5GB per month. Although the company has not enforced that limitation to date, nothing precludes them from cutting customers off who exceed that minuscule amount of usage, or charge them overlimit penalties and fees for exceeding it down the road. That puts Frontier in a league shared only by wireless data providers like Verizon Wireless, AT&T Mobility, and Sprint. No other wired provider of note “limits” consumers to that tiny amount of usage. We continue to call on Frontier to delete the entire reference to “5GB” of usage from their Acceptable Use Policy, particularly if the company truly intends not to enforce it.

Should rural residents find themselves with Frontier as their only broadband service provider, the kind of broadband service they will endure, without revolutionary upgrades, could be essentially suspended in time while the rest of the nation marches forward with ever-increasing speeds and potentially lower pricing as a result of competition. It’s a phenomenon known as establishing a “broadband backwater,” where consumers are trapped with sub-standard service with onerous limits, slow speeds, and high pricing with little or no competition.

Although companies like Verizon have the financial resources to rewire even the smallest states with advanced broadband networks, even if they are currently unwilling to do so, smaller providers could find themselves in a reverse position – wanting to deploy advanced networks but lacking the financial capacity to do so.

The unnerving part about all of this is the Obama Administration is set to spend billions of taxpayer dollars to improve and enhance broadband networks, particularly in rural areas across states like West Virginia. Telecommunications companies nationwide are hiring consultants and grant specialists to tailor-write grant applications to receive public funds to build out their broadband networks. It would be a terrific shame if public money went to providers building networks based on yesterday’s technology, with paltry usage limits and high pricing for consumers, with some or most of those costs to construct the networks paid by taxpayers like you and I. That’s having your broadband cake and eating it too.

No telephone company should ever be given public money to construct broadband networks that cannot meet the need for increased speeds and consistent levels of service for every customer, today and in the future, regardless of whether they live in the largest city or a small mountain town in West Virginia. No sales transaction transferring assets from one phone company to another should be granted unless the needs of consumers are given first priority, not the afterthought they were given with some prior deals (FairPoint, Hawaiian Telecom, etc.) No public money should ever be handed over to a broadband provider that wants to establish Internet Overcharging schemes like paltry limits and tiers either, especially in non-competitive areas where consumers have just one choice.

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This article was published originally on ConsumerTel, our new pro-consumer website protecting the interests of telephone company subscribers.