Sprint is notifying their mobile hotspot customers the company is now prepared to enforce their formerly soft-capped 5GB plan with a $50/GB overlimit fee, billed at $0.05/MB increments.

Sprint has long informally capped customers using their phone as a Wi-Fi hotspot or tethered device, but until now was not prepared to enforce the limit because it could not accurately track usage.

“Starting June 2012, and effective on your next bill, your phone or tablet’s Mobile Hotspot on-network data allowance will be limited to 5 GB,” reads the message sent to Sprint customers.

Customers will begin receiving text message alerts when they reach 75% of their usage allowance, with repeated alerts at both 90 and 100%. When the 5GB limit is reached, Sprint will give customers the option of continuing service at the penalty price of $50/GB billed in megabyte increments, or shut the service down until the next billing cycle.

Some customers have been confused by the change, in part because Sprint has made a series of sometimes-confusing adjustments to their data pricing. But the company insists it has always had a limit on its mobile hotspot service, even if not enforced.

Smartphone customers using broadband on their phone still receive unlimited access. But other devices with mobile broadband access are usage capped based on the usage tier selected.

If you don’t believe Verizon Wireless’ newest family-share plans work for you, you are not alone.

More than a few Verizon Wireless customers are in open revolt on the company’s interactive forum, and some are preparing to leave a wireless company they have stayed with for up to 15 years. In a word, the consensus from these vocal customers is: “enough.”

Customer ‘bgudgel‘ explains why:

I have been a loyal Verizon customer for seven years now. I have defended them and recommended them to friends and family, but I feel my time as a Verizon customer has come to an end. The simple reason is that Verizon no longer sees me as a valued customer. I am just a source of income to them. I was prepared to swallow the $30 upgrade fee, but the new shared data plans are the final straw.

You can argue pricing and details all you want, but the simple fact is this – Verizon is clearly not interested in providing great service at fair prices to their customers anymore. The want to provide great service at the highest possible price, and they are taking pages out of the Big Cable handbook to do it – requiring services you don’t want/need in order to get the service that you actually do. And on top of that, the price levels they have chosen for data thresholds and adding additional lines are completely indefensible.

Verizon, I have heard your message loud and clear. You no longer care about me as a customer, so I will gladly take my business somewhere else. I do not know if I can get a better deal anywhere else, but I will no longer give money to you based on the simple principle that you have no respect for your loyal customers. It feels like you are just using us, and that is when I say goodbye.

A California customer considers this the last straw for Big Red:

I too have been a Verizon customer for years. But this final slap in the face is it for me. First, the stupid $30 “upgrade” fee for the “privilege” of buying a new phone from Verizon, and now this absurdity.

I am researching other companies’ prepaid plans now, and I fully intend to be gone within a couple of weeks, at most. And I won’t encounter cancellation penalties as our 3-line plan is more than 2 years old.

I have grown weary of “data” and its rising costs and caps, and will purposely look for a voice/text plan only. Enough.

And Lyondellic tallies up Verizon’s nickle-and-diming customers over the past year:

During my year with Verizon, I have seen a failed attempt to impose a $2 ‘convenience’ fee for paying my bill online. I have also seen a $30 fee added for device upgrades. Then there was the February 2012 change in the customer agreement that does not limit so-called ‘Network Optimization’ to 3G devices, which also allows throttling (let’s call it what it is) during the current and NEXT billing cycles. Verizon seems to have no issues with someone getting full 4G LTE speed, as long as they pay for it by the GB, but apparently feel that those of us with unlimited data plans should be considered data hogs that can be slowed down into billing cycle that has not even started. So network optimization in Verizon-speak means freeing up bandwidth for their pay by the GB customers by throttling customers with grandfathered unlimited data plans that are using their devices in a manner that is consistent with their agreements! Finally, we are told about the cries for family shared-data plans. I figured Verizon might do something that would make it attractive for me to move into a tiered data plan, boy was I ever wrong.

Now Verizon wants to charge $40 per smartphone to actually use the shared-data plans! So, for someone who is paying ~$87 per month for a smartphone with unlimited data, the cost per month will now be somewhere around $120 for the 6GB plan! How are these plans a good thing for either new or existing customers?!? I was considering paying full price to upgrade to a Galaxy Nexus in order to keep my unlimited data plan, but I have changed my mind. I can order the Galaxy Nexus from Google for $399 and use a prepaid, no-contract plan from T-Mobile plan that provides me with 100 minutes, unlimited text messaging and 5GB of data at 4G speeds for $30 month. Since I do not make a lot of calls on my phone, why would I want to continue to pay Verizon $87 per month without subsidized device upgrades, which would move me into a $120 month plan?

So I look at this as a simple lesson in economics. I can pay the ETF, buy a GNex and still come out ahead by moving to T-Mobile. The beauty of this is that I will also be taking money away from Verizon, as they clearly want to treat me like a second-class customer that needs to fork over more of my money. So I will vote with my dollars and send a clear message to Verizon that their conduct is unacceptable. I encourage others here to consider doing the same. Your speed may not be blazing fast with T-Mobile, but neither will be the speed that money flies out of your wallet or purse. My .02 cents!

Despite repeated provider claims that usage-based billing will save customers money on their broadband bill, new evidence shows the exact opposite is true. Broadband prices for metered broadband across Canada are rising, not falling, and now outpace pricing in the United States.

The reason for more costly broadband? Internet Overcharging schemes like usage caps, overlimit fees, and so-called usage billing, which providers have uniformly implemented on both wired and wireless broadband in most parts of the country.

A new study from PricewaterhouseCoopers finds Canadian consumers now pay 3.9% more for broadband than American consumers do, and prices are expected to increase another 9% by 2016 — from the average $38.43 paid last year to $45 for usage-capped broadband.

Usage billing has been profitable to Canadian providers like Rogers and Bell, with broadband revenues up 17.5% last year as consumers adopted higher priced plans to accommodate their monthly usage.

Canadian providers have also systematically reduced or “re-tiered” usage allowances, engineering service upgrades for customers trying to avoid costly overlimit fees.

“Canada’s broadband fees were lower than those in the United States in 2007-09, but as a result of large increases during the past two years, the average Canadian broadband subscriber paid more in 2011 than the average U.S. subscriber did,” says the report.

Bandwidth caps have allowed Canadian providers to now charge premiums to high bandwidth users, according to the report. Rising use among all broadband customers “should continue to put upward pressure on pricing.”

In the United States, providers are having a more difficult time implementing similar usage caps and overlimit fees, primarily because of consumer-organized backlash.

Holder

The Justice Department has been quietly conducting a wide reaching investigation into whether cable operators are using Internet Overcharging schemes like usage caps and metered billing to squash online video competition, according to a report in this morning’s Wall Street Journal.

The Antitrust Division has spoken to major online video providers like Netflix and Hulu as well as cable operators, including Time Warner Cable and Comcast.

At issue are data caps — limits on how much a subscriber can use their broadband account.  Justice officials are exploring whether major broadband providers like Comcast and AT&T are using usage limits to protect their video businesses from cord-cutting — canceling a cable subscription to watch shows online.

Providers of online video like Netflix are particularly concerned about operators showing favoritism to their own video platforms. Comcast, for example, exempts partnered content from its usage allowance while continuing to count Netflix viewing against its cap. Comcast’s Xbox “free pass” is attracting particular attention in the Justice probe, in part because it could violate the merger agreement with NBC-Universal which requires the company to not discriminate against third party video content.

Some cable operators claim usage caps protect their networks from heavy users overwhelming their facilities. Comcast claimed its decision not to count Xbox video traffic against the operator’s monthly usage cap was fair because the video content did not travel across the Internet. Now the company has temporarily suspended  usage caps altogether in preparation for testing a new usage limit that also carries overlimit penalty fees.

Federal Communications Chairman Julius Genachowski last month publicly announced his support for usage limits and metered billing, describing both as innovative and enabling customer choice. The Justice Department probe would indicate otherwise, because it suggests customers are finding their options increasingly limited, possibly in violation of federal antitrust laws.

The Justice Department is also investigating the industry’s TV Everywhere project, which provides access to cable network online video exclusively to those with an existing cable television package. Most cable networks specifically prohibit online streaming of their live content, which itself might run afoul of antitrust rules.

The Journal notes Attorney General Eric Holder on Tuesday suggested he would like to be a cord-cutter himself, picking and choosing only the channels he wants to watch. At a recent Senate hearing, Sen. Al Franken (D-Minn.) said cable bills were “out of control” and consumers want alternative options to watch shows online. Holder responded, “I would be one of those consumers.”

While cell phone companies tell you the only fair way to price wireless data is to charge you for what you use, these same companies are now considering how to reverse that argument and force you to buy more expensive “unlimited voice calling” plans you may not want or need.

The Wall Street Journal reports that AT&T is the most vocal proponent of ditching “tiered minute plans” for voice calls, which let consumers pick cheaper plans with fewer calling minutes. With Americans talking less and less on their cell phones, customers have been downgrading voice plans to less expensive options.

Industry trade group CTIA-The Wireless Association notes the average cell phone call dropped from 3.03 minutes in 2006 to just 1.78 minutes in 2011. Customers who rely entirely on their cell phone and no longer have a landline used to talk an average of 826 minutes per month in 2007.  Last year, that number dropped to 681 minutes, according to CTIA.

Verizon Wireless sells customers 900 minutes for $59.99. But the company does not count minutes used during nights and weekends or when placing/receiving calls to or from other Verizon Wireless phones. If a customer now talking less still pays $60 for a 900 minute plan, they could shave $20 a month off their monthly bill if they kept their daytime calling to 450 minutes a month. Many do. In fact, younger customers use their smartphones for talking even less, with some not even reaching one hour of voice calling a month.

Verizon's cattle call? Will the company herd all of its wireless customers to unlimited voice calling at a higher price?

Given the option to downgrade, customers are jumping at the chance. With voice revenue declining 2-4% in the first quarter, Wall Street has been pressuring carriers to act.

The answer that works for them, although probably not for you, is forcing all customers to purchase an unlimited voice calling plan at contract renewal time. At today’s prices, that could add an extra $30 a month for customers used to paying $40 for a basic 450-minute calling plan.

“The industry’s definitely moving towards unlimited,” AT&T Mobility Chief Executive Ralph de la Vega said in a recent interview. “Especially as more people adopt smartphones that have voice capabilities over the Internet, segmented voice plans will become less relevant.”

Ironically, cell phone companies that have spent the last year or two defending the end of unlimited mobile data as “fair” because customers can “choose exactly the plan they need,” are adopting a completely different strategy to push for unlimited voice calling.

“It’s more important to offer a complete solution to consumers which is really, truly unlimited,” said T-Mobile USA Chief Executive Philipp Humm in a recent interview. “The new world is a completely unlimited, worry-free world.”

Sprint agrees, although its insistence on preserving an unlimited data experience for its customers protects the company from charges of hypocrisy.

Fared Adib, head of product development for Sprint, told the Journal eliminating tiered voice options makes sense because it simplifies choices for customers. “People like the freedom of not having to worry about either data or voice,” he said.

No cell phone company would go on the record as the first to discard tiered voice plans, but AT&T led the way to ending unlimited data, and the company is increasingly vocal about ending tiered voice calling as well.

At current prices, consumers could pay substantially higher cell phone bills as a result.

Both AT&T and Verizon Wireless currently charge $70 a month for unlimited calling. Sprint charges $99.99 for its combined unlimited calling and data plan. T-Mobile charges $60 for unlimited talking and texting. Compelling customers to adopt unlimited calling plans will likely bring smartphone monthly charges well above $100 a month when factoring mandatory data plan add-ons, taxes, surcharges, and fees.

Customers who find this pricing intolerable will likely gravitate to prepaid calling plans, which is where an increasing number of occasional and light cell phone users have already ended up.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WSJ Voice Calling Plan Changes 6-5-12.flv[/flv]

The Wall Street Journal explores why cell phone companies want to compel customers to choose unlimited voice calling plans.  (4 minutes)