NBC’s Saturday Night Live proves an important point about today’s smartphones and data products.  Only a handful of consumers really understand what LTE, 4G, and 3G are really all about.  Just as few can tell you what a “gigabyte” is or how many they used, or increasingly important — how many they have left before the overlimit fees kick in.  (2 minutes)

Game over. In the championship of cell phone competition, Verizon Wireless and AT&T have won, and it is now too late for Sprint-Nextel or T-Mobile USA to catch up.

That is the conclusion of Moody’s Investors Service, who has determined competition in waning in the U.S. wireless marketplace.

“AT&T Mobility and Verizon Wireless have better network coverage, wider capabilities and wider profit margins which gives them a competitive advantage that smaller rivals just can’t match,” said Mark Stodden, a Moody’s analyst and author of the report. “It is too late for competitors to invest and catch up; Sprint has the willingness but not the ability, while T-Mobile’s parent Deutsche Telekom, is the opposite.”

Sprint’s ambitious plans for a new 4G LTE network have been suppressed by a lack of enthusiasm by Wall Street investors and bankers, who seem to prefer the much-larger AT&T and Verizon who can sustain increased pricing and are better credit risks.  T-Mobile USA has practically been abandoned by its parent owner Deutsche Telekom, which wants to focus its investments in larger markets in Europe.

Moody’s estimates AT&T and Verizon will account for 81 percent of industry earnings in 2011.  Wall Street has pressured Sprint and T-Mobile to seek consolidation to better withstand their larger competitors.  Before AT&T bid for T-Mobile, rumors of an acquisition of the German-owned company by Sprint-Nextel were common, although the two companies operate with different network technology.  Moody’s predicts troubled waters for Sprint if it should actually seek to acquire T-Mobile, because the FCC seems comfortable with a minimum of four national carriers.

Instead, Moody’s predicts Sprint will seek to acquire smaller regional carriers and prepaid providers like Leap Wireless’ Cricket and MetroPCS.  Neither acquisition would significantly improve Sprint’s service footprint, however, as both prepaid providers operate only in larger markets where they already co-exist with Sprint.

A billionaire who invested enormous sums to purchase airwaves for a new national wireless broadband network learned Tuesday ruled he cannot use them to launch LightSquared.

The Federal Communications Commission said yesterday Philip Falcone’s vision for competitive wireless service cannot go forward on the frequencies he acquired because tests show they create significant interference to other nearby spectrum users, especially GPS.

Falcone’s hedge fund poured nearly $3 billion into LightSquared, which the company still claims would not create significant problems for GPS users including aircraft, cars, and ships.

Falcone

But when tests were conducted in early 2011, significant interference problems were reported, some that could jeopardize the safety of American air travel.  The FCC decided it preferred to be safe instead of sorry.

The announcement by the FCC calls into question the future of the company and the value of its airwave assets, which are now likely worth a fraction of the price paid.

The company’s agreements with at least 30 wholesale customers are also at risk, and one of its largest partners, Sprint-Nextel, has spent the last few months distancing itself from the project, anticipating the decision the FCC announced yesterday.

The rejection has upset the FCC’s plans to increase wireless competition for AT&T and Verizon, which dominate American wireless.  The agency hoped the spectrum LightSquared obtained would open the doors to a new national player, but that appears unlikely for now.

LightSquared executives said in October they would sue the FCC in court if the agency blocked their network from operating.

The only new player on the horizon may be Dish Network, which earlier acquired wireless spectrum from two bankrupt companies, and now seeks to use them as mobile phone spectrum.  Separately, Clearwire is working with Sprint to construct a new national 4G network, while still operating Clear’s existing WiMAX 4G service.

[flv]http://www.phillipdampier.com/video/CNBC LightSquared Faces Prohibition Following Interference Report 2-14-12.flv[/flv]

CNBC discusses LightSquared’s new troubles and where the company can go from here.  (3 minutes)

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Fox News’ Shepard Smith launched into an off-script tirade against AT&T after sending him a text message he was one of the “5%’ers” about to have their data service throttled.  “I’m gonna pay more for this crap, because it -is- crap,” Smith said.

Smith just discovered the reality of Internet Overcharging.  Get customers hooked on unlimited use plans that soon become a part of their daily lives, and then allow an uncompetitive marketplace to turn data into a “limited resource” that can be monetized for all it’s worth.

“I signed up for this [unlimited] plan, I bought this phone, [and] they told me I could do this, and now that I’ve signed up… and I’ve done everything the way they tell me to do it, now I gotta pay more.”

“It’s like all you can eat crack, until you like a lot of crack, and then you gotta pay more.”  (2 minutes)

Thanks to reader Mileena for alerting us.

An increasing number of wireless data users are getting some tough love courtesy of AT&T.

“Your data use this month places you in the top 5% of users,” the text message reads. “Use Wi-Fi to avoid reduced speeds.”  Our regular reader Earl hopes we’ll keep spreading the word.

AT&T’s speed throttle has now moved beyond the pages of tech blogs and into USA Today, where the newspaper explores the trials and tribulations of wireless data management policies at the nation’s largest wireless companies.

Mike Trang, along with at least 200,000 other AT&T customers, has been caught in AT&T’s wireless speed trap.  The result can be speeds punitively reduced to dial-up for the remainder of a billing cycle, leaving customers on AT&T’s “unlimited use” plan waiting up to two minutes for a single web page to load.

While AT&T tells the newspaper it only throttles the speeds of unlimited customers who use an average of 2GB or more per month to ease congestion (if that), the company’s “congestion problems” seem to disappear when customers switch to a usage-billing plan that charges fees based on different usage allowances:

Trang’s iPhone was throttled just two weeks into his billing cycle, after he’d consumed 2.3 gigabytes of data. He pays $30 per month for “unlimited” data. Meanwhile, Dallas-based AT&T now sells a limited, or “tiered,” plan that provides 3 gigabytes of data for the same price.

Users report that if they call the company to ask or complain about the throttling, AT&T customer support representatives suggest they switch to the limited plan.

“They’re coaxing you toward the tiered plan,” said Gregory Tallman in Hopatcong, N.J. He hasn’t had his iPhone 4S throttled yet, but he’s gotten text-messages from AT&T, warning that he’s approaching the limit. This came after he had used just 1.5 gigabytes of data in that billing cycle.

Many customers who have received the text message warning about their usage now think twice about everything they do with their phone, which may be part of what AT&T intended for its remaining customers grandfathered on a now-discontinued unlimited use plan.

John Cozen, a Web and mobile applications designer in San Diego, told USA Today he’s now “almost scared to use the phone.”

Cozen’s complaints to AT&T have been ignored and now he’s shopping for a new carrier.

AT&T’s warning-and-throttle system is the strictest among America’s largest wireless carriers. When customers exceed AT&T’s arbitrary declaration of being among the “top 5% of users,” their speeds are subject to severe slowdowns until their next bill is issued. This leaves customers who may have needed their phone at the beginning of the month for a business trip or vacation suddenly throttled for weeks because of what AT&T calls “congestion,” even if nobody else is using the cell tower.  Even worse, customers not yet deemed to be offending AT&Ts usage manners, or who pay per gigabyte, can overload a cell tower and create the very congestion AT&T claims it hopes to manage.  But only “unlimited use” customers get “time out” in the usage penalty corner.

Among other carriers:

• Verizon Wireless also uses a network management system that can throttle speeds for exceptionally heavy users, but their speed throttle is engaged only when individual cell towers are overloaded with traffic, and the speed reduction level will vary with the amount of traffic on that tower.  When congestion eases, speeds return to normal for everyone;
• T-Mobile throttles customers after a maximum of 5GB of usage per month, unless other arrangements are made with the company;
• Sprint Nextel does not have usage limits or a throttle on smartphone data plans at this time.