A snake in the grass?

You used 50 kilobytes of data visiting a web page on your iPhone, but AT&T claims the site actually consumed six times that — 300 kilobytes, for which the carrier overcharged you for access.

A major point of contention for consumers facing Internet Overcharging schemes is that the same company with a vested interest in maximizing revenue from such schemes also administers the meter that measures how much you used.  There is no oversight or independent verification.

In a lawsuit filed this week, AT&T Mobility faces accusations it is systematically overcharging iPad and iPhone users for data services many never used.

Patrick Hendricks claims AT&T’s Internet Overcharging “was discovered by an independent consulting firm retained by plaintiff’s counsel, which conducted a two-month study of AT&T’s billing practices for data usage, and found that AT&T systematically overstate web server traffic by 7 percent to 14 percent, and in some instances by over 300 percent.”

The lawsuit compares the company’s billing system to a gas pump that charges for a full gallon when it only dispenses nine-tenths into your tank.

Hendricks’ suit also claims the same independent testing firm confirmed AT&T charges for data usage even when phones and iPads were disabled for data sessions, push notifications, location services, and other data features.  After 10 days, the firm found AT&T had billed 35 data transactions totaling 2,292 kilobytes of usage, akin to being billed for gas when you never even pulled into the station.

The complaint admits the individual overcharges are relatively small for most consumers, but collectively they earn massive profits for AT&T.

“AT&T has 92.8 million customers. In the fourth quarter of 2010, AT&T reported its wireless data revenues increased $1.1 billion, or 27.4 percent, from the year-earlier quarter, to $4.9 billion,” the suit claims. “A significant portion of those data revenues were inflated by AT&T’s rigged billing system for data transactions.”

The lawsuit is seeking class action status and refunds of alleged overcharging for impacted customers.

The firm handling the case, Bursor & Fisher, has tangled with cell phone providers before, winning cases against Verizon, Sprint and T-Mobile.  The firm is also exploring a lawsuit against Sprint on behalf of Evo owners who paid a $10 surcharge on top of an “unlimited” data plan.

The Associated Press reports, and Stop the Cap! can confirm AT&T is allowing some of their long-standing customers to switch back to unlimited data plans, even if they gave them up after the company introduced cheaper, limited data plan options.

After our regular reader “PreventCAPS” sent word AT&T was relenting on some requests for unlimited data plans, we spent some time late this afternoon with Jim Scott, an AT&T customer from New Rochelle, N.Y. as he navigated his way through AT&T customer service trying to get back to an unlimited data plan.

“When AT&T offered customers new, cheaper data plans, I never knew those replaced the unlimited option and I thought I could save some money downgrading to a cheaper data option,” Scott told us.

But Scott discovered the plan allowances he got didn’t save him money at all, because he exceeded them.

“I am a contractor and I spend all day on my phone moving large image files and even video of work being done on the properties I manage,” Scott says.  “Two gigabytes didn’t cut it.”

Scott tried to switch back to his unlimited plan this summer, but was told he could not, as it was no longer offered.

Enter Verizon Wireless, which is keeping its unlimited service plan at least temporarily as it introduces the Verizon iPhone.  Verizon’s imminent iPhone has become leverage for customers who want to turn the tables on AT&T.

“Thanks to AT&T’s greed, I had already made the decision to dump them for Verizon when my contract ends in February,” Scott says. “AT&T works fine in this part of New York, and the only reason I am leaving is because they don’t have a wireless data plan that met my needs.”

We worked with Scott and suggested he threaten to cancel his AT&T service and walk his future business to Verizon Wireless.  We asked him to make sure to tell AT&T the reason he was planning to cancel his service was because of the end of unlimited data option.

On a three-way call with AT&T customer service, AT&T promptly offered to restore Scott’s access to its discontinued unlimited data plan.

“All I had to say was ‘Verizon’ and ‘iPhone’ and the customer service representative immediately starting clacking away on her keyboard, and I had my unlimited data plan restored in less than five minutes,” Scott said.

The AP reports the key to success is having been a previous subscriber to AT&T’s unlimited data option.  New customers who signed up after June 2010 never had that option, and AT&T has refused to offer unlimited data to these customers.

Because newer customers are under relatively new contracts, actually following through on a threat to drop AT&T is an expensive proposition with early termination fees still well into the hundreds of dollars.  For those closer to a penalty-free exit, AT&T recognizes many of these customers already have one foot out the door.

Jose Argumedo, of Brentwood, N.Y., told the AP he and a friend were switched to an unlimited plan recently after they called AT&T’s customer service. Both have iPhone 4s, and previously had earlier iPhone models.

AT&T spokesman Mark Siegel wouldn’t confirm the option to return to an unlimited plan.

“We handle customers and their situations individually, and we’re not going to discuss specifics,” he said.

Scott says he is comfortable with his iPhone, but getting back an unlimited data plan was more important than the handset.

“If I can use the iPhone as leverage against these guys, why not?” Scott says.  “They’ve had me under their thumb for more than six months now with overlimit fees — now the table is turned.”

Stop the Cap! advises customers who want to follow in Scott’s footsteps get organized before calling:

1. Be sure to note the number of years you have been an AT&T customer;
2. Explain you used to have unlimited data and now want that plan back;
3. Tell them you are prepared to drop AT&T, even at the risk of a cancellation fee, if they don’t restore your access to the unlimited data plan.

If a representative is unable to make the switch, or doesn’t have information about how to switch you back, ask for a supervisor or hang up and call back.

Since federal courts ruled that corporations are people, shouldn’t that mean those corporations also deserve the same privacy rights you and I enjoy?

AT&T intends to find out at the U.S. Supreme Court in the case of FCC v. AT&T Inc., an effort to win privacy rights for itself and keep potentially embarrassing documents out of the hands of third parties.

At least one court — the U.S. Court of Appeals for the Third Circuit, which includes the very-business-friendly state of Delaware, agreed with AT&T.  It ruled that since a corporation is also defined as a  “person,” it deserved enhanced protections available to ordinary citizens.

In AT&T’s world, that includes adjectives — all things personal, as in “personal privacy.”

The implications of such an interpretation are stunning, and judicial activism on this scale would deliver a golden platter of new rights to corporate interests that would wipe away oversight and more than a century of accepted business law.

AT&T could use its new powers to deny requests for documents and other materials, on the principle it would violate its privacy and potentially “embarrass” the company.  AT&T as an entity could get the right to remain silent and enjoy double jeopardy protections from repeated investigations.

It would be like watching a Law & Order episode with a corporate logo propped up at the defense table.

Overreach much, AT&T?

Many members of the U.S. Supreme Court apparently thought so during last week’s arguments, judging from the astonished reactions to AT&T lawyer Geoffrey Klineberg’s reasoning.

“Anything that would embarrass the corporation is – is a privacy interest?” Justice Antonin Scalia asked. “You talk about personal characteristics. That doesn’t mean the characteristics of General Motors. You talk about personal qualities. It doesn’t mean the qualities of General Motors. [The ‘personal privacy’ of a corporation] is a very strange phrase to me.”

Chief Justice John Roberts was also skeptical of AT&T “adjective”-shopping, noting several examples of adjectives with different meanings from their root nouns: “craft and crafty; squirrel and squirrely; pastor and pastoral.”

AT&T is no stranger to the federal court system, pouring millions of dollars into a range of legal actions that suggest the company takes its “Rethink Possible” slogan to literal extremes in some business-friendly legal venues.  [Stop the Cap! covered an earlier California case where AT&T argued consumers do not have the right to file class action lawsuits against the company.]

At Issue: Earlier AT&T Wrongdoing

In 2004, SBC Communications (which now owns AT&T) overcharged the government to provide technology services to several Connecticut schools, under the government’s E-Rate program (funded by telephone ratepayers).  After earlier abuses in the program were exposed and the federal government was threatening to expand investigations, SBC turned themselves in and handed over documents demanded by the Federal Communications Commission.  In return for its cooperation, AT&T got to admit no wrongdoing, but did pay a half-million dollar fine.

That didn’t sit well with CompTel, a Washington-based phone company trade association.  In 2005, Mary Albert, the group’s assistant general counsel e-mailed a request for copies of the documents collected by the FCC in the case.

“I made the request because I was very surprised to see the FCC enter into a consent decree in a case like this,” Albert said. “There has been a serious problem with E-Rate fraud over the years. I don’t mean to accuse AT&T of fraud, but there were clearly [enough] problems with its billing [to the program] that it reimbursed the government.”

Klineberg

Under federal law, documents collected by the government have to be made public under the Freedom of Information Act (FOIA), so long as those documents do not violate national security or expose certain personal, private information (typically home addresses, phone numbers, Social Security numbers, etc.)  Companies also have long-standing, existing exemptions protecting confidential trade secrets and other proprietary business information.

Albert expected to receive documents with “blacked-out” information protecting AT&T’s trade secrets, but instead she ended up with nothing.

AT&T argues the release of -any- of the documents would embarrass the company and violate its personal privacy.  It demanded, and got the FCC to withhold release of the documents and the dispute has been working its way through the court system.

The FCC argues corporations can’t sue over invasion of privacy.  Why?  Because they are an entity, not a person.

How does someone violate the privacy of a corporate entity that doesn’t live, breathe, or even blush?

Legal observers say the case isn’t really about protecting AT&T from potential embarrassment — it’s about curtailing the government’s right to request and receive documents from companies as part of its oversight process and to investigate potential wrongdoing.

On cue, Lawrence J. Spiwak, president of the Phoenix Center for Advanced Legal & Economic Public Policy Studies (which receives substantial funding from AT&T), argues AT&T’s arguments have merit because if corporations are not protected under FOIA’s law-enforcement exemption, they will be less forthcoming to the government.

In other words, if you don’t give AT&T what it wants, it will bury, shred or hide important documents when regulators come looking.

"If you have to ask how much, you can't afford it."

Knology, which bought out Sunflower Broadband last year, has elected to carry forward the old owner’s Internet Overcharging schemes, charging broadband customers penalty rates for exceeding their usage allowances.

The company’s explanation for their overpriced bandwidth comes with a tall tale about their competitors they simply made up out of thin air:

Data transfer allotments allow Knology to offer higher speed service with lower prices. Unlimited, open usage plans offered by other providers typically employ network controls to slow down the high usage customers.

That’s news to us, and to their nearest competitor AT&T.  They deny speed throttling any of their U-verse or DSL customers.

While the company’s download speeds are impressive — up to 50Mbps — their upload speeds are not, topping out at a paltry 1Mbps.

Knology's pricing is nearly identical to its predecessor Sunflower Broadband, except for the $5 rate hike for its most popular Silver plan.

Knology claims they expand usage allowances based not on network capacity, but by the percentage of customers they gouge with overlimit fees:

Data transfer allotments: Each level of internet above includes the amount of data transfer indicated measured in Gigabytes (GB). The data transfer allotments are increased regularly, based on usage patterns, to ensure the number of customers who go over their allotments remains under 10%. Additional GB of data transferred beyond the allotment is billed at $1.00 per GB if not purchased at a discount before the end of the billing period. The percentage of Knology customers charged for extra data transfer beyond their allotment was 6.1% in April 2009.

Paul Bunyon, Knology's new director of marketing

Bemusingly, customers with time machines who can travel into the future and determine they will exceed their allowance for the month can pre-purchase an increase in their usage allowance at a discount.

No time machine?  Then you either pay the standard overlimit rate, watch your usage like a hawk, or potentially over-buy excess usage that expires at the end of the month.

Customers tell Stop the Cap! the company’s single, unlimited use package is “the same piece of garbage it always was,” writes Larry who lives in Lawrence.  He had high hopes Knology would do the right thing and abandon Sunflower’s overcharging schemes.

“Apparently not, and after a month with their unlimited service, I have scheduled my U-verse installation with AT&T,” Larry writes. “Even on Knology’s limited packages, they don’t provide the speeds they promise.”

Larry also says the higher speed tiers Knology offers deliver diminishing returns.

“If their uplink is congested, or the web sites you visit are busy, it won’t matter if you have 10Mbps or 50Mbps — the speed is effectively the same,” he says. “Besides, upload speed is more important these days and 1Mbps is just plain lousy in 2011.”

“Bye, bye SunKnology.”

Sunflower's Old Broadband Plans & Pricing (February 2010)

Despite promises from AT&T and their astroturf friends that telecom deregulation would result in lower prices for Ohio residents, the company announced this week it was -increasing- prices for basic landlines — the service Ohio’s poorest rely on most from the phone giant.

AT&T Ohio residential customers are receiving notices with their recent bills that effective Jan. 7, monthly service will increase by $1.25, the maximum amount allowed under Ohio’s new deregulation law.  Before taxes, fees, and surcharges, Ohio phone rates for basic residential service will increase from $14.25 to $15.50.

It’s the fourth rate hike in four years for Ohio landline customers who were promised savings as a result of telecommunications deregulation.

But in fact AT&T’s lobbyists recommended and got language in the legislation that actually reduced the competitive test required for AT&T to win approval of rate increases.

Under old Ohio law, AT&T had to show they had at least five competitors in a service area; today that number has been reduced to just two, leaving virtually the entire state wide open to unfettered rate hikes.

“It is unfortunate residential consumers will have to pay more for basic landline service, especially during these difficult economic times,” Consumers’ Counsel Janine Migden-Ostrander told the Times-Reporter.

The Ohio Consumers’ Counsel tried to have the rate increase rolled back, arguing under the new law, AT&T Ohio failed to show proof that even two competitive services are available.

But AT&T’s lobbyists made sure the company really did not have to respond, because the new law provides for automatic approval if Ohio’s Public Utility Commission fails to deny rate hike requests within a 30 day window.  In this case, they did not rule on the Consumer Counsel’s appeal within 30 days, which effectively ceded the issue to AT&T’s favor.

While large numbers of Ohio residents continue to drop landline service in favor of cell phones or phone service from the cable company, Ohio’s rural and poor consumers are the least likely to cancel landline service, and face the brunt of the rate hikes, even as they cannot buy (or afford) products like U-verse AT&T said would be possible with statewide deregulation.