Verizon Wireless sees enormous new revenue opportunities in the “machine to machine” applications business, using its LTE 4G wireless network to exchange data between you and the companies you do business with.

Fran Shammo, Verizon’s chief financial officer, noted that State Farm Insurance is just one example where your wireless carrier and insurance company will quietly collect data about your driving habits based on the car seat law in california and share the information for marketing purposes and to micromanage your driving insurance rates based on your real driving habits.

State Farm Insurance recently signed an agreement with Verizon subsidiary Hughes Telematics, which today embeds microchips into vehicles that can communicate over Verizon’s nationwide wireless network. In the near future, State Farm Insurance customers’ driving habits will be automatically tracked by Verizon Wireless with certain data shared with the insurance company to personalize your auto insurance rates.

Shammo

“If you know the car insurance industry today, they do everything based on actuarial studies and make you pay based on your driving habits, charging a premium specific to your driving,” Shammo told investors at the Oppenheimer 16th Annual Technology, Internet & Communications Conference. “We will accumulate that data, analyze that, and send that off to State Farm.” Keep your car protected with extended warranty protection. Drive confidently with Nova Warranty’s Jeep Extended Warranty.

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With the contracts signed, State Farm hopes to expand its Drive Safe & Save program nationwide later this year. It will be voluntary, for now, for customers driving OnStar-equipped vehicles from General Motors and Ford’s Sync system. Others can take part with Hughes’ In-Drive tracking device, installed by the customer. Customers choosing In-Drive will have to pay a monthly fee for the device ranging from $5-15 a month.

Verizon Wireless will benefit from tracking information about where customers are, have been, and are likely to go in the future. State Farm will not benefit from that level of precision, however. Verizon will purposely “fuzz” up those details, depicting vehicles only within a 40-mile radius. But State Farm will still know a great deal about your personal driving habits, which can directly affect your insurance premium.

State Farm says its program is primarily intended to deliver discounts to safe drivers (sometimes up to 50 percent off the highest risk category drivers, such as teens), not penalize unsafe ones. But the insurance company does disclose it will increase rates of policyholders caught driving over their selected mileage category or if they are ever tracked driving 80mph or over for any reason, regardless of the posted speed limit.

The amount of the discount is dependent on a number of factors, mostly based on mileage driven, the time of day the vehicle is on the road, and the rate which one accelerates and brakes while driving. But State Farm agents admit other factors can also penalize you. Making a lot of left turns will cut your discount — more accidents occur during those. When that unfortunately happens, you can go to this web-site. How hard of a turn you make also matters – squealing tires and a fast turn will earn a spanking for aggressive driving. Do you often pass other vehicles? That can hurt your discount as well.

Progressive pitches its “Snapshot” drive tracking system.

If you don’t drive the car at all, State Farm will, not surprisingly, praise your driving habits and boost your discount. A car driven under 500 miles a year may get a 30% discount. Drive it close to the annual average of 11,000 miles and your discount plummets to 11%. Long commutes hurt the most. A policyholder driving 16,000 miles a year will only receive 1% off.

Wherever you go, Verizon Wireless and State Farm, among other insurers, will be watching and that bothers some privacy experts.

“It’s a slippery slope,” Paul Stephens, an official with the Privacy Rights Clearinghouse, told the Wall Street Journal. While insurers say they don’t track routes driven, Mr. Stephens fears that as programs expand and get more commonplace, insurers may wind up with “a very detailed log of your whereabouts throughout the day.”

A St. Louis Post-Dispatch reporter joined over 1.4 million other Progressive insurance customers driving with Snapshot — a competing drive tracking system. He concluded it felt like driving with a nanny.

It beeped at me when I braked too hard or floored it up the ramp to Highway 40. Each beep, I knew, was a demerit that could mean a higher insurance quote.

Like some other programs, Progressive lets you keep track of your performance on its website, measuring your braking, acceleration and mileage. It grades you as excellent, good or “opportunity,” which is a nice way of saying “no discount for you, bub.” It also awards little online merit badges. I got one for “alien abduction,” since I left town and didn’t drive for a week. When I finished the tryout, the system offered me an initial 12 percent discount from Progressive’s normal rate. I’m considering this device.

Privacy experts also caution that those refusing to install the currently voluntary drive tracking systems may eventually be lumped into high risk driving pools because insurers may conclude those drivers have something to hide.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Progressive Snapshot 8-13.flv[/flv]

Progressive’s omnipresent spokesperson “Flo” introduces drivers to Snapshot, the insurance company’s driver tracking system. (1 minute)

“You can see who is defensive and who is aggressive,” said Richard Hutchinson, Progressive’s general manager for usage-based insurance. “It gives us very powerful data from an insurance standpoint.”

“If people choose to (sign up for the program), that’s up to them,” said Wisconsin state Sen. Jon Erpenbach (D-Middleton), a longtime privacy advocate. “But I would just caution people to know exactly what they’re getting into.  I have huge privacy concerns (about the program). They are offering a 5 percent discount and I would assume somebody’s rates are going up somewhere else to pay for that.”

Wisconsin-based American Family Insurance takes driver tracking to an even more personal level with its Teen Safe Driver system, which uses DriveCam technology to maintain a comprehensive video and data record of driving habits. If the system detects unsafe driving, a professional driving coach will automatically receive a video file showing the incident, leading to a personal follow-up to discuss the dangerous driving.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/TeenSafe Drivecam 8-13.flv[/flv]

American Family Insurance’s TeenSafe Driver Program uses an in-car camera to watch teen drivers and automatically sends video of incidents to a professional driving coach if an infraction or unsafe driving is detected. Could insurance companies adopt similar technology for adult drivers for on-the-spot rate adjustments in the future? (3 minutes)

Erpenbach

“Armed with this kind of data, an insurance company could eventually theoretically adjust a driver’s insurance rates on the spot, or even notify the policyholder they intend to cancel their insurance,” says Sam Underwood, who feels the insurance industry will soon police more driving infractions than local traffic cops. “While a safe driver may feel they have nothing to hide, their driving details could be subject to disclosure under a criminal or civil subpoena as part of any legal action, driving related or not.”

Ten years ago, privacy experts worried about automated toll collection devices like E-Z Pass being used to track driving habits. Underwood says insurance companies will take that to a whole different level.

“They have a vested interest in reducing insurance claims and payouts and there is probably nothing wrong with that because who wants to be in an accident,” Underwood says. “But under current laws, they are the judge, jury and executioner and can subjectively use this data to set rates as they please. It starts with a tantalizing discount but ends with a compulsory system that will make cell companies like Verizon Wireless a lot of money and let them keep a copy of collected data for who knows what purpose.”

The Wall Street Journal calls the programs “usage based insurance,” priced according to how customers actually drive. But there have been some familiar arguments and “family discussions” that have followed the regular report cards and insurance renewal premiums that arrive after enrolling into the tracking programs:

One day recently, Mr. Scharlau logged onto his State Farm account to learn he so far had earned “A+” grades for left-hand turns and for not topping 80 miles per hour, but only “B+” for braking, acceleration and time of day his Expedition was on the road. Mr. Scharlau said he and his wife now find themselves chatting “about our own driving and what we see around us: ‘Oops, did we just lose points?'”

Shammo says Verizon Wireless is just beginning to profit from this type of machine to machine application. It has well-positioned itself with the acquisition of Hughes Telematics, which develops chipsets that makes it simple to move data over Verizon’s wireless network. Shammo admits it costs just pennies on the dollar to transport information from applications like drive tracking devices. But Verizon isn’t satisfied just charging for data traffic. The real earnings come from processing the data Verizon collects, analyzes and transmits back to clients like State Farm.

“If you then take the next step, though, the value is really in the data in the cloud and how you can utilize data to do the analytics behind that,” Shammo said. “If you look at Hughes Telematics and what they are doing […], it’s not the transport through Verizon Wireless that really creates the average revenue per user increment on that machine to machine [traffic]. It’s all the other analytics behind that. The ARPU on that is $20 to $30 higher than what it would be on a machine-to-machine type application for just transport.”

Verizon Wireless considers machine to machine traffic still in its infancy and primed for more profits. That worries people like Sen. Erpenbach who wonders where it will all end.

“If I’m State Farm, sure, I want to know about any driving habit of my policyholders,” he said. “I would also love to know, if I’m State Farm, what everybody does in their houses (for home insurance purposes). And I’m sure health companies would love to see people’s grocery lists.”

[Image: The Verge]

Details remain sketchy, but The Verge and TMONews report the new plan will continue T-Mobile’s efforts to break free from the traditional 24-month upgrade cycle for phones offered by other carriers.

Although new by North American standards, providing an “equipment plan” is not unprecedented in Europe. O2 offers a “Refresh” plan specifically targeting likely early upgraders who want the latest devices and do not want to wait through a two-year upgrade cycle.

In North America, customers buy the phone at a subsidized price and then pay back that discount subsidy over the life of the traditional two-year contract (through artificially higher cell phone plan rates).

When one buys a phone on the O2 Refresh plan in Europe, the customer signs up for a 24-month equipment plan which covers both the cost of the phone, the Refresh feature and an airtime plan which covers everything else.

Customers who want to upgrade early simply pay off the remaining balance on their equipment plan (at a rate lower than the usual penalty fee) and upgrade the device at a discounted, new customer price.

T-Mobile has done away with the two-year contract most North Americans are familiar with, so the Jump plan will be different from O2’s Refresh Plan.

The Verge suggests T-Mobile will introduce a type of lease-to-own financing with Jump.

Customers will presumably pay a monthly fee to join the Jump “club” offering early upgrades. When a customer wants a newer phone, they might pay the same upfront fee a new customer would, but instead of being forced to pay off the full remaining balance due on their old phone, they would return it to T-Mobile and start a new financing arrangement for their next phone. If a customer keeps the phone until it is paid off, the customer would presumably own it.

CNET reports customers will also be provided with handset insurance, important if T-Mobile intends to keep an ownership interest in the phone until it is returned or paid off.

The details are forthcoming, but such a “lease-to-own” arrangement would still leave plenty of room for T-Mobile to recoup their costs, depending on how much they charge for the “upgrade anytime” feature.

The downside is that some customers may decide it is easier to pay off the remaining owed balance on a traditional T-Mobile financing contract and sell the phone to a third-party instead of sending it back to T-Mobile.

Comcast: You owe us $640 (Original image: Sentinel & Enterprise)

Comcast billed a Leominster woman $640 for cable television equipment destroyed in a major apartment fire, despite promises from the company she would not be charged.

Lakisha Nunez spent months fighting with Comcast over the equipment lost when a fire broke out at the Columbia Hotel building on Nov. 24.

Two days later, Nunez contacted Comcast to inform them of the fire and to temporarily suspend service. A representative promised she would not be held accountable for the unreturned equipment because the fire was not her fault.

One month later, the company changed its mind and refused to discuss the matter further. When the $640 bill arrived, she complained.

“I called and was told that is what (renter) insurance is for,” Nunez told the Sentinel & Enterprise.

Another representative told her the fees would be waived if she filed a “fire report” with the local Comcast office. She complied, but Comcast still refused to remove the charges.

The bill was finally waived after Leominster Mayor Dean Mazzarella’s office intervened on her behalf and reporters from the Sentinel & Enterprise also began making inquiries.

Comcast spokesman Marc Goodman quickly apologized and promised to refund $233 in fees she already paid, believing it covered her monthly service.

Stop the Cap! reminds renters that buying renter’s insurance is essential to protect your personal property (and that belonging to others) in the event of a catastrophic loss. It is inexpensive and easy to buy from any large insurance company.

A New Jersey man is facing down Verizon Communications after the company sent him a $2,345 bill for the company’s equipment lost in a devastating fire.

Jarrett Seltzer has been a Verizon FiOS customer for six years. A February fire destroyed virtually all of his property, including four Verizon cable boxes and a router installed six years ago. After notifying Verizon about the fire, Seltzer says Verizon continued to charge him for two additional weeks of service and then sent him a final bill for $2,345 to cover the lost equipment.

Seltzer called Verizon to complain about the bill and says he was transferred not less than 14 times during the call, which lasted about an hour and a half. At the end of the call, nothing was resolved.

“[Verizon] should be ashamed,” Seltzer said in a YouTube video describing his debacle.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Verizon FiOS billed me 2,345 for my burned cable boxes 9-21-12.flv[/flv]

Jarrett Seltzer says a February fire left him with nothing… except a $2,345 bill from Verizon Communications for equipment that was destroyed in the fire.  (2 minutes)

Seltzer says he has spent more than $18,000 as a Verizon FiOS customer over the last six years, and is astounded the company is aggressively trying to recoup damages for six year-old equipment. He is now at the point where he would not accept a credit from Verizon even if offered.

“I’d rather pay $2,345 for [equipment] I lost in a fire, along with everything else I’ve ever owned, than not make people aware of this,” Seltzer said.

Stop the Cap! regularly covers stories about customers facing enormous bills for lost or damaged provider equipment. While most companies will forego billing customers fees in high profile cases, and Comcast claims it will not charge customers for lost equipment if they don’t have insurance, many other companies are less understanding. One cable company asked a customer to search their tornado-devastated neighborhood to unearth lost equipment. Others demand advance payment while the insurance companies sort out claims in progress.

Renters are traditionally the most likely to face lost equipment charges because many mistakenly believe a landlord’s own insurance policy will cover their losses. That  impression can leave customers with nothing after a fire. But even with a personal renter’s insurance policy, some insurance companies still refuse to cover lost cable equipment or only offer to pay the depreciated, actual value of equipment, not the full retail price most companies demand. That may be the case with Geico — Seltzer’s next target.

[flv]http://www.phillipdampier.com/video/KDKA Pittsburgh Arson Victim Billed For Cable Equipment Lost In Fire 5-18-12.mp4[/flv]

KDKA in Pittsburgh got Comcast on the record — it will not bill people for lost or damaged equipment if they lack renter’s insurance — after this victim of an arson fire reported the company billed her more than $600 for lost cable equipment.  (2 minutes)

Sorry about your loss, but you still owe us for the equipment that melted in the fire.

An Antioch, Calif. woman on Social Security disability faced a substantial bill from AT&T for equipment lost in a recent house fire that left her with nothing but the clothes on her back, until the local media helped the company change its mind.

Her TV melted into a plastic mess, along with the box for AT&T. Now AT&T wants payment for the equipment. I have written them to inform them that everything, including the AT&T equipment, was destroyed in the fire. The company still wants to be paid for the destroyed parts. The landlord’s insurance did not cover tenant’s loss.

I want to let your readers know that if they lose their AT&T equipment due to a disaster beyond their control, they will have to pay for the equipment.

But once the San Jose Mercury News reached out to AT&T, they changed their mind.

AT&T spokesman John Britton:

“We are sorry to learn about the fire. We are glad our customer was able to get out of the burning house safely. We have adjusted the charges. Our policy is to be sensitive, listen to customers and to evaluate these claims on a case-by-case basis.”

AT&T would have dealt directly with the insurance company, if the customer kept and maintained renter’s insurance.

Most cable and phone companies maintain policies that require customers to compensate them for equipment either lost or damaged in natural disasters or fires. Problems arise most frequently when renters discover that whatever insurance a property owner maintains only covers damage or loss to the building itself. Renters need renter’s insurance to cover theft or damage to their property. The coverage is often overlooked, despite the fact it is very inexpensive.

Damaged cable television set top boxes can cost $300-500 or more each, no matter how old. Companies also routinely charge full price for damaged remote controls, cable modems, and company-supplied wireless routers.

Media attention regarding losses that were not the fault of customers often gets companies to waive fees, and some will issue blanket waivers where neighborhoods are affected by fire, flood, or tornadoes, but not always.

Insurance companies will usually handle matters directly with the cable, satellite, or phone company once the damaged equipment becomes part of an insurance claim. Some insurance policies will not cover the full replacement cost of equipment, but in such cases providers typically agree to accept the depreciated value to settle the matter.