Verizon Wireless wins bragging rights this month as a new study shows fleeing iPhone owners on AT&T’s network were willing to put up money just to get out of their contracts and switch to Verizon. Two of every three departing customers paid AT&T up to $300 to break-up with the carrier and bought new iPhones that work on Verizon’s network.

The study, produced by Mobclix, found reception on AT&T’s network was by far the biggest issue cited by exiting customers, followed by Verizon’s offer of a personal hotspot add-on, and the perception Verizon runs a more robust network.

Mobclix found Verizon’s newest customers may have a point about who runs the stronger network.  Many AT&T customers are accustomed to relying on the company’s broadening Wi-Fi network to cope with 3G reception woes.  At least 53 percent of AT&T customers rely on Wi-Fi regularly for data connectivity.  On Verizon’s network, just 38 percent do.

But predictions of a stampede away from AT&T to Verizon have turned out not to be true, either.  Just 14 percent of America’s iPhone owners are on Verizon’s network.  AT&T serves the rest.

Analysts suspect the reason for this is that AT&T’s worst problems are in certain major metropolitan areas, but the carrier does respectably well providing service in many smaller and medium-sized cities.

Mobclix produced a map which may bear this out.  It shows the largest concentration of Verizon iPhone owners in the cities that are routinely cited as problem areas for AT&T:  San Francisco, New York, Seattle, Chicago, Boston, and Los Angeles.

“Based on our survey findings today, it’s clear that consumers are taking control of their mobile destinies by evaluating carrier criteria such as Wi-Fi usage, reception issues and reputation as part of their decision to remain with their carrier or make a switch,” said Krishna Subramanian, Mobclix co-founder.

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AT&T customers using modified phones to share their 3G wireless connection with other devices are complaining about the company’s warning that if they don’t cease tethering their phones, they will be automatically enrolled in the company’s premium $45 a month DataPro for Smartphone Tethering plan next week.

An attorney tells Stop the Cap! if the company does that, his firm will consider filing a class action lawsuit against the company for forcing customers into service plans they did not enroll in themselves.

This controversy comes to those who have been using “jailbroken” phones, modified to restore features blocked at the factory by North American cell phone carriers.  Among the most coveted restored features is turning your phone into a mini Wi-Fi hotspot or allowing the phone to connect directly to other equipment, sharing your 3G connection with other devices, such as a laptop, iPad, or iPod.  While many phones include this capability, most carriers in the United States and Canada disable it for those not enrolled in an extra cost add-on plan covering “tethering.”  AT&T offers two such plans — $45 a month for 4GB of usage, or $25 a month for 2GB.

For several years, some AT&T customers have used tethering as a convenient way to bring connectivity to devices out of reach from Wi-Fi or a home broadband connection.

Jonathan in San Francisco shares with Stop the Cap! he is grandfathered in on an unlimited use data plan from around the time the first smartphones entered the marketplace.

“AT&T even sold me the tethering equipment at the same time they sold me the data plan, which they promised was unlimited,” Jonathan says.  “I don’t buy their subsidized phones — I buy my own unlocked phones at full retail price every few years, and AT&T has allowed me to keep my plan the way it is.”

Until he received a notification message from AT&T claiming his account “may need updating.”

AT&T says customers tethering their phones must pay for both a data plan -and- a tethering plan if they want to use the feature, a condition not part of Jonathan’s plan.

“My plan with AT&T says nothing about an extra tethering plan; it says I have unlimited data — something I do not abuse,” Jonathan says.

He is particularly upset that if he uses his phone as he always has, AT&T will slap a $45 additional monthly fee on his phone bill.

“Even worse, when I called AT&T to complain, they told me my plan is so old, they would automatically ‘upgrade’ my service plan to one that costs more and delivers less, effective Monday,” he tells us.

It turns out some customers on legacy plans cannot easily add the tethering option without abandoning the plans they have carefully held onto for years.

“The lady I spoke with said their computer billing system cannot add the feature to my account because it is so old,” he said.

Janie, one of our readers in Seattle, noticed AT&T “‘graciously’ wants to auto-enroll you in their most expensive tethering plan, not the cheaper $25 one.”

“My cousin is lucky enough to still have their $30 a month plan which provided 5GB a month, but they discontinued it for new customers so they could raise prices,” Janie writes.

Janie is upset because it was an AT&T reseller that charged her $30 extra to enable the feature AT&T now wants her to pay even more to use.

“I have no idea what ‘jailbreaking’ is, or that I was doing anything wrong — I bought the phone from an AT&T authorized retailer and had no idea there was even a problem until I called and they lectured me about ‘stealing’ service,” Janie says.  “The company disgusts me and I have never been accused by anyone of stealing, so I am canceling with them when my contract is up.”

Janie is not the only customer to have had her phone modified by someone representing the company.

We found another customer who paid an employee at an official AT&T store to modify his phone.  The employee told him if he keeps monthly usage under 10GB per month, no red flags would be raised, a statement that some might consider a red flag itself.

Just how AT&T tracks down its tethering customer-underground remains a mystery, but some have speculated usage may have been the major contributing factor.  Not everyone who quietly tethers their AT&T phone has gotten the notification message, while many of those using tethered phones as their only Internet connection have.

“If you are using your tethered AT&T phone on a laptop and running up 25GB of usage, AT&T will notice if they look,” an employee tells us privately.  “AT&T can run an audit on data usage and discover considerable amounts of money being left on the table by customers not enrolled in the appropriate plan.”

One lawyer that has targeted AT&T in the past said his firm is carefully watching to see if AT&T follows through on its auto-enrollment threat.

“We’ve found judges and government officials take a very dim view on automatically enrolling customers in anything that costs money without their direct, informed consent,” the attorney who is not authorized to speak publicly on behalf of his firm tells us.  “We are obviously taking a close look at this.”

AT&T’s e-mail notification text is below the jump.

… Continue Reading

Joe Brown was obviously not the right person for G4TV’s Attack of the Show to talk to about the issue of Internet Overcharging.

As AT&T begins notifying their DSL and U-verse customers they are about to face usage limits on their broadband service, G4TV sought out reaction from the features editor of Gizmodo.com, who was wholly unprepared to inform viewers about the facts behind AT&T’s usage caps and their implications for customers.

While Brown and G4TV were joking about users having to curtail game downloads, for millions of AT&T customers, it’s no laughing matter.

AT&T’s announced 150-250GB limits will eventually cost customers $10 or more for each extra 50GB allotment, on top of their already-expensive broadband service package.

“It really had to happen eventually I think,” Brown told viewers.  “People are using a lot of bandwidth.”

Gizmodo's Joe Brown talks with G4TV's Attack of the Show

But Brown’s observation conflicts with AT&T’s own claim “only a tiny minority of customers” will use more than the company wants to allow, with the average AT&T customer consuming 18GB per month.  AT&T isn’t telling the full story about that either.

For those “heavy users” AT&T wants to restrict first, the implications go well beyond curtailing Netflix and playing online games.

“As a software developer who works under a Linux environment and is forced to telecommute from home one week per month, these caps would absolutely kill me,” writes Joe Stein from Sparks, Nev.  “If you are a retired person using your computer to check e-mail and browse the headlines, you will obviously never exceed AT&T’s caps, but for technology innovators and those like me in the software development field, 150GB is nothing.”

Stein downloads regular updates for Linux, exchanges software back and forth with the office several times a day, and uses video conferencing regularly when he works from home.

“Not all online video is about adult entertainment or downloading movies,” Stein says.  “Usage caps hurt anyone who has to work with large files or business-related video, and after the events this week, AT&T can afford to leave off the caps.”

Brown claims AT&T conducted “a study” in two cities which found that 98 percent of their customers used far less than the usage caps would allow.  What Brown does not know is that those two cities are Beaumont, Texas and Reno, Nevada — hardly superstars in the tech revolution.

“Nobody moves to greater Reno to be a software superstar, which is why I am in San Jose, Calif., all the time,” Stein says.  “But there is more to this area than casinos.”

Stop the Cap! has been helping consumers in both cities avoid AT&T because the company’s “study” came at the same time it was experimenting with an Internet Overcharging scheme that limited customers to as little as 20GB of usage per month — a strong incentive for customers to avoid high bandwidth services,  or better yet AT&T.  So it’s no surprise broadband users who know better chose an alternative provider, including Stein.

“I first became aware of the usage cap debacle a few years ago when AT&T tested usage caps in the Reno area, which covers Sparks,” Stein says.  “I saw the impact first hand when customers started getting notified they would have to pay substantially more for basic Internet service.”

AT&T first limited their broadband customers to as little as 20GB of usage per month, then claimed the average customer only uses 18GB, making their 150GB DSL cap "generous."

Stein left for the cable company — Charter Communications, and they have usage caps too, but they are rarely enforced and much higher than what AT&T offers DSL customers, Stein says.

Brown claims AT&T is trying to “get out ahead of people using too much,” a point in conflict with the fact AT&T is willing to sell consumers additional bandwidth on its “overcongested” network.

Brown’s suggestion that “bandwidth costs money” is partially true, but not in the context of AT&T’s usage limits.  The company that can afford fiber optic upgrades to deliver limitless television and telephone service apparently cannot afford the pennies in bandwidth costs customers consume as part of their broadband service, which can run $50 a month or more.

Pondering broadband usage “fairness” is a losing proposition for consumers… and reporters, too.

Once someone blindly accepts the premise AT&T needs data caps, with no evidence usage presents a technical or financial challenge for the company, the debate is quickly reduced into a numbers game about “how much usage is fair.”

Clearly for Brown and his friends, who admit they are dangerously close to reaching or exceeding AT&T’s limits, the answer to Brown wondering aloud if the caps would “do it for him” should be no.

Stop the Cap! believes no cap is worth living with, especially on AT&T’s enormous-sized broadband network, now increasingly designed to handle the multimedia rich Internet and their U-verse platform.

It is doubtful many will be assuaged by Brown’s comments that “AT&T sounded pretty cool” about how they will deal with those who exceed their arbitrary usage limits.  Why?  Because after the “fair warnings” AT&T will provide customers on its artificially limited network, they will drop the sledgehammer of higher bills on top of customers’ heads.

Brown should know better, especially after finding AT&T unwilling to discuss how often it intends to revisit its usage cap levels.  AT&T’s counterparts in Canada have already foreshadowed the answer.  Once the cap regime is in place, several companies lowered them, sometimes repeatedly, to further monetize broadband usage.  They also raised the prices of overlimit fees, often substantially.

AT&T depends on uninformed consumers and reporters not understanding the true facts about Internet Overcharging schemes.  It’s not too late for reporters like Joe Brown to undo the damage, however.

Stop the Cap! strongly encourages everyone to examine the evidence we have compiled here over the past two and a half years.  It’s not hard to discover AT&T’s usage caps have nothing to do with fairness, are arbitrary and unnecessary, and come as a result of providers seeking higher profits in an undercompetitive marketplace.

If we do not uniformly and loudly oppose usage limits, America’s broadband rankings, digital economy innovation, and high technology jobs are all at risk, just to satisfy AT&T’s insatiable appetite for higher profits.

(P.S. – Joe: How did you miss Comcast has been capping their customers at 250GB for two years now.  Say it ain’t so, Joe!)

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/G4TV Attack of the Show ATT Caps Their Data Usage 3-15-11.flv[/flv]

G4TV’s ‘Attack of the Show’ misses the boat on AT&T’s Internet Overcharging scheme.  They did better covering Time Warner Cable’s attempt at Internet Overcharging in 2009.  It’s time to revisit this issue and get involved in the fight that could hurt the very audience watching this show.  (6 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/UBB is Nonsense.flv[/flv]

François Caron produced this video succinctly smashing the myth that “usage-based billing” and “usage caps” are about fairness or fight congestion.  In this case, Caron refers to Canadian providers, but the story is much the same south of the border.  These Internet Overcharging schemes are nothing more than an effort to control what you can do with your broadband connection.  AT&T wants a 150-250GB usage cap on broadband, but has limitless capacity for television and telephone service.  They also have $39 billion to buy T-Mobile, but need to overcharge you for broadband service.  Bell in Canada wants -every- broadband user in Canada to pay this ripoff pricing.  Share with anyone who thinks paying for usage is anything like paying for water, gas, or electricity.  It’s not!  (6 minutes)

Genachowski

Federal Communications Commission Chairman Julius Genachowski spent this morning in Orlando delivering a keynote address opening the wireless industry’s annual trade show.

Stop the Cap! spent part of the morning following the event over a live stream that most wireless customers would never dare to watch — fearing they’d blow past their monthly usage limits.  Genachowski steered well clear of commenting on yesterday’s merger announcement between AT&T and T-Mobile.  But then AT&T must have hacked their way into the tablet the FCC chairman was reading from, because he suddenly launched into a series of talking points that could have come right off of AT&T’s government affairs website.

“Mobile broadband is being adopted faster than any technology in history, but there’s a catch,” Genachowski said. The chairman said the demand for wireless broadband is overwhelming the country’s wireless infrastructure. “The coming spectrum crunch threatens America’s leadership in mobile,” Genachowski said.

It appears Julius has been listening to AT&T executives who have made the spectrum crunch and “America’s leadership in wireless broadband” bullet points a hallmark of their argument for a merger with T-Mobile.

In fact, although T-Mobile delivers AT&T additional mobile broadband capacity in selected major cities, the company is likely to find many of T-Mobile’s cell sites redundant, and some of T-Mobile’s spectrum is incompatible with AT&T’s network unless customers are handed new devices.

America’s “leadership in mobile broadband” can be judged in many different ways.  For example, we feel many in Washington are helping AT&T lead the way to a mobile duopoly.  We are also leading with some of the most expensive mobile broadband service in the world, a fact of life that will never change in America’s shrinking competitive landscape.

Spectrum issues are solvable by the FCC without destroying competition with yet another colossal merger.  The chairman’s telegraphing of AT&T’s talking points can only be seen as an encouraging road map by which the huge telecom company can sell its deal to regulators by selling out consumers.