No need to be herded into a Verizon Wireless usage-limited mobile data plan.

New to Verizon Wireless and unhappy being constrained with a usage-capped wireless data plan?  Thanks to a loophole, customers can buy their way into an unlimited access plan Verizon was supposed to discontinue last July.

Some background: Verizon Wireless spent 2011 enticing customers to upgrade to their new 4G LTE phones which use the company’s much faster mobile broadband network.  One of the benefits early adopters received was a free, ongoing trial of Verizon’s mobile hotspot feature, which turns your phone into a Wi-Fi device your other devices (and friends’ phones) can share.  When Verizon elected to discontinue its unlimited data plans in July, the free trial of the mobile hotspot feature went with it.  In its place, Verizon pitched 4G phone owners an unlimited mobile hotspot feature add-on for $30 a month (in addition to the price of your data plan.)

Those who travel often or who want a backup Internet service in case their home or business Internet connection goes down found this a reasonable deal, especially because it carries no data limits or speed throttling, and works on both Verizon’s 3G and 4G networks.

But it turns out this little-known add-on promotion also unlocks the door to an unlimited smartphone data plan Verizon intended to stop selling last summer.

As we explained earlier, just signing up for the unlimited use mobile hotspot plan involved jumping through a few hoops.  But with the help of a feature code, any Verizon representative should be able to look it up and add it to your account.

When they do, something interesting happens.  Verizon cancels any existing usage-limited plan and converts it into an unlimited use plan ($29.99) they stopped selling.  That leaves you with Verizon’s Mobile Hotspot feature for $30 a month and unlimited smartphone data for $29.99 a month.  But here is the exciting part: you can quickly cancel the $30 mobile hotspot feature and will remain grandfathered on Verizon’s unlimited use smartphone data plan.

Slickdeals provides a helpful step-by-step guide, and it sometimes takes a few calls to reach a representative who can manage this successfully:

1. Dial *611 from your Verizon phone, or 1-800-922-0204 from any phone.
2. Wait for computer CSR to go through the main menu. You will need your Verizon phone # and account PIN or last 4 of SSN.
3. Hit option 4.
4. When it asks you what you would like to do today say “Add a feature.” You will be transferred to a live Verizon Customer Service representative.
5. If you have a 3G device (which includes all iPhones): Say you would like to add the $20 2GB 3G Mobile Hotspot FEATURE to your phone. When you add this MHS feature, you will be charged $20/month in addition to the $29.99 unlimited data plan.
   If you have a 4G device: Say you would like to add the $30 Unlimited 4G Mobile Hotspot FEATURE to your phone. According to http://stopthecap.com/2011/07/12/…r-account/ , they may be able to locate this feature via referencing feature code #76153. When you add this MHS feature, you will be charged $30/month in addition to the $29.99 unlimited data plan.
6. After one of the MHS features above are added to your account, you will now have the $29.99 unlimited data plan, which can be verified via the My Verizon app on your device or at http://www.verizonwireless.com/myverizon
7. {OPTIONAL – if you don’t want the Mobile Hotspot feature} Log into My Verizon and remove the Mobile Hotspot FEATURE from your account. It is recommended to wait at least a day to remove the feature. The $29.99 unlimited data plan should remain on your account.
8. If they say they can’t add that feature to your plan, or that you must bundle your data + mobile hotspot service together as a single data plan, tell them thank you, hang up, and repeat the steps above.

Updated 2:45pm EST:  Our regular reader Duffin reports this loophole may be in the process of being closed.  See this article from The Consumerist for further details.

Verizon Wireless 4G LTE customers experienced problems for the second Wednesday in three weeks, as another network outage plagued the “most reliable wireless network in the U.S.”

Verizon officials admitted the outage was a problem early this morning, mostly for 4G customers.  But many LTE phone owners found that switching their 4G phones to 3G service didn’t fix a thing, leaving them once again without any data service.

“When my 4G beacon switched off, the 3G beacon only stayed on a second before it was gone as well,” shares Stop the Cap! reader Roger, who lives in Denver.  “Even when I turned 4G off, 3G just would not stay enabled.”

This problem was remarkably similar to a lengthy day-and-a-half outage that brought down many of Verizon’s 4G customers on Dec. 6 and 7.

“Verizon Wireless 4G LTE service is returning to normal this morning after company engineers worked to resolve an issue with the 4G network during the early morning hours today,” the company said in a statement. “Throughout this time, 4G LTE customers were able to make voice calls and send and receive text messages. The 3G data network operated normally.”

That may be true for 3G-only customers.

Verizon’s second major national outage is starting to test the patience of some of its customers who bought service from the company based on its reliability track record.

“This is a second huge FAIL for Verizon in just a few weeks, and I’m growing annoyed,” Roger says. “I could live with a downgrade to 3G for a few hours, but Verizon 4G phones seem to have a problem stepping down to the slower network when there is a problem with their 4G LTE network.  This means 3G-only phone owners have service as usual, while the rest of us do not.”

Verizon’s 4G network is fast becoming among the world’s largest, and its penchant for service problems during the overnight hours likely means a software upgrade or patch is responsible.  As the update propagates across Verizon’s network, service problems begin to spread from region to region.

As LTE technology improves, Verizon customers are effectively beta-testers and suffer the consequences when a bad piece of software has unintended consequences.

Service credits are available on request from Verizon Wireless customer service.

As long as your life stops after 5GB per month.

Asian wireless operators are learning from their North American counterparts that artificially limiting wireless broadband consumption with usage caps and metered pricing can deliver enormous new profits companies can use to satisfy shareholders and attract higher dividend-seeking investors.

DoCoMo, Hong Kong’s CSL, and South Korea’s SK Telecom have all announced a shift towards usage-limited plans even as they launch new 4G networks that have at least three times the capacity of the older 3G networks they will eventually replace.  In fact, as Dow Jones reports, usage capping 4G wireless Internet access has little to do with congestion.  Instead, it’s a “revenue booster.”

Limiting data use and charging subscribers for excessive Web browsing on mobile devices may help boost carriers’ return on their investment at a time when many operators in the region have seen their earnings pressured due to falling voice revenue and hefty smartphone subsidies.

With the shift to charging subscribers for extra data usage, the region’s carriers are hopeful that they can boost their revenue.

While last generation 3G wireless broadband networks do face congestion issues, providers have maintained unlimited data plans until very recently.  But solving the 3G capacity crunch by upgrading to 4G has not removed the excuse to engage in Internet Overcharging.  It has only shifted the rationale for usage based pricing towards attracting increased revenue and investment.

Hong Kong-based CSL began offering 4G services in November last year for $44.85 for 5GB with an overlimit fee of $12.72/GB. At least CSL retains an unlimited use option, charging customers $60 a month for all-you-can-eat wireless broadband, a much better deal if you expect to exceed CSL’s 5GB limit.

Comcast, Time Warner Cable, and Bright House Networks sold AWS spectrum in areas shown here to Verizon Wireless, virtually guaranteeing the cable industry will not compete in the wireless phone business.

Two years ago, Cox Communications was hungry to get into the wireless phone business.  It announced it was launching “unbelievably fair” wireless — an oasis in a wireless desert of tricks and traps on offer from competing wireless companies.  No more expiring minutes, the option of affordable flat rate service, and no hidden fees or surcharges were all supposed to be part of the deal.

“Our research found that value and transparency are very important to consumers when choosing a wireless service plan, but they are not finding these qualities in the wireless plans offered today,” Stephen Bye, vice president of wireless said back in 2010, introducing the service. “Total loss of unused minutes as well as unforeseen overage charges on bills are just two examples of what our customers have told us is just unfair.”

Those same issues still exist for wireless customers today, but Cox won’t be a part of the solution.  The company announced this past May it was exiting the competitive arena of wireless and would simply resell Sprint service instead.  Last month, it announced it wouldn’t even bother with that, and will transition its remaining wireless customers directly to Sprint.

What changed Cox’s mind?  The cost of building and operating a wireless network to compete with much larger national companies.  It simply no longer made sense to build a small regional wireless carrier and rent the rest of your national coverage area from other providers, who set wholesale prices at a level high enough to protect them from would-be competitors.

The lesson Cox learned first has now been taught to America’s largest cable operators Comcast and Time Warner Cable (and its sidekick Bright House Networks).

All three cable operators have effectively signed a non-aggression treaty with Verizon Wireless, agreeing to sell their unused wireless spectrum acquired by auction in 2006 at a 50% markup to Big Red.  In return, Verizon will market cable service to wireless customers.  It’s the ultimate non-compete clause so wide-reaching, Verizon stores will soon be selling Time Warner Cable right next to Verizon FiOS, something unheard of in the telecommunications marketplace.

It’s a win for Verizon Wireless, which accumulates additional wireless spectrum and peace of mind knowing the cable industry will not enter the wireless communications business.  Cable companies get to profit from their purchase of the public airwaves and see the potential of a dramatic reduction in customer poaching, as cable and phone companies stop fighting each other for customers.  Ultimately, it means customers could eventually pay the cable or phone company for all of their telecommunications services from television and broadband to wired and wireless phone service.  What consumers enjoy in one-bill-convenience may eventually come with higher rates made possible from reduced competition.

Verizon Wireless' currently unused AWS spectrum favor the east coast, but not for long.

Verizon will pay $3.6 billion to Comcast, Time Warner and Bright House Networks for the spectrum.  The deal has stockholders cheering because that payment represents a tidy profit for cable operators who did absolutely nothing with the spectrum they purchased five years ago.  It also makes AT&T even more intent on completing its own spectrum merger with T-Mobile USA.

The agreement has concerned consumer advocates because it seems to signal Verizon is content making money primarily from its wireless business, and will repay the favor from the cable industry by pitching phone customers on cable service.  That could ultimately spell big trouble for Verizon’s stalled FiOS fiber-to-the-home network.  Verizon may find it easier and cheaper to end its aggressive entry into Big Cable’s territory by simply reselling traditional cable television products.  It can still market wireless products and services to cable subscribers and not endanger the new atmosphere of goodwill.  Rural broadband, where cable never competes, could be served through wireless spectrum, for example.

For now, Verizon says it intends to continue competing with its FiOS network, but the company stopped deploying the service in new areas nearly two years ago.

The deal will go before regulators at the Justice Department and the Federal Communications Commission for review.  What will likely concern them the most is the appearance of collusion between the cable companies and Verizon.

“A flag is raised when two rival networks move to start selling each other’s services,” a person familiar with the concerns of federal antitrust officials told the Washington Post. “They lose their desire, impetus, to compete. That is a big antitrust flag.”

Mark Cooper, the director of research for the Consumer Federation of America, expressed serious concern as well.

“Verizon was supposed to be the great competitor for Comcast in the video space, while Comcast has been looking for a wireless play to match the Verizon bundle,” he said. “The deal signals bad news for consumers, who can expect higher prices for video, fewer choices and higher prices for wireless.”

Who owns what

Four years into the deal, consumers may not know what company they are dealing with, as cable operators will be able to market Verizon Wireless service under their own respective cable brand names.

The deal is also trouble for lagging Clearwire, which had been providing wireless broadband service to both Comcast and Time Warner Cable.  Under the agreement, both cable companies will end their relationship with Clearwire, which is particularly bad news for the wireless company because of its ongoing financial distress.  Sprint, which has heavily invested in Clearwire, may ultimately find itself with an investment gone sour, troubling news for the third largest wireless company manning the barricades against a nearly-complete duopoly in wireless service between AT&T and Verizon Wireless.

Cable stock cheerleader Craig Moffett from Sanford Bernstein seems thrilled with the prospect.  In a research note to his Wall Street clients, Moffett says AT&T could benefit from the Verizon pact with Big Cable by ending up in a “more duopolistic industry structure without paying for it.” If the FCC approves the non-aggression pact, the deal “would amount to an unmistakable step towards the duopolization of the U.S. wireless market, inasmuch it would leave T-Mobile, once again, stranded without a 4G strategy.”

Cable investors, he adds, are likely to be excited the cable industry won’t spend billions of dollars in capital building a wireless venture, and instead has agreed to work with competitors to cross-sell products and services.  With little competitive pressure, prices won’t be falling anytime soon.

That’s great news for investors, even if it is “unbelievably unfair” for consumers.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg Verizon to Buy Wireless Spectrum for 3-6 Billion 12-2-11.flv[/flv]

Bloomberg News explains the deal and its implications in the wireless industry spectrum battle.  (2 minutes)

Verizon Wireless has confirmed a major LTE outage is impacting their data customers up and down the east coast as of late last night.

4G service works only intermittently this morning for impacted customers.  Many Verizon Wireless 4G phones are also not stepping down to the older 3G network properly during the outage, which means no data service at all, unless you are near a Wi-Fi hotspot.

The largest service area affected is New York City, but the outage is also impacting 4G customers in western New York, Pennsylvania, and northern Virginia.

Verizon has no estimated time when the problem will be repaired.

Updated 3:46pm ET — Readers report the outages now extend south into South Carolina, west into Ohio, Indiana, and Illinois, and one reader tells us service is out in California.  Verizon has acknowledged the problem on their Twitter channel, with no time estimates for repair.

Updated 4:58pm ET — Verizon is telling some customers the outage is impacting those with SIM cards, which effectively means LTE/4G.  Customers with 3G only phones still have access, but many 4G phone owners cannot downgrade to 3G service, even when they turn LTE off.