We’ve heavily covered the proposed sale of Verizon landline service to Frontier Communications since the deal was announced last spring.  This should not come as a big surprise, considering Frontier Communications’ decision to insert a 5GB monthly usage limit in their Acceptable Use Policy in the summer of 2008 was what instigated the launch of Stop the Cap! in the first place.  Frontier’s decision was boneheaded at best in a city like Rochester with a very aggressive cable competitor only too willing to bash Frontier for implementing it if they thought it would win more customers.

But of course Frontier Communications’ Rochester operation is an anomaly for ‘rural America’s phone company.’  For the majority of rural customers, it’s far easier to slap customers around with a usage cap and 1-3Mbps DSL service when those customers have few, if any practical alternatives.  Unfortunately, there is real money to be made from their business plan serving frequently non-competitive communities with incrementally-upgraded “just enough” broadband service with unfriendly terms and conditions attached.

In several of the 14 states impacted by the proposed sale, the relatively small number of customers involved made it easy for regulators to quickly approve the proposal with few conditions attached. The deal flew under the radar and got scant press in most of these states.  Washington, Ohio, and West Virginia are another matter.  Regulators are taking a closer look at the deal in all three states where most of the controversy is taking place.  The deal is most contentious in West Virginia, where Verizon’s exit threatens to turn most of the state’s landline business over to Frontier Communications.

Stop the Cap! has been reviewing the public comments left on more than a dozen news sites, forums, and printed letters to the editor regarding the deal.  We’ve seen comments obviously coming from Frontier employees, union members, politicians, business leaders, and competitors.  But the vast majority come from ordinary consumers who have concerns about what the deal will do to their telephone and broadband service.  Most of the comments from consumers that embrace the sale don’t do so because they are fans of Frontier.  They simply loathe Verizon and want an alternative.  Boiled down, the consensus among those in favor of Frontier taking over is “let them try… they can’t do any worse than Verizon.”

[flv]http://www.phillipdampier.com/video/WCHS Charleston PSC Phone Hearing 1-12-2010.flv[/flv]

WCHS-TV in Charleston covers West Virginia’s Public Service Commission hearings reviewing the proposed deal.  Frontier employees arrived in Charleston to lobby for the sale. (1 minute)

Desperate for Broadband

There are a lot of West Virginians who still have no broadband options.  Frontier claims Verizon provides only 60 percent of their customers with a broadband option — DSL service that tops out at 7Mpbs, if you live in an urban area.  Those that don’t have often waited years for Verizon to extend DSL service into their communities or neighborhoods.  It’s a problem common in mountainous, often rural states like West Virginia where infrastructure costs can be prohibitive.  Customers believe that Frontier Communications will tolerate a lower return on their investment providing DSL service to those customers Verizon ignored.

Promising to expand broadband service in rural, unserved areas is a common sales point for all of the prior Verizon sell-offs.  Hawaiian Telcom promised improved broadband service and speed.  Fairpoint promised to expand DSL availability to 75 percent of all access lines within 18 months of the sale, 85 percent within two years and 95 percent within five years.  Frontier Communications promises to expand broadband service as well, claiming they already provide 92 percent of their existing West Virginia customers with the option.  Of course, Hawaiian Telcom and FairPoint both reneged on their commitments before going bankrupt.  Frontier Communications hasn’t yet been held to any specific commitment or timeline in West Virginia as part of their proposed takeover of service.

Consumer Reports rated TV, phone, and Internet providers, including Verizon and Frontier, in its February 2010 issue

To those suffering with dial-up or satellite fraudband, -any- broadband option seems like a miracle, even if it turns out to be 1-3Mbps DSL service with a 5GB allowance.  But as those kinds of anemic speeds arrive, cutting edge multimedia-rich broadband applications will become increasingly mainstream and leave these customers behind, again.  With a 5GB usage limit, it wouldn’t matter anyway, because customers will never be able to take advantage of services that will rapidly blow through those limits.  Make no mistake, a user’s broadband experience at 1.5Mbps with a 5GB allowance is going to be considerably different than a customer enjoying online multimedia from a cable provider or the next generation broadband service from Verizon FiOS or AT&T’s U-verse.  Think e-mail and basic web browsing, and that’s about all.

What kind of broadband experience does Frontier Communications bring?  This month, Consumer Reports rated Frontier dead last among DSL providers that own and operate their own broadband networks (subscription required).  The magazine rated 27 regional fiber, cable, and satellite providers and Frontier’s DSL ended up #19 on the list, the lowest rating of any DSL provider selling service on its own network.  Only Earthlink, which usually buys access on other providers’ networks came in lower among DSL providers.  Verizon actually scored higher than Frontier.

Frontier’s DSL service merited a 67 out of 100 score, rating only fair on value, speed, reliability, and customer support, based on 56,080 Consumer Reports subscribers who have a home Internet account.

Frontier’s phone service rated even lower, second to last in the survey.  Frontier was rated fair on value, reliability and call quality.  Only Mediacom did worse.  Verizon scored much better on reliability.  The magazine’s survey of phone companies was based on 37,484 respondents with phone service and was completed in the spring of 2009.

The consumer magazine did not recommend DSL for broadband access, suggesting consumers would do better with fiber optic broadband first, and cable modem service second.

Union Bashing – The enemy of my enemy is my friend

A significant minority of comments were focused entirely on union bashing, completely ignoring the specifics of the Frontier-Verizon sale.  All these people knew was that if the Communications Workers of America or other union was involved, they were the “real problem,” accusing union bosses of opposing the deal until they were paid off.

Nonsense.

Reality trumps anti-union talking points.  Consumers can review for themselves who correctly predicted the outcome of the last two deals of the recent past.  They were the CWA and the International Brotherhood of Electrical Workers, who accurately identified the service problems, the network transition problems, the debt load that prevented service expansion and upgrades, and the eventual bankruptcies experienced at Hawaiian Telcom and FairPoint Communications.  It turns out that asking front line employees who work in the office and out in the field maintaining the network are well positioned to give an honest assessment of these transactions that others seek to candy coat to get the deal done.

[flv]http://www.phillipdampier.com/video/WSAZ Charleston Frontier Defends Deal 1-12-2010.flv[/flv]

WSAZ-TV in Charleston delivered this decidedly pro-Frontier news report on the company’s efforts to counter opposition to the proposed sale. (3 minutes)

The Opposition

A large number of comments from those who oppose the deal believe they will actually be far worse off with Frontier.  Most relate the experiences of themselves or their friends and family who live in Frontier service areas, and they’re unhappy with Frontier’s poor customer service, reliability, and slow speed DSL.  Many were also unhappy with Frontier’s automatically-renewing contracts committing customers to stay with the company or face a steep early cancellation penalty.  Many more lament the lack of a future with Verizon fiber optics.

David Swanson, who blogs from his home in Golden Valley, Arizona just dumped Frontier for his local cable provider – Golden Valley Cable & Communications.  He says he was overpaying for Frontier’s DSL and phone package.  Together, after fees and taxes, $90 a month went to Frontier and $73 a month went to DirecTV for television service.  With his new cable bundle, he pays $100 a month for everything.  He uses Boost mobile for his phone, and has no need for a landline.

Reviews on DSL Reports aren’t exactly positive about Frontier either.

One Rochester customer isn’t happy with the “spotty service” he’s experienced on Frontier’s aging copper wire infrastructure, noting they don’t seem to be in any hurry to upgrade facilities in western New York.  He’s stuck with unreliable DSL service far slower than what Time Warner Cable’s Road Runner service can provide. Another customer in Lowville, New York admits he has to live with Frontier’s slow speed DSL because there is no other provider available.  In Kingman, Arizona one customer rated the company’s DSL service “slightly better than nothing.”

Even customers who had had good things to say about Frontier in forums often acknowledge their service simply isn’t a good value when considering the high cost charged for the slow speed received.

What Can Be Done?

At this point, it is critical impacted customers contact their state utility commission and state representatives and tell them this deal does not work for you.  It is true Verizon wants out of these service areas, and should they win the right to withdraw someone will have to assume control of landline operations in these communities.  But the terms and conditions for the company seeking to provide service should favor customers and not the Wall Street dealmakers.  Strict financial pre-conditions should be in place to guarantee the buyer is up to the task of providing service and upgrades.  Historically, it’s been far too easy to simply renege on the deal with a quick trip to Bankruptcy Court to shed the debt these deals pile on, and be rid of the service commitments that were part of the approval process.

A company that believes they’ll earn plenty from this deal should be spending plenty to provide quality broadband service starting at 10Mbps, not the 1-3Mbps service Frontier provides most of its rural service areas.  What chance do communities in West Virginia have to stay competitive in a digital economy that requires faster broadband access without the ridiculously low usage limits Frontier includes in their customer agreements?  In fact, usage limits and other Internet Overcharging schemes should be explicitly banned as part of any sales agreement.

Holding Verizon responsible for the outcome of deals that benefit them and their shareholders while sticking customers with a bankrupt provider must be considered.  An important component of past Verizon’s landline-dumping-deals involves the Reverse Morris Trust — delivering a tax-free transaction for Verizon and piles of debt for the buyer. That puts all the risk on ratepayers, lower level employees who are among the first to go when cost-cutting begins, and head-scratching regulators wondering where it all went wrong.  The only ones not doing any hand-wringing are Verizon’s accountants and the executive management of both companies who conjure up such deals.  That’s because they are rarely held accountable, and often win retention bonuses even while a company is mired in bankruptcy.

Regulators should insist Verizon play a fundamental role in insuring that customers are protected even after the deal closes, honoring commitments and financing operations should the buyer fail soon after the sale is complete.  Under these conditions, customers are protected and Verizon might think twice about structuring a deal that loads the buyer down in insurmountable debt.

“This deal is driven by greed — and we can learn from Northern New England’s and Hawaii’s experience to make sure it does not come to pass here or in the other 13 states,” said CWA’s District Two Vice-President Ron Collins, who has been leading the campaign in West Virginia.

Cox has a Facebook page devoted to asking customers what they think would be fair in wireless products and pricing.

The cable industry’s definition of “fair” doesn’t always seem to connect with average consumers, who too often discover what sounds like a good deal to the local cable company isn’t a good deal for them.  Despite the skepticism, Cox Communications thinks it has a deal for you… an “unbelievably fair deal” for consumers looking for wireless service.

Cox already has a website up and running, unbelievablyfair.com where Cox Cable customers can register with their e-mail address and get updates on service availability.  They also get a free OnDemand movie coupon.

If you’re wondering what Cox is up to, here’s the scoop.

Back in 2006, Cox and several other cable companies bid for and won several frequency blocks suitable to support wireless services.  Those frequencies, along with a partnership with Sprint Nextel, are expected to serve Cox’s entry into the wireless business.  Initially launching in Hampton Roads, Virginia, Omaha, Nebraska, and Orange County, California, Cox will use Sprint’s CDMA 3G network to support its wireless service at the outset.

The company hasn’t revealed exactly how “unbelievably fair” their pricing actually is, but based on the company’s advertising campaign, it’s a safe bet it will be free from the tricks, traps, and gotchas bigger players in the market stick to their customers.  Minute plans would likely provide “rollover” of unused minutes, if not kicking the minutes bucket right out of the equation with flat rate service.  Hidden extra fees and surcharges are also unlikely to be a part of Cox Wireless’ service plans.  That could ultimately mean a plan priced competitively with Boost Mobile or Tracfone Wireless’ Straight Talk.

Cox will eventually enhance Cox Wireless and provide it in other Cox Cable service areas, as well as building out its own wireless network.

“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,” said Stephen Bye, vice president of wireless. “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.”

Customers have been following Cox’s invitation to join in a discussion about wireless pricing fairness on the company’s Facebook page (click the logo above to access).  From a quick review of comments, customers want lower pricing, more bundled discounts, a better handset selection, better speed, and our personal favorite – no Internet Overcharging schemes like usage caps and limits on their data network.

Cox is rolling out a major marketing campaign to promote Cox Wireless, including advertising and discussions on company-produced programs airing on Cox Cable systems in the communities where service will arrive this spring.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Cox Wireless Advertising Campaign.flv[/flv]

Cox Wireless’ marketing campaign includes three ad spots and a website intro. (2 minutes)

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/Cox Connections 1-2010.flv[/flv]

Cox Cable in Hampton Roads, Virginia briefly mentions Cox Wireless in ‘Cox Connections,’ a company-produced program airing on Cox Cable.  (6 minutes)

Lawrence, Kansas is a unique place to live.  Its local newspaper, the Lawrence Journal-World, was one of the first in America to begin an online edition in 1995.  Its owner, The World Company, just so happens to also own the independent cable system serving the community, which also provides broadband and phone service to the city’s 90,000 residents.  Its biggest competitor is AT&T, which has been upgrading parts of Lawrence with its U-verse system to stay competitive.

Sunflower Broadband, which provides a “triple play” package of Internet, cable TV and telephone service, has remained controversial among service providers because it instituted an Internet Overcharging scheme with usage caps and overlimit fees.  The company has been used by the American Cable Association, a trade and lobbying group serving independent cable operators, as a poster child for effective rationed broadband schemes that reduce demand and increase broadband profits.

Lawrence, Kansas

Customers generally have loathed usage caps, particularly when they were stuck choosing between Sunflower’s faster, usage capped broadband service or a low speed DSL product from AT&T.  Stop the Cap! receives more complaints about Sunflower Broadband than any other provider, except Time Warner Cable during its own Internet Overcharging experiment in April 2009.  Lawrence residents appreciate the relatively fast speeds Sunflower can provide, but complain they can’t get much use from a service that limits customers to a set allowance and then bills them up to $2 per gigabyte in overlimit penalties when they exceed them.

Last fall, things started to change in Lawrence as AT&T began offering it’s U-verse service in parts of the community.  We began receiving e-mail from Lawrence residents pondering a new service plan Sunflower Broadband introduced — Palladium, an unmetered broadband option priced at $49.95 per month.  It sounded like a good deal, perhaps introduced to protect them from U-verse customer poaching, until they noticed Sunflower was  selling the plan without a fixed downstream or upstream speed.  In fact, no speed was mentioned at all.  Indeed, Sunflower’s Palladium is nothing new to those living abroad under various cap ‘n tier broadband regimes.  It’s comparable to New Zealand Telecom’s Big Time plan, where customers need not fear overlimit fees and penalties, but have to live with a “traffic management” scheme that gives priority to customers on other plans living under a usage cap.

In other words, Palladium customers get last priority on Sunflower’s network.  If the network is not congested, these customers should enjoy relatively fast connections.  But during primetime, expect speeds to drop… and dramatically so according to customers writing us.

Sunflower Broadband's Internet pricing - add $10 if you want standalone service

That customers debate just how slow those speeds can get testify to the nature of cable’s “shared infrastructure.”  Groups of subscribers are pooled together in geographic areas and share a set amount of bandwidth.  As usage increases, so does congestion.  Responsible operators measure that congestion and can split particularly busy neighborhoods into two or more distinct “pools,” each sharing their own bandwidth.  Based on the variable reports we’ve read, it’s apparent Palladium works better in some parts of Lawrence, namely those with fewer broadband enthusiasts, than others.

Network management is a major concern of Net Neutrality proponents.  It allows an operator to artificially impede traffic based on its type, who generates it, and potentially how much a customer has paid to prevent that throttling of their speed.  In the case of Palladium, network management is used to give usage-capped customers first priority for available bandwidth, and push Palladium customers further back in line.

Judging the quality of such a service is a classic case of “your results may vary,” because it is entirely dependent on when one uses the Internet, how many others are logged in and trying to use it at the same time, how many customers are saturating their connections with high traffic downloading and uploading, and how many people are sharing your “pool” of bandwidth.  Oh, and the quality of your cable line can create a major impact as well.

Sunflower Broadband representatives claim Palladium is “optimized for video” and should provide at least 2Mbps service during peak usage and up to 21Mbps service at non-peak times.  That’s a tremendous gap, and we wanted to find out whether most customers were getting closer to the low end or the high end of that range.

Back in October, we wrote a request in the comments section of the Journal-World asking customers to e-mail us with answers to several questions about their experiences with Sunflower Broadband:

• 1) whether you ever exceed the cap.
• 2) do you think there should be one.
• 3) would you prefer faster speed with a cap or slightly slower speed with no cap.
• 4) your experience with the new unlimited option.
• 5) whether you would contemplate switching to AT&T U-verse if it meant escaping a usage cap, even if it had slower speeds.
• 6) Would you pay more for faster speed and no cap?
• 7) your overall feelings about Sunflower Broadband.

We heard from just over two dozen readers sharing their thoughts about the company and its service.  The response was mixed.

Generally speaking, customers hate the usage caps Sunflower Broadband maintains on most of their broadband tiers.  All thought it was unfair and unreasonable to limit broadband service under Sunflower’s Bronze tier to just 2GB per month and their Silver tier to just 25GB per month.  Most customers who wrote subscribed to the Silver tier of service with 7Mbps/256kbps speeds at $29.95 per month.  They also paid a $5 monthly modem rental charge.  Those who wrote who fit the “broadband enthusiast” category were internally debating whether the Gold plan, with its assured 50Mbps/1Mbps speeds for $59.95 per month was a better option, even with a 120GB allowance, or whether they should opt for Palladium’s $49.95 option to escape the usage cap.

Among enthusiasts, some felt Sunflower responded to customer demands by offering an unlimited plan in the first place, and thought it was an acceptable trade-off to obtain lower speeds at peak usage times for a correspondingly lower price, and no cap, as long as speeds were reasonable at all times.  Others were offended they had to make the choice in the first place.

“If I lived anywhere else, I wouldn’t have to choose between a throttled service or one that asks for $60 a month for 120GB of service,” writes Steve from Lawrence.  “AT&T DSL for me is 1.5Mbps service because I live close to the edge of the distance limit from AT&T’s exchange.”

But Justin, also from Lawrence, has a more favorable view. “I hate their usage cap with a passion, but when you look at what small cable companies usually offer their customers, it’s slow speed service at terribly high prices,” he writes. “At least Sunflower did DOCSIS 3 upgrades and can offer big city speeds here.  How long will that take other small independent providers?”

Troy adds, “at least they gave us one choice for unlimited service.  Time Warner Cable and Comcast sure didn’t.”

About half of those who wrote did exceed their usage cap by underestimating the amount of usage in their respective households.  Most of those who did were on the Silver plan.

Dave writes, “I knew right off the bat the Bronze tier was ridiculous for anyone to choose, and our family has three teenagers so we knew that was not an option.  We tried the Silver plan when we switched from AT&T DSL service and blew the lid off that 25GB cap probably within two weeks and got a crazy bill.  At least Sunflower forgave the overlimit fees for the first month, but they could afford to because we upgraded to Palladium, paying them $20 more per month.”

One customer's dismal Palladium speed test result from last October, likely the result of a signal problem

Angela, who shares an apartment with two other roommates had their share of fights over who used up all the broadband allowance.

“We have a wireless network and everyone splits the bill, but when we ran up almost 200GB of usage, we freaked.  Nobody would admit to using that much Internet.  Thanks to my boyfriend, we discovered our wireless router was wide open and one of our lovely neighbors probably hopped on to enjoy,” Angela writes.

Sunflower also forgave their overlimit bill for the first month, but they decided to take advantage of an introductory offer from AT&T and switched to U-verse and are much happier.

“At least with AT&T, we know what our broadband bill is going to be and we don’t have fights or worries about getting a huge bill from Sunflower,” she adds.

Among those answering our question about reduced speed in return for no cap, the consensus view was “we would need to know what speed they are providing.”  Broadband speed was important to most who wrote.  While many may not be able to discern a difference between 10 and 20Mbps service for most online activities, obtaining 2Mbps service when expecting closer to 20Mbps is readily apparent, and that was the biggest problem with Palladium users unimpressed with its performance.

“Palladium is god awful, and close to unusable on the weekends and during the early evening when everyone is online,” writes Kelly, also in Lawrence.  “We have college students all over the neighborhood and these people can’t be unconnected for a minute, so I’m not surprised Palladium crawls when everyone is online.”

Kyle, a regular Stop the Cap! reader writes the whole concept of Palladium leaves a bad taste in his mouth.

“Palladium is the equivalent of going into a restaurant and eating leftovers — whatever speed is leftover, it’s yours.  Sometimes it might be a whole meal, other times scraps!  It’s an example of crappy customer service coming from a provider which doesn’t have much competition (although maybe that will change with U-verse),” he says.

Kyle is on the Gold plan, but remains unimpressed with Sunflower:

“Is there another DOCSIS 3 system in the country that limits upload speed to 1Mbps or has a bandwidth cap this low (120 GB) with DOCSIS 3?”

Stop the Cap! also obtained access to the company’s subscriber-only forums and discovered considerable discontent with Sunflower’s broadband service.

“I recently switched over to Palladium to avoid the new Gold price gouging. I bought the new modem set it up and much to my surprise my speeds were HORRIFIC! Consistently 4.5Mbps service over the course of a week at various times. Upload speeds were so terrible it took 15 minutes to send emails with one minute movies,” writes one user.  “So, for $20 more a month Palladium offers much slower speeds BUT unlimited bandwidth (which according to Sunflower’s own statistics almost no one exceeds their limits anyway.)  What a rip-off. All I want is my old Gold back, same speed and price. I am absolutely disgusted with Sunflower. Calling Palladium “variable speed” is a lie. You are throttling customers – period.”

“So I have Palladium and the speeds are decent, usually around 10Mbps down (we won’t talk about up speeds.) But every time I run a torrent my speeds go down to about 500kbps. The second I turn off my torrent client and run a speed test again its right back up to 10. Has anyone else been having similar issues? It seems like Sunflower throttles my entire connection when they detect a torrent,” writes another.

One Lawrence resident claims he was blacklisted by Sunflower Broadband after criticizing them.

“Their blacklisting of me served as a warning to others after I spoke out nationally.  They are quite pissed and I’m not allowed to go to any event sponsored by them.  I even got removed from the local Twitter festival,” a person who I have chosen to keep anonymous writes. “The nutshell is that the bandwidth from DOCSIS 3.0 is extremely throttled for Palladium users. If they have done heavy downloading the throttle drops speed to about 2Mbps.”

For Lawrence residents who have decided they don’t like the choices Sunflower provides for broadband service, the good news is that AT&T is upgrading their network in the city to provide U-verse service, and many who wrote us have switched just because AT&T does not engage in Internet Overcharging caps and limits in Lawrence.

There is even a blog devoted to comparing Sunflower Broadband service with AT&T U-verse.  The Lawrence Broadband Observer has been reporting on the dueling providers since August.  His verdict: AT&T U-verse wins for broadband for its more stable speeds, and no Internet Overcharging schemes, even if it costs more:

We decided to go with U-verse for our Internet service, canceling our Sunflower Broadband Internet, which we had used for over 13 years. U-verse’ top line internet costs $15 more per month then Sunflower’s; we decided that the advantages of U-Verse for Internet were enough to make this extra $15 per month a reasonable value.

Furthermore, the speed of U-verse has been remarkably consistent, always ranging between 16 and 17Mbps down and about 1.4Mbps up, no matter the time of day.

While Sunflower’s service is very fast at certain times of day, it frequently slows down during evenings or other times of heavy network use, sometimes to less then half of the speed we were paying for.

The other primary reason we went with U-verse was because U-verse does not have bandwidth overage fees or any kind of bandwidth limits. Although we have been careful with Sunflower and managed to avoid any bandwidth overage charges, having “the meter running” all the time was annoying, and we worried that we could always be surprised with an unexpected charge. With U-verse we do not have this worry.  One could almost think of the $15 extra for U-verse as an insurance policy…it buys peace of mind not having to worry about bandwidth overages.

Robert F. McDowell

Two Republicans serving on the Federal Communications Commission told attendees at Saturday’s Tech Policy Summit that “usage-based pricing” for wireless broadband could be a solution to congested cell phone data networks.

“Pricing freedom has to be essential, because a small number of users take up the majority of bandwidth. So charging some of the heavy users for that bandwidth makes sense,” Commissioner Robert McDowell said during a panel discussion at the 2010 Consumer Electronics Show.

“I think it’s time to let that happen,” he added. “Net neutrality proponents say it should be an all-you-can-eat price. But that will lead to gridlock.”

The discussion, Inside the FCC’s Communications Agenda, focused on the FCC’s agenda in light of the Obama Administration’s new policy initiatives and the current the impact technology has on regulatory policy.

McDowell was responding to industry reports that Verizon was prepared to abandon all-you-can-eat pricing for wireless data on its forthcoming 4G LTE wireless network, even though it doesn’t actually have such a plan in place at the time the panel discussion was held.

McDowell believes that since private money is constructing the networks capable of delivering LTE service, the company has a right to charge what it pleases for service, reducing demand with a correspondingly higher price for those who use the network more than others.

Meredith Atwell Baker

Consumer advocates argue that current profits in the wireless industry provide ample resources to build and upgrade networks without overcharging consumers with expensive usage based pricing designed to make customers think twice before using the service they pay good money to receive.  Unlimited use pricing is favored by consumers as well.  Most providers abandoned “all you can eat” plans at least a year ago.  Every wireless broadband plan carries some limitations somewhere in the fine print, particularly for plans that are designed for mobile netbooks or laptops.  Virtually all of them either limit usage to 5GB per month or throttle the user who exceeds that amount down to dial-up speeds for the rest of the month.

Meredith Attwell Baker, the newest Republican FCC Commissioner, seemed slightly out of her element in discussing the issue of consumption billing.

As panel moderator Kim Hart reported for The Hill newspaper, Baker has some novel ideas for easing congestion on wireless broadband networks.

“Maybe we move back to a world where people pay for roaming,” she said.

Verizon Wireless is expected to unveil three new data plans on January 18th, including a new smartphone-mandatory “unlimited broadband” 3G plan priced at $29.99 per month, according to documents obtained by Broadband Reports.

The documents, provided by a Verizon Wireless employee, show the company is moving towards mandating all of their customers select some sort of data plan as part of their monthly service.  But unlike some wireless providers that leave options open to customers, Verizon wants to herd customers into data plans based on the types of phones they use:

• Simple Phones: Basic handsets that are designed for making and receiving phone calls and sending quick text messages from a numeric keypad, typically at older network standard speeds;
• 3G Multimedia: 3G-capable phones that may include a simple keyboard, and are designed for simpler text messaging and occasional data access;
• 3G Smartphones: Blackberry, Android, Windows-capable, and eventually the iPhone all qualify for this classification.

Verizon Wireless formerly offered a paltry 25MB package for $9.99 with a 50 cents per megabyte overlimit fee and a stingy 75MB package for $19.99 per month with a 30 cents per megabyte overlimit fee.  These might be suitable for someone trying to navigate a mobile web browser on an older generation phone from a numeric keyboard, but were priced unattractively for those with more advanced phones.

The 75MB package appears to be history after January 18th, but the 25MB package will remain with a reduced overlimit fee of 20 cents per megabyte (that’s an incredible $200 per gigabyte) .  Customers who don’t want -any- data plan for their basic wireless phone will be forced onto Verizon’s “pay as you go” plan, which charges $1.99 per megabyte.  It’s this plan that subjects customers to those $1.99 mysterious “data charges” on their bill, caused when a customer invokes the phone’s web browser (intentionally or otherwise, if you believe customers.)

Customers who don’t own smartphones and don’t use their phones to access many data services will find themselves being corralled into one of Verizon’s new data plans, whether they like it or not, once they try and renew their contract or make “certain account changes” under their existing contract.  If you’re a smartphone user, your choice will be the $29.99 unlimited data plan or the $29.99 unlimited data plan.  In other words, smartphone customers don’t get a choice.  Only owners of more basic phones will be able to choose from overpriced “pay as you go” service, a paltry 25MB offering, or what the company will upsell as the “best value” — the $29.99 unlimited plan.

“Even some basic phones such as the LG VX8360 will require data plans starting the 18th,” says Broadband Reports‘ tipster. Some examples of 3G Multimedia phones: LG Chocolate Touch, LG enV3, LG enV Touch, LG VX8360, Motorola Entice, Motorola Rival, Samsung Rogue, Samsung Alias2 and Nokia Twist.

The launch of an unlimited data plan on Verizon Wireless’ 3G network will make Apple happy.  The iPhone manufacturer has reportedly advocated generous data plans for iPhone customers who find themselves required to purchase plans for both voice calling and data with AT&T.  If the iPhone’s arrival on Verizon Wireless’ network is imminent this summer, having an unlimited data plan available to customers would make sense.

Although the fine print isn’t available to us, Karl Bode at Broadband Reports notes the documents he’s seen indicate no hidden usage cap, like AT&T’s formerly advertised “unlimited” plans that were limited to 5GB in the fine print.

Broadband Reports ran an exclusive story this morning breaking the news about Verizon's new data plans.

Still, for customers pushed into purchasing a data plan they may not want, it’s another case of Internet Overcharging.  That’s particularly true with Verizon, which claims to be a proponent of “paying for what you use,” yet still doesn’t offer all of their customers that option.  Instead, customers who don’t want to pony up $29.99 a month (or don’t have to because they don’t own a smartphone) are stuck paying for overpriced “pay as you go” plans or a paltry 25MB plan priced not to sell.  Even their “unlimited” plan may not last for long.  As Verizon Wireless works towards their 4G network launch, unlimited pricing may never be a part of it.

The Verizon Wireless documents explain what’s really happening here when it instructs employees pushing data plans to up-sell customers: “think of how dissatisfied they would be if they received their bill with excessive Pay As You Go charges!”  That is a powerful tool to motivate customers to choose a more expensive plan they may not need or want, just to protect themselves from the nasty surprise of an enormous bill at the end of the month.

With the evolving wireless phone marketplace now opening up new options for consumers to bypass the wireless company’s own products and services, overcharging consumers for accessing competitors’ products on their network guarantees a nice payday for Verizon Wireless no matter how you use your phone.

It’s why year after year, despite an increasing number of minutes thrown into your plan’s bucket, your cell phone bill never seems to actually decrease.  After all of the additional add-ons, surcharges, and fees attached to the bill, it has become easier than ever to approach $100 a month for cell phone service in the United States.