Verizon has decided Sprint is worth competing with again, so the nation’s largest wireless carrier has started testing unlimited calling plans that deliver Verizon’s network at Sprint’s prices.

So far the unlimited plans are only available in two markets – Los Angeles and San Diego, and represents a $20 discount off regular monthly pricing:

The $99.99 price is no coincidence. That happens to match pricing for Sprint’s Simply Everything and T-Mobile’s Individual Talk + Text + Web plans which both sell for $99.99 per month.

Verizon’s price cut experiment may be a reaction to Sprint’s new marketing that stresses it will not usage cap smartphone customers, and charges a lower price for more services.

Most Verizon customers in the two California cities will learn about the new pricing in Verizon retail outlets and through the company’s website.

Although the new pricing seems attractive, there is a mass of fine print which may temper your enthusiasm:

1. The lower pricing is only good for Individual plans.  You cannot get the savings on a Family Plan.
2. No monthly access discounts, available through many employers, are permitted.
3. There is a $35 activation fee.
4. Tolls, taxes, surcharges and other fees, such as E911 and gross receipt charges, vary by market and as of August 1, 2010, add between 5% and 39% to your monthly bill and are in addition to your monthly access fees and airtime charges.
5. Monthly Federal Universal Service Charge on interstate & international telecom charges (varies quarterly based on FCC rate) is 13.6% per line.
6. The Verizon Wireless monthly Regulatory Charge (subject to change) is 13¢ per line.
7. Monthly Administrative Charge (subject to change) is 83¢ per line.

Thanks to Stop the Cap! reader Scott for the news tip.

You've used too much, and now we have to charge you more... a lot more.

No matter where you live, work or play — be it Seoul, Korea, Manchester in England, or Oklahoma City — there is one thing consumers in all three cities will readily agree on: hatred of broadband data usage caps.

Those are the findings of a brand new survey conducted by GfK NOP in association with Reuters News in Britain.

Nearly 1,000 consumers were asked what they would do if confronted with their Internet provider implementing usage limits and other Internet Overcharging schemes.  More than half said they would be shopping for a new provider.

Not surprisingly, regardless of whether a consumer uses wired or mobile broadband, few believe usage caps are anything more than price gouging by providers to rake in additional revenue.  Many of these company’s biggest-spending-customers are unhappy to learn their provider is back looking for more money in return for less service.

The survey found users of smartphones such as the Apple iPhone care more about their mobile data allowance than they do about their choice of operator or even handset brand.

The survey found that users of the iPhone, Google Android phones or Research in Motion’s BlackBerry — typically, those who spend the most — are far more likely to switch operators to find better data deals.

More than half the users of these devices said they would switch to get a higher mobile data allowance.

Adjusted to take account of the fact that consumers do not always do what they say they will, GfK NOP esimated that 24 percent of contract customers using smartphones would actually switch operators.

Such a stampede would ring panic alarms inside any wireless carrier, but one company in particular faces some serious consequences for delivering years of bad service at high prices.

According to market research firm Morpace, nearly one-half of AT&T’s iPhone customers will seriously consider jumping ship if and when Verizon offers their own version of the wildly popular Apple smartphone.

At least 34 percent of current iPhone owners are resisting upgrade offers from AT&T that require a two-year contract renewal.  They’d rather wait until the iPhone is available on any network other than AT&T.

Even worse, should Verizon introduce their version of the iPhone in the coming year, nearly a quarter of AT&T customers (including those without the iPhone) are “somewhat or very likely” to dump AT&T immediately and head for Verizon.

In addition to complaints about lousy network performance, AT&T smartphone owners who spend the most with the carrier absolutely loathe AT&T’s new data usage limits implemented this past June.

“Experienced smartphone users who understand the benefits of using the Internet on the move and use services to help them in their day-to-day lives simply can’t live without mobile data,” says GfK/NOP analyst Ryan Garner, one of the report’s authors.

“They don’t want to be thinking about their data allowance and possible costs of over-running every time they open their browser or click on an app.”

Although AT&T told their customers and the media the new data-limited plans were going to save many customers money and have no impact on the rest, that is not what AT&T’s Chief Financial Officer Rick Lindner told Wall Street bankers and shareholders on a conference call last month.

“We believe over time, based on how much data they use, they will then begin to migrate up to [more costly] higher tiered plans,” Lindner said.

AT&T is well aware customers are already packed and ready to abandon ship, which is why the wireless provider has introduced a series of impediments to keep customers anchored in place.  Waived upgrade rules permitted most iPhone owners to upgrade to the latest iPhone 4 model this summer at the promotional price, in return for a two-year contract extension.  Customers seeking an end to their relationship with AT&T will find divorce an expensive proposition.  The company nearly doubled the contract early termination fee for smartphone owners June 1st.  Your exit price: up to $350.

Why construct more of these if providers can get you to use less and pay more in the process?

Reuters notes the biggest driver towards the introduction of Internet Overcharging schemes like usage caps is the quest for additional revenue.

Most Western carriers have frozen or cut capital expenditure in the last two years as they prioritise maintaining the dividends prized by investors — meaning the modernisation of networks has been largely put on ice.

Meantime, they say they can no longer afford physically or financially to support unlimited data usage, and are banking on the fact that most consumers will barely notice data caps that are in any case far more generous than average data usage.

Stop the Cap! has been reporting that fact for at least two years now.  Usage limits are never about saving money for customers or making consumers pay for what they use.  They are about increasing profits at the same time providers continue to reduce investments to maintain and upgrade their networks.  Providers routinely report they are spending countless billions on network infrastructure, but neglect to mention those investments are not keeping up with subscriber growth and, in many cases, are actually decreasing year-by-year.  The self-perpetuating problem of network congestion that inevitably follows then becomes an excuse to charge customers more money for usage-limited service.

Reuters confirms that many western carriers have business plans that would be familiar to any neighborhood drug dealer – hand out plentiful cheap samples, get customers hooked, and then gradually reduce the supply while also raising the price.

In Europe, Scandinavian operator TeliaSonera is betting that the superiority of its next-generation LTE network, the world’s first, will allow it to offer premium services — at premium prices.

“When a service like this is entering the market, you normally more or less give it away for free, and so we did with mobile data,” Hakan Dahlstrom, the company’s head of mobility services, told investors last month.

“After a while… to meet the customer’s need for cost control; that is when you have flat rate. And then after some time the user understand how these services work and how it suits them, and you start charging for speed and volume.”

Yet not every provider has found success in alienating and overcharging their customers for increasingly important connectivity.

Reuters found Japan and Korea’s more advanced and mature data networks have already been down the road of usage restrictions, and found they didn’t solve network congestion issues — only provider investments in upgrades did:

Japanese operators NTT DoCoMo, KDDI and Softbank have stuck to flat rates — with discounts for months in which customers use less data — while encouraging them to use more Wi-Fi to take pressure off the mobile networks.

In Korea, carriers are returning to unlimited data plans because of heightened competition while investing heavily to upgrade their networks — a move that Western counterparts are unlikely to be able to avoid for much longer.

SK Telecom, South Korea’s top mobile carrier, last month said it would offer unlimited data services and free mobile Internet calls for customers paying 55,000 won ($46.40) and over in monthly service charges.

Of course, both Korea and Japan maintain more oversight by public officials over critical network infrastructure vital to both nations’ economies.  Neither government allows unregulated monopolies or duopolies in their midst — convinced they’ll deliver the least amount of service they can for the highest possible price they can get away with. In other words — today’s marketplace model in much of Europe and North America.

Almost two years to the day Frontier Communications quietly introduced language in its customer agreements providing a monthly broadband usage allowance of just 5GB per month, the company has quietly removed that language from its terms and conditions.

The 5GB usage allowance was deemed generous by Frontier CEO Maggie Wilderotter.  Frontier claimed most of its 559,300 broadband subscribers (2008 numbers) consumed less than 1.5 gigabytes per month.  But news of the cap angered customers anyway, particularly in their biggest service area — Rochester, N.Y.  In fact, Frontier’s usage cap was what sparked the launch of Stop the Cap! in the summer of 2008.

While never universally enforced against the company’s DSL customers, Frontier has used that portion of its acceptable use policy to demand up to $250 a month from some “heavy users” in Mound, Minn.

Frontier’s usage limit language also played a role in a major controversy in April, 2009 when Time Warner Cable planned usage limits of their own for western New York customers already faced with Frontier’s 5GB usage limit.

The phone company used Time Warner’s planned usage cap as a marketing tool to switch to Frontier DSL service.

Frontier used Time Warner Cable's usage cap experiment against them in this ad to attract new customers in the spring of 2009.

This website has pounded Frontier for two years over its continued use of the 5GB language as part of its broadband policies.  We raised the issue with several state regulatory bodies as part of Frontier’s purchase of Verizon landlines in several states.  Several state utility commissions raised the usage cap issue with Frontier as a result, deeming it negative for rural broadband customers who would effectively endure rationed broadband service from a de facto monopoly provider.

We also criticized Frontier for promoting its MyFitv service, little more than a website containing Google ads and embedded videos already available on Hulu, while not bothering to tell its customers use of that service on a regular basis would put them perilously close to their 5GB allowance.

In the end, Frontier itself denied they would strictly enforce the 5GB limit, making its continued presence in the company’s terms and conditions illogical.

Now, the company has returned to the earlier language it formerly used, reserving the right to shut you off if you use the service excessively or abusively.  This resembles similar language from most broadband providers.  While not absolute in defining those terms, Frontier doesn’t commit to a specific number either.  Today’s “generous usage allowance” is tomorrow’s “rationing.”

If Frontier cuts off customers for using only a handful of gigabytes a month, deeming it excessive, we want to know about it.

Stop the Cap! opposes all Internet Overcharging schemes like usage caps, speed throttles, and so-called “consumption billing.”  We believe such limits retard the growth and potential of broadband service and are unwarranted when considering the ongoing decline in costs to provide the service.  We do not oppose providers dealing with customers who create major problems on their networks, but believe those issues are best settled privately between the company and the individual customer.

Providers must also be honest in recognizing that broadband is a dynamic medium.  They have a responsibility to grow their networks to meet demand, especially at current pricing which provides major financial returns for those offering the service.  We also believe broadband tiers should be limited to speed, not consumption.  Customers with higher data demands will naturally gravitate towards higher-priced, faster-speed tiers, providing higher revenue to offset the minimal costs of moving data back and forth.

Broadband customers will be loyal to the providers that treat them right.  We applaud Frontier Communications for finally removing the last vestiges of its infamous 5GB usage allowance.  Hopefully, going forward, Frontier will spend its time, energy and money improving its broadband service instead of trying to convince customers to use less of it.

Knology, a West Point, Georgia-based cable overbuilder, has acquired Sunflower Broadband in Lawrence (Douglas County), Kansas for $165 million cash.

Knology has been buying small, independent cable operators across the south and midwest to build its footprint and become a larger player in the heavily integrated cable television and broadband marketplace.

The company expects to acquire Sunflower partly from its own cash reserves and the balance from low interest loans.

Knology praised Sunflower Broadband’s advanced infrastructure — it has already deployed DOCSIS 3 broadband upgrades and uses a modernized hybrid fiber-coaxial cable network.  Sunflower spends between $8-9 million annually in capital expansion, a level comparable to Knology.

The purchase of Sunflower opens additional potential purchasing opportunities for Knology in the region to add other cable companies to its portfolio.

Lawrence residents were treated to gushing, emotional coverage of the sale in the pages of the Lawrence Journal-World this morning.  A sample:

In the beginning there was the vision. Forty-five years later, it was a spectacular reality. Today, the baton is being passed to a new owner.

One reader said the newspaper had a Messiah Complex.

Employees were informed this morning, but most will not know what impact, if any, will come from the sale until it closes in the fourth quarter of 2010.

The impact of the sale is drawing mixed reviews from Lawrence residents, some concerned about the loss of another locally-owned and operated business to an out-of-state “conglomerate,” while others believe the sale offers the potential for better service without irritating usage limits.

A Lawrence computer repair expert, “Dr. Dave” recognized the impact of Internet Overcharging schemes on Lawrence residents in a thorough analysis of the then-potential sale:

Sunflower stands apart from most Internet Service providers with its bandwidth caps. Knology and other suitors of Sunflower do not have these artificial limits. We’ll be free to use the internet at whatever speed we choose to pay for without fear of limits and overages. Online backups, security updates, and videos will be accessible without the worry of nasty additional fees.

Additionally, because our newspaper and television providers will be separated, the Journal World will be able to more accurately and fairly report news in Lawrence. No longer will they be limited by their vested interest in the cable company. Media consolidation is generally against FCC rules, but the loophole is that Sunflower is not seen as a “media” company. The loophole will be closed and growth of both companies will be natural and organic and both companies will be made stronger. We as citizens will trust the newspaper to accurately report the news and the Journal World will be restored to its role as watchdog for the citizens it serves. If the cable company isn’t acting in our best interest, I would trust the Journal World to report on it. Knology won’t be able to slack off and reduce the quality we’ve come to expect from Sunflower–the newspaper will see to that.

Knology claims it will get $5 million in “synergies” from the merger, much coming from volume discount programming purchases, a switch to Knology’s billing systems, and potential layoffs.  However, since Sunflower Broadband’s operating area does not overlap existing Knology service areas, the impact on jobs may prove limited.

One impact subscribers may not miss is the end of Sunflower’s Internet Overcharging schemes.  Sunflower is one of a handful of cable operators placing arbitrary limits on their customers’ broadband usage.  Usage caps, speed throttles, and overlimit fees are all imposed on Sunflower’s customers.

Knology has never imposed similar schemes on their customers.  Now may be a good time for Sunflower customers to let Knology management know they want an end to Sunflower’s profit-padding usage limits, especially considering AT&T U-verse, increasing competition in Lawrence, does not limit usage either.

The Internet video revolution will increasingly be blocked by Internet Service Providers who will leverage their duopoly markets with restrictive usage limits to keep would-be video competitors from ever getting their business plans off the ground.

William Kidd, industry forecaster for iSuppli, an industry analyst group, sees a future of Internet Overcharging schemes like usage caps, overpriced pay-per-use pricing, and other limitations designed to erect roadblocks for online video content, which increasingly threatens the cable-TV products of both cable and phone companies.

The latest scheme to limit usage of streaming media come not from concerns about bandwidth costs but rather the “unknown risks” online video could have for cable and phone companies’ other products.

Such risks, Kidd believes, will compel broadband providers to increasingly implement caps in order to mitigate any long-term gambles that providers might have to take to make streaming media available to home and mobile environments.

At present, content can be streamed over TV from online service offerings such as Hulu and Netflix, or accessed through a device such as the PlayStation from Sony Corp. In addition, new-media business models continue to emerge with the introduction of new platforms that circumvent services currently provided by traditional cable or satellite pay-TV providers.

The caps planned for implementation will sink virtually all of the video streaming services that are not partnered with cable and phone companies.  Kidd notes the caps he’s seen offer limited viewing — as little as three hours for wireless 200kbps video streams or standard definition video streamed on wired networks for up to 25 hours per month.  True HD viewing is simply not going to happen with caps on many providers planned to cut off viewing after only seven hours.

Business plans and would-be investors must take notice of what providers have in store for would be competitors, Kidd argues.  Since the phone and cable companies maintain a near-monopoly on broadband, they ultimately control what Americans can do (and see) on their broadband accounts.

Rogers reduced usage allowances on several of its broadband plans days after Netflix announced a streaming service for Canadians.

One need only look to Rogers Communications in Canada for a timely example.  Rogers promptly lowered usage limits on some of its broadband plans just days after Netflix announced a video streaming service for Canadians that could directly compete with the cable giant’s video rental stores and cable pay per view services.

“These new-media business models imagine that they don’t have to pay the network through which their data traverse,” he said. “However, such a theory is directly at odds with the ambitions of cable and satellite-TV operators, which increasingly are unwilling to provide heavy data access through their networks for free—especially if a way can be found to monetize ongoing data traffic into viable revenue streams.”

In addition, new Internet-born content providers wrongfully take for granted that the way their largely free content has been consumed now also will apply in the future to premium services. The assumption is a bad one, Kidd observed, because in order for consumers to consider the Internet as a true substitute for their big-screen TV, content would need to be comparable in both technical quality and entertainment value. And to achieve the same level of value, such content necessarily would be extremely bandwidth intensive.

As a result, for any number of these emerging TV-substitute models to work someday, one has to assume that the picture quality being proffered is acceptable for viewing on large-screen TVs.

But providers have a trick up their sleeves by implementing seemingly tolerable usage caps as high as 250GB per month, which seem generous by today’s usage standards.  But they will be downright paltry tomorrow, especially if they do not increase over time, as online video increases in quality and size.

“By implementing caps now that don’t impinge on the way subscribers use the Internet today, cable and telco operators are able to create for themselves an advantageous situation,” Kidd said. “Under these circumstances, emerging media competitors must work more directly with the network owners before getting their services off the ground—as opposed to around them, as they may have previously hoped.”

That means giving them exactly what they want — a piece of the action and control over the content that crosses over their wires to broadband consumers.