AT&T customers upgrading to Apple’s newest iPhone will be able to keep their grandfathered unlimited data plan and purchase the phone at discounted prices starting at $199, with a new two-year contract.

AT&T’s definition of “unlimited” has, for at least a year, actually meant up to 3GB of usage before throttling your 3G speeds to something comparable to dial-up Internet. But with the iPhone 5 ready to run on AT&T’s higher capacity 4G network, the company is increasing the limit to 5GB per month.

AT&T has been working hard to hold onto its significant base of iPhone owners, who have endured dropped calls and slow data in many cities for the last several years.

Customers planning to leave AT&T will find a considerably less-friendly attitude at Verizon Wireless, where new customers are compelled to sign up for a Share Everything plan that starts with just 1GB of usage per month.

Sprint is retaining its unlimited smartphone data plan with no hidden limits or speed throttles, but Sprint’s overburdened 3G network is not known for fast and reliable speed, and the company’s aging 4G Clearwire WiMAX network cannot perform as well as Sprint’s forthcoming LTE counterpart, which has only appeared in a handful of cities so far.

The iPhone 5 will be the first Apple phone ready to take advantage of 4G LTE speeds, which could give those new networks a real workout as millions of new iPhone owners pile on.

Verizon is pulling back on its traditional landline service and FiOS expansion to continue focusing on its more-profitable wireless service.

Verizon Communications’ landline customers will endure continued cost cutting as the company focuses on its increasingly profitable wireless division, now set to bring in even more profits with Verizon Wireless’ transition to new, often higher-priced service plans.

Verizon executive vice-president and chief financial officer Fran Shammo yesterday told investors attending Bank of America-Merrill Lynch Media’s Communications & Entertainment Conference that the company is pleased with Verizon Wireless’ successful transition to Share Everything, which includes a shared data plan for multiple wireless devices.

Shammo characterized the true nature of Share Everything as a data plan that happens to include unlimited calling and messaging.

“It really comes down to data consumption and that is what drives revenue,” Shammo told investors. “And really the reason we did this was because we saw what happened in Asia with some of the text messaging and the dilution and voice migration.  So you are protecting that revenue stream going forward and we think that is beneficial to the consumer and the company.”

Shammo sees increased profits in Verizon’s future as customers transitioning away from unlimited data plans eventually bump up and over their new plan limits. But the revenue gains actually begin the moment customers sign up, as those bringing various wireless devices to a shared data plan are immediately told to upgrade for a larger data allowance at an additional cost.

“We are telling them that they really need 2GB per device,” Shammo said. “So if they want to bring five devices, they really should be buying the 10GB ($60/month) plan. What we are finding is customers are very receptive to that formula because they can get their head around the 2 gigabytes. They understand what their usage is. So part of it is that they are actually buying higher up packages than we’ve anticipated.”

Verizon also has a plan to deal with potential bill shock from customers using their wireless devices for high bandwidth applications. The company is receptive to letting content producers pay Verizon to cover customer usage charges.

Share Everything = a data plan that happens to include unlimited calling and messaging

“So when you look at that, revenue per account may not go up, but service revenue will because you are just getting it from someone else,” Shammo said. “So the LTE network allows the differentiation, and the way I like to classify it as you can have an 800 service over here, which is ‘free data’ because somebody else is paying for that and then you have your consumption data over here.”

Shammo believes customers who gave up their unlimited data plan believing Verizon’s basic data allowance will suffice for years to come will be surprised at how fast they will hit their limits as wireless data becomes more important.

“I think we are going to see this accretion faster than people think,” Shammo said. “If you look at our SpectrumCo [cable operators Cox, Comcast, Bright House Networks, and Time Warner Cable] deal, [CEO Lowell McAdam] and the team did an outstanding job convincing the Department of Justice about the innovation that can happen here and maybe being the first in the world to really integrate wireless with inside the home and content outside the home. And if you think about how that content can be streamed outside the home within cars, you really say this is unlimited as to where this can go. So I think the innovation is going to come very, very quickly here.”

With the spectrum deal with cable operators in place, Shammo said Verizon will not be in the market for any large spectrum acquisitions in the near future, and even plans to sell off some excess spectrum it does not currently need, so long as the company gets paid what it believes the spectrum is worth.

Verizon’s concern for keeping large amounts of cash on hand is evident as it continues to reduce investments in traditional landline service and FiOS. In fact, Verizon said it would continue increasing prices for its FiOS fiber network to more closely align with the higher prices cable companies are charging.

“We have really concentrated this year on getting our price points equivalent to where the rest of the market was,” Shammo said. “We were actually underpriced with a superior product to cable. So the concerted effort was we needed to do some price-ups and we are doing that over — we started in the first quarter. We did it in the second; we are doing it in the third. You saw some of that benefit come through in the second quarter where we delivered a 2.5% mass-market revenue increase, which was I think the best in years and I see that doubling by year-end. So I think that, coming out of this year, we will be on a very good path for a mass-market revenue increase.”

Two service calls in six months may get your traditional landline canceled and moved to Verizon FiOS phone service, which requires 10 digit dialing for every number.

But those rate increases will not deliver improved service. If fact, Shammo said Verizon will continue reducing costs and investments in its network. Much of its investment in the landline business has been to support Verizon Wireless’ growth through its IP backbone and fiber-to-cell-tower projects. Shammo predicts capital investments will continue to be flat to down.

One example where the cost-cutting is apparent is how Verizon deals with service calls for troubled phone lines.

Verizon landline customers in FiOS areas who report chronic service problems may find themselves disconnected and switched to FiOS Voice over IP phone service instead, because Verizon has quietly set new in-house rules about the number of permitted service calls for each customer.

“If we have a copper customer who is what we classify as a chronic (two truck rolls in a period of six months for that copper line), I am losing money on that copper customer,” Shammo said. “So if I can take that chronic customer and move them to FiOS, I deplete the amount of operational expense to keep that customer on and now I have moved them over to the FiOS network where they get the benefit of FiOS digital voice, which is clearer.”

Once a customer gets switched to FiOS, Verizon’s marketing machine swings into action.

“I now can put their DSL service onto FiOS Internet where they now realize the speeds of FiOS and what we are seeing preliminarily is even if we take a voice and DSL customer and move them, they are starting to buy up in bundles because they are starting to see the benefit of the higher speeds,” Shammo said. “Then we open up the sales routine to go after them, now for the FiOS TV product.”

Unlimited data holdouts can leave

Shammo added Verizon is becoming more concerned than ever about long term investments that leave the company waiting years for a return.

“Lowell and I have a very concerted effort to really make sure that the investments we make are returning their invested capital in a very short period of time,” said Shammo.

That spells trouble for landline service upgrades and future FiOS expansion, which both require the company to take a long term view recouping those investments. But even Verizon’s wireless business’ capital expenses are down — by $1.3 billion through the first half of this year.

Verizon Wireless has also picked up nearly $5 billion in cost savings through restructuring, including lucrative revenue earned from new activation and upgrade fees and also tightening up on subsidized wireless phone upgrades.

For customers holding onto unlimited data plans, intending to get their money’s worth from them, Shammo has a message:

“Quite honestly, they could leave my network because you are not making much money on those.”

Maitreyi Krishnaswamy, Verizon’s head of FiOS TV admits she practically never watches live television — she records everything on her DVR first.

Krishnaswamy has been responsible for many of the interactive video services offered on Verizon’s FiOS TV platform, including on-screen apps, the media program guide, and how customers connect various devices to the FiOS television experience.

Now she’s directing Verizon’s consumer video services — deciding which channels make the lineup on FiOS TV and the networks available for streaming to mobile devices.

Krishnaswamy told the Tampa Tribune she recognizes the way Americans watch television has changed over the past few years, and she admits it has led to the “growing” trend of customers’ cord-cutting their cable TV subscriptions in favor of online viewing.

Krishnaswamy

“The question is: Is it growing enough for us? For us, it’s a matter of cord-cutters versus cord-shavers — people who switch to smaller tiers,” Krishnaswamy said. “Is the migration to a-la-carte enough that we can go that route? It has a way more important impact that just on them. It impacts how we negotiate TV contracts with studios. It’s not something we can do overnight, but definitely something we’ve been looking at.”

Verizon has made it clear it intends to compete for customers regardless of how they watch television, but Krishnaswamy signals the company is also considering protecting their core video business model, and would only say Verizon had no announcements to make “just as yet” regarding an Internet Overcharging scheme including usage caps and overlimit fees. Critics of data caps argue that limiting broadband usage prevents customers from taking their viewing experience online because it threatens consuming the majority of their monthly data use allowance.

But Verizon does not mind offering customers a TV Everywhere experience — streaming video content over its broadband network, so long as a customer also subscribes to its TV package. The company already offers live streaming television of many channels on its lineup and wants to bolster that with on demand content. Verizon also is experimenting with non-traditional set top boxes, and although Krishnaswamy had nothing to say about supporting the forthcoming Apple TV, she is actively working on improving how Verizon’s television service works away from the traditional company-provided set top box.

Some highlights:

• Verizon’s partnership with Redbox will let the company offer a new streaming and DVD rental service for customers, regardless of whether they live in a Verizon FiOS area or not. Customers will be able to access the service over mobile broadband, Wi-Fi, or any home broadband connection;
• Verizon will introduce an online viewing app for forthcoming versions of Amazon’s Kindle;
• The company has thus far only managed to secure streaming rights for in-home viewing and has run into difficulty getting content providers to let customers watch shows while on the go;
• Google Fiber is “interesting,” but Krishnaswamy doesn’t believe they are “a real operator” when only offering service in one city. She thinks the project is a good idea, however, because it forces competing providers “to increase your speed;”
• Verizon is considering simplifying its family of apps to reduce customer confusion. They currently have different apps for home security, home media, the remote control, and the program guide. Verizon wants its MyFiOS app to become a “super-app” that manages everything.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/TVnext Interview – Maitreyi Krishnaswamy Verizon FIOS 1-28-11.m4v[/flv]

Back in 2011, Maitreyi Krishnaswamy explained her thinking about where Verizon FiOS was taking the TV experience. Many of these applications have since been released, but Verizon — like most providers — still runs into brick walls with content providers getting licensing to allow more flexible viewing of content.  (12 minutes)

Sprint has launched a new ad series and accompanying web site to warn consumers that choosing Verizon’s new Share Everything data plans can give you a big headache and a higher monthly bill.

“The concept of sharing a monthly data allowance across a family or group of users increases the likelihood for a surprise monthly bill due to data overage charges,” said Caralene Robinson, vice president of brand strategy and marketing communications for Sprint. “Data usage continues to increase and consumers value Truly Unlimited data because it’s simple and straightforward.”

Sprint argues that customers have enough trouble differentiating the usage of the applications they run themselves. When sharing a data plan with other members of a family, it can quickly become impossible to know exactly who is consuming what. That makes it easy to exceed a monthly usage allowance, which results in costly overlimit fees. Tracking usage and the inevitable arguments that will result at the dinner table make Verizon’s new share plans a real headache in Sprint’s view.

Sprint proposes that customers switch to their Truly Unlimited data plan, which has no limits and also costs less than Verizon’s shared data plan. Sprint also continues to sell budget plans that offer a calling allowance in return for a reduced price. Verizon now only sells unlimited voice minutes bundled into their Share Everything plans.

Unlike most carriers who boast customers can send millions of e-mails or visit hundreds of thousands of web pages with a low allowance data plan, Sprint explains what a 1GB limit really means when customers use increasingly popular streaming services and apps. It turns out Verizon’s 1GB allowance plan does not deliver that much.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Sprint Say No to Sharing – Family Meeting.flv[/flv]

Sprint launches its “Say No To Sharing” and “Say Yes To Sprint” campaign with this “Family Meeting” ad, which shows a family debating how to divide up their shared data plan and avoid overlimit fees.  (1 minute)

A homeless man’s mattress fire under a bridge in Massachusetts was enough to create the biggest telecommunications disaster for Verizon since the terrorist attacks of 9/11. The fire melted fiber and damaged copper cables that represented the backbone of Verizon’s landline network in the region, disrupting phone, cable, and broadband service for thousands of Verizon’s customers in northeastern Massachusetts in late August. Now that service has been restored, the damages from the outage and its ripple effects are still being calculated as questions are being raised about how the company handles its communications network.

The damage went far beyond an inconvenience for Verizon customers:

• Area businesses were ripe for plundering with Verizon-dependent alarm systems out of service;
• Cell towers went down if they were connected by Verizon’s fiber optic network;
• Local law enforcement communication systems ceased to function in areas where Verizon provided the vital link between the dispatch center and transmitting facilities miles away;
• Banks and other local businesses closed down because Verizon-based connectivity was inoperable. That left ATMs throughout the region out of service and credit card transactions often impossible to manage;
• 911 systems in several communities had to transfer emergency calls to other 911 centers miles away;
• Even the Registry of Motor Vehicles locked their doors and shut down while the outage persisted over several days.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/NECN Verizon telecommunications outage causes problems 8-31-12.flv[/flv]
NECN News reports on Verizon’s enormous Massachusetts service outage and how it impacted the lives of affected customers. (3 minutes)

Verizon’s landline network ultimately failed its Massachusetts customers on a scale the company admits it has not seen in a long time.

“It’s the biggest problem we’ve faced, nationally, other than 9-11,” Bill Wilson, area manager for Verizon, told the Eagle-Tribune. “This is the biggest problem we’ve had in 20 years.”

At the heart of the problem is Verizon’s lack of redundancy in its landline network. With fiber optic cables managing a larger share of broadband traffic, phone calls, and even Verizon’s television service, the loss of even a single fiber cable can disrupt service for hundreds or thousands of customers, many more than would be affected by a damaged copper cable.

State Sen. Barry Finegold (D-Andover) is questioning Verizon’s decision not to have a backup plan in place.

“So if there’s a fire there’s a redundant system in place so if one fails there’s another to back it up,” Finegold said.

Customers, particular those working from home, wholeheartedly agreed.

“I am appalled,” Shela Horvitz, a Verizon FIOS customer who lost her phone, Internet and TV service for days as a result of the fire, told the newspaper. “Can you say, ‘Single Point of Failure?’”

[flv width=”640″ height=”380”]http://www.phillipdampier.com/video/Eagle Tribune Verizon Talks to Media About Outage 9-2-12.flv[/flv]

Verizon officials show reporters what the fire did to their network and how they are going to restore service after a fire on Lawrence Central Bridge caused mass outages in the region. From the Eagle-Tribune. (4 minutes)

Verizon blames the entire affair on homeless people, who they say should not have been sleeping on top of their wires. The idea of network redundancy for Verizon’s landline network? “Cost prohibitive,” say company officials.

Joseph Zukowski, vice president for government affairs for the phone company, said the problem was so rare, it was comparable to a 100-year storm. He compared the outage with a natural disaster.

“We have extensive security measures to make the network as secure as possible,” Zukowski said. “We restrict building access and access to our cables. Nowhere on the list is a homeless guy lighting a match on a mattress. We’re not laying blame, but the best thing would have been not to have the tent city there.”

Local police acknowledge the bridge where the cables cross the Merrimack River is a popular spot for the local homeless to congregate, and they have attempted to control the problem. But nobody ever told them Verizon’s vital regional communications network infrastructure was at ground zero of the mattress fire.

“Going forward, if the stuff that’s there is so important, it really needs to be secured so nobody can get access to it,” said police chief John Romero.

Verizon has promised refunds for all affected customers.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Verizon Lawrence MA Bridge Fire Verizon Restoration 2012 9-1-12.flv[/flv]

A Verizon-produced video illustrates how the company is repairing its damaged network. The heat from the fire on August 27th melted and fused both fiber and copper cables, and the protective casings that house the cables.

Verizon: “The work to restore service is complex, given that technicians are splicing thousands of individual copper and fiber-optic connections in a very confined area under the bridge. The conduit structure that holds the cables, which was protected by a metal cage, was destroyed and needs to be replaced. Verizon crews have been working in 24-hour shifts since the fire to restore service for customers and will continue to do so until every customer is back in service.”  (2 minutes)