Some Verizon Wireless customers are reporting data usage numbers spiked on their bills to unprecedented levels this summer, giving the cellular company’s bean counters a heaping helping of overlimit fees, charged when customers exceed their data allowance.

The phantom usage problem has become noticeable enough to win attention from the consumer reporter at Cleveland’s The Plain Dealer, who found her own family of four suddenly blowing past their shared 15GB a month, resulting in a $30 overlimit fee.

“My family’s data usage has mysteriously increased significantly every month since February, except for one month,” wrote Teresa Dixon Murray. “My family of four pays for 15GB a month. We’re grandfathered in the old More Everything family share plan. We typically were using no more than 10GB a month. But for the last six months, that has increased steadily — and inexplicably. 8.2. Then 9.7. Then 10.6. Then 12.7. Two months ago, we got alerts that we were nearing our allotment and managed to take care to avoid going over. Last month, despite our efforts, we went over by 1.057GB, and were charged an extra $30.”

Murray questioned why her family’s phones were burning through their data allowance in the middle of the night, while connected to the family’s home Wi-Fi.

A Verizon representative explained phones may be connecting to Verizon’s network because of a new feature installed on some phones, including the Apple iPhone, called “Wi-Fi Assist.” This feature, which could also be called “Verizon Profit Assist” automatically ignores the fact you are connected to Wi-Fi and switches back to the Verizon Wireless network if the phone determines your Wi-Fi connection is “poor.”

“So what’s the definition of poor? I guess Verizon and our iPhones decide that,” Murray questioned.

This feature can be switched off from your phone settings.

They are coming.

But that hasn’t always stopped the overlimit fees. Some customers report they still incur overlimit fees even after switching cellular data off when they reach a warning from Verizon they are about to exhaust their allowance. Verizon charges $10 in overlimit fees, even in instances where the offending extra usage amounts to .0001GB.

Verizon claims its usage meter only provides an estimate of usage, and there are instances where the warning comes too late for a customer to stop using data before they’ve already exceeded their plan allowance. Verizon’s solution is to sell a $5/month “family coverage” add-on that allows parents to monitor data usage before it gets out of hand. But Verizon doesn’t guarantee it will stop overlimit fees based on the measurements of usage it provides.

That add-on plan may or may not have helped Valarie Gerbus, who is now facing a $9,100 Verizon cell phone bill she is adamantly refusing to pay.

The suburban Tampa customer regularly paid $118/month for her cell phone plan, which included 4GB of data usage — an amount she never exceeded, at least until July. Gerbus was shocked to open her bill and discover her normal monthly bill now also included $8,535 in overlimit fees for using 569GB of data in a single month:

(Image: The Plain Dealer)

On July 21, Verizon sent her a text, notifying her that she had used nearly all of her 4 gigabytes of data. The text said she could get 4 more gigabytes for $20. Realizing that she had two weeks before the end of the month, Gerbus bought the additional data.

Within an hour of the purchase, she received another text that told her she only had 10 percent left on the data that she had just purchased. The next text message she received said she could change her plan to 8 gigabytes for an additional $20 a month. She said she bought that upgrade to ensure she didn’t have any data overages.

In a span of several hours, she estimates that she received 40 to 50 texts saying that she needed to purchase more data. She turned the notification off, believing that there had been a glitch in Verizon’s system.

Gerbus said she realizes now that she should have contacted the company at that point, but she didn’t, as she feared being placed on hold by a customer service representative.

She later went to work and planned on paying the bill online. When she found her online statement, it said she owed $6,480 for using 490 gigabytes of data. She was shocked.

“I told them that I won’t pay the bill,” Gerbus told the newspaper. “I can either wait until they take it to a collection agency or when they take it to court. Either way, my credit history will be ruined. I can go bankrupt here.”

Verizon said they are not aware of any widespread problem, but is looking into phantom phone usage at night and some of the more extreme examples of bill shock, where bills extend into the thousands of dollars.

Affected customers report the high bills are, in some cases, tearing families apart.

“It got to the point that we were battling in our family,” reported Lockport, N.Y. resident Tom Walker, who told the newspaper their data usage soared for no apparent reason. “We were really asking each other, ‘Have you been on Facebook too much? What have you been doing?’ We were trying to figure out who was using all this data.”

Gerbus is almost thankful to pay Verizon Wireless a nearly $600 fee to exit her contract early as she switches to T-Mobile. Verizon’s engineers have no explanation for Gerbus’ bill, other than noting her phone contacted Amazon.com at least 400 times over a few days.

Providers with usage caps and usage-based pricing often consider their usage meters more reliable than their own customers, and when customers complain, many representatives trust the meter and insist on payment. When a customer like Gerbus complains about usage that is considerably above average usage, customer service representative are not always receptive.

“I told them that there was no way that I could have gone from 490 to 560 in a day,” Gerbus said. “The [Verizon] person said, ‘Yes there is.'”

Always looking for a new angle.

While T-Mobile and Sprint are preparing to battle it out offering dueling unlimited data plans, Verizon Wireless and AT&T are continuing to raise prices for many customers while pushing upgrades on customers some do not need.

This week, AT&T officially introduced its Mobile Share Advantage plan, with most of the advantages going to AT&T.

Per device fees have shot up by as much as 33% if you have more than two smartphones on your account. AT&T used to charge $15 per smartphone as a device fee. Now it is $20, offset in many cases by some reductions in data plan costs. But once you add a third device, you are paying a $5 rate increase per device.

The company is also trying to clean up its reputation by eliminating the scourge of data-related overlimit fee bill shock. Before the change, AT&T customers faced an overlimit fee of $5 for each 300MB used on its 300MB data plan and $15 per gigabyte on other plans. Instead of billing overlimit fees, AT&T is adopting punishing speed throttles for customers over their allowance. Once customers exceed their plan limit, speeds are reduced to 2G levels, up to 128kbps. While that is just painful for web pages, it makes watching video and uploading photos next to impossible without experiencing frustrating network timeout error messages.

Gone are the 2, 5, and 15GB plans. Customers can now choose from 12 different usage plans ranging from 1-100GB.

But AT&T’s most conservative users of data are going to pay more under the new plan. Customers enrolled in the old 2GB $30 data plan, suitable for those who use their phones to check e-mail and view web pages, will find that same $30 will only buy them 1GB if they switch to the new plan. To avoid the likelihood of hitting the speed throttle, these customers will have to upgrade to a 3GB plan for $40 — a $10 increase.

For everyone else who happens to slightly exceed their data allowance, many may end up preferring the old $15 overlimit fee system. Under the new plan, customers have to live with speed throttles that make their devices almost unusable until the billing cycle refreshes. We predict many customers won’t wait and will upgrade their data plan to restore functionality. But upgrades from the 3GB and 6GB plans come in $20 increments — $5 more than the overlimit fee charged for slightly going over. Even worse, if the overage was a one-time issue, many customers will spend $20 more on a data allowance many probably won’t use.

Customers are free to keep their existing plan, for now. But if they change plans, they won’t be able to switch back.

On a morning conference call with Wall Street analysts, Comcast continues to misrepresent its vision of broadband usage caps and usage-based billing, claiming customer preferences echoed through Comcast’s performance in the marketplace will tell the company what is “best for consumers,” and guide Comcast how to realize the most value for shareholders.

Wall Street is very interested in usage caps and usage-based billing because cable operators can protect video revenue threatened by cord-cutting and boost revenue earned from customers who exceed their allowance.

Vijay Jayant, and analyst at Evercore ISI, quickly zeroed in on the potential loss of anticipated revenue from Comcast’s recent decision to boost its data cap from 300GB to 1TB, something Jiyant characterized as a “hurdle” for future usage-related charges.

“Well we have one terabyte. We moved it up from 300 gigabyte to one terabyte in 14% of our markets where we have usage-based pricing,” responded Neil Smit, Comcast Cable’s president and CEO. “We think we’re going to continue to adjust and look at it as the market evolves and as usage evolves. We have different pricing models, some based on speed, some based on usage, and we’re going to be flexible and kind of let the market tell us which way is best for consumers and how we add the most value. We continue to add speeds. We’ve upped speeds 17 times in 15 years. We’ve built out the fastest Wi-Fi. So we’re going to continue to invest in the network to stay ahead of things.”

Smit’s response was incomplete, however.

Smit

Comcast’s usage and speed-based pricing models are hardly “flexible” and do not co-exist in the same markets. Customers are compelled to obey Comcast’s usage cap, face overlimit fees up to $200 a month, or pay an additional $50 a month to buy back their old unlimited use service. In Comcast markets without usage caps, the cable company only sells speed-based internet tiers with no enforced caps.

Comcast has consciously avoided allowing customers to choose between speed-based or usage-based tiers, because years of experience among other cable operators quickly proved customers intensely dislike usage caps of any kind. In fact, the largest percentage of complaints filed with the FCC about Comcast are about its compulsory usage cap trial and the fees associated with it.

One reason for that hostility may be that Comcast’s broadband prices do not drop as a result of the introduction of usage caps in a service area. The customer effectively receives a lower value broadband product as a result of its arbitrary usage limit, and the potential exposure to overlimit fees or a very expensive “insurance” plan to avoid the cap altogether. Earlier trials offered some customers a small discount if they kept usage under 5GB a month, a difficult prospect for most and in any case not much of a revenue threat for Comcast.

If Comcast was seriously interested in what its customers think about its usage cap trial, it need only review the FCC’s complaint database. According to a Freedom of Information Law request from The Wall Street Journal, nearly 8,000 complaints received by the FCC in the second half of 2015 were about data caps, and most of those were directed at Comcast.

Comcast’s claim it will let the marketplace decide only delivers a distorted view about usage caps, because many Comcast customers have only one other competitive choice, and there is a significant chance that provider caps customer’s broadband usage as well. AT&T, for example, caps its customers at a level even stingier than Comcast. Those caps have not been enforced with overlimit fees on customer bills (except for AT&T’s DSL customers), although AT&T suggests it is getting serious about collecting future overlimit fees. If Comcast gains new customers leaving AT&T to avoid smaller caps, Comcast executives seem to believe they can claim consumers have ’embraced’ Comcast’s usage billing. But we know that is about as credible as an election in North Korea.

Time Warner Cable has been one of the few honest players about usage billing, giving customers the option of keeping unlimited or switching to a capped plan for a discount. More than 99% of customers have chosen to stay with unlimited and only a few thousand have chosen to limit their usage for a small discount. An honest market test from Comcast would extend a similar option to customers. Keep unlimited or voluntarily limit usage for a small discount. Given this kind of test, we expect the overwhelming majority of customers would keep unlimited at all costs. Doing so would hurt shareholder value, however.

The only value Comcast is concerned with is how much more money they can charge customers for broadband service. In America’s broadband duopoly, where speed-based broadband pricing is already outrageously high, usage caps and usage billing are nothing more than a greedy cash grab. When money is at stake, reputation comes in a distant second at Comcast, as the company continues to prove its poor reputation with American consumers is well-deserved.

CenturyLink will begin a usage-based billing trial in Yakima, Wa., starting July 26 that will combine usage caps with an overlimit fee on customers that exceed their monthly usage allowance. The trial in Washington state may soon be a fact of life for most CenturyLink customers across the country, unless customers rebel.

Already at a speed disadvantage with its cable competitors, CenturyLink will likely alienate customers with a new 300GB usage cap on DSL customers who can manage speeds up to 7Mbps, and 600GB for those lucky enough to exceed 7Mbps. Customers will be given a browser-injected warning when they reach 65% and 85% of their allowance. If a customer exceeds it, they will have overlimit fees forgiven twice before the usual de facto industry overlimit penalty rate of $10 for 50 additional gigabytes will be added to their bill, not to exceed $50 in penalties for any billing cycle.

DSL Reports received word from readers in Yakima they had the unlucky privilege of serving as CenturyLink’s first test market for hard caps and overlimit fees, and was the first to bring the story to the rest of the country.

CenturyLink hasn’t wanted to draw much attention to the usage-based billing change, quietly adjusting their “excessive usage policy FAQ” that takes effect on July 26. But it has begun directly notifying customers who will be enrolled in the compulsory trial.

“Data usage limits encourage reasonable use of your CenturyLink High Speed Internet service so that all customers can receive the optimal internet experience they have purchased with their service plan,” states the FAQ.

But counterintuitively, CenturyLink will exempt those likely to consume even more of CenturyLink’s resources than its low-speed DSL service allows by keeping unlimited use policies in place for their commercial customers and those subscribed to gigabit speed broadband.

CenturyLink’s justification for usage caps with customers seems to suggest that “excessive usage” will create a degraded experience for other customers. But CenturyLink’s chief financial officer Stewart Ewing shines a light on a more plausible explanation for CenturyLink to slap the caps on — because their competitors already are.

“Regarding the metered data plans; we are considering that for second half of the year,” Ewing told investors on a conference call. “We think it is important and our competition is using the metered plans today and we think that exploring those starts and trials later this year is our expectation.”

CenturyLink’s new overlimit penalties (Image courtesy: DSL Reports)

In fact, CenturyLink has never acknowledged any capacity issues with their broadband network, and has claimed ongoing upgrades have kept up with customer usage demands. Until now. On the west coast, CenturyLink’s competitors are primarily Comcast (Pacific Northwest) and Cox Communications (California, Nevada, Arizona). Both cable operators are testing usage caps. In many CenturyLink markets further east, Comcast is also a common competitor, with Time Warner Cable/Charter present in the Carolinas. But in many of the rural markets CenturyLink serves, there is no significant cable competitor at all.

Usage Cap Man is back, protecting high profits and preserving the opportunity of charging more for less service.

As Karl Bode from DSL Reports points out, for years CenturyLink has already been collecting a sneaky surcharge from customers labeled an “internet cost recovery fee,” supposedly defraying broadband usage and expansion costs. But in the absence of significant competition, there is no reason CenturyLink cannot charge even more, and also enjoy protection from cord-cutting. Customers who use their CenturyLink DSL service to watch shows online will face the deterrent of a usage cap. Customers subscribed to CenturyLink’s Prism TV will be able to access many of those shows on-demand without making a dent in their usage allowance.

For years, American consumers have listened to cable and phone companies promote a “robust and competitive broadband marketplace,” providing the best internet service money can buy. But in reality, there is increasing evidence of a duopoly marketplace that offers plenty of opportunities to raise prices, cap usage, and deliver a substandard internet experience.

As Stop the Cap! has argued since 2008, the only true innovations many phone and cable companies are practicing these days are clever ways to raise prices, protect their markets, and cut costs. Consumers who have experienced broadband service in parts of Asia and Europe understand the difference between giving customers a truly cutting-edge experience and one that requires customers to cut other household expenses to afford increasingly expensive internet access.

We recommend CenturyLink customers share their dislike of CenturyLink’s style of “innovation” in the form of a complaint against usage caps and usage-based billing with the FCC. It takes just a few minutes, and adding your voice to tens of thousands of Americans that have already asked the FCC to ban usage caps and usage pricing will keep this issue on the front burner. It will help strengthen our case that providers must stop treating internet usage as a limited resource that has to be rationed to customers. Wall Street believes the FCC has given a green light to usage caps and usage pricing, and the risk of attracting regulator attention by imposing higher broadband prices on consumers is pretty low. We need to change that thinking so analysts warn providers against being too greedy, out of fear the FCC will impose a regulatory crackdown.

Comcast announced last week it will invest $100 million in fiber optic and coaxial cable to expand its network for businesses and residents across the Chicago region, but not before it slaps a usage cap on Chicagoland internet users forced to join its compulsory data cap “trial.”

Beginning Aug. 1,  customers who exceed 1 terabyte of data usage per month will face a nasty overlimit fee of $10 for each 50GB of additional usage they rack up over the course of a billing cycle. Customers who want to keep the unlimited broadband plan they have today can, if they are willing to pay an extra $50 a month.

Comcast’s PR department has christened the incoming data cap the “Terabyte Internet Experience,” suggesting customers will now have the privilege of using up to 1,000GB each month without facing extra charges. But the plan customers have until the end of this month already allows that, and more, without facing overlimit fees that will top out at $200 a month.

Customers like Greg believe Comcast has a different agenda imposing data caps.

“We’ll teach those cord cutters a lesson,” he wrote. “We’re going to get your money one way or another. Comcast is just greedy, they want to extort as much money as they can from people. I’m paying $90 for internet, with the option to charge more based on their conditions. Remember when consumers had options?”

Other residents looking for an opt-out of the “trial” are out of luck.

“Got the email this week we get to be part of this data cap ‘trial,'” shared another customer. “How lucky are we? And what do we get for being part of this trial? Absolutely nothing! And can we opt out of this trial? Heck no!”

Comcast claims almost nobody will be impacted by the terabyte cap, predicting as few as 1% of their customers reach that level of usage. But 25% of Comcast customers nationwide have now received email and other notifications about a data cap plan “trial” Comcast has spent time, money, and resources trying to explain and implement in a growing number of cities in their service area. Many ask if so few are affected, why make the effort?

The FCC received 11,812 complaints about Comcast in 2015, mostly about its data cap trials. That is at least 5,000 more complaints than AT&T, Verizon, and Time Warner Cable received combined. That would seem to indicate a significant percentage of Comcast customers are concerned about data caps, even if they are not among the “1%” Comcast now claims will be affected by caps.

Comcast’s plan to invest $100 million in Chicago, primarily on fiber expansion, may not placate customers who do not appreciate their internet usage being capped at the same time Comcast’s network capacity continues to increase. Most of the upgrades may be targeted to benefit Comcast’s business customers. The expansion will string 50 miles of fiber cable across seven square miles of downtown Chicago, including the Loop, River North, and River West. Additional expansion will target the city’s Back of the Yards and Bridgeport neighborhoods at in the Peterson-Pulaski business district near O’Hare.

Comcast claims the upgrade will expand internet, video, voice, and home security/automation services for residential customers. They will just need to make sure not to use them too much.