Company-owned store or third party reseller?

Customers who see the logo of their favorite wireless phone company on a storefront might do better to look a little closer to determine if they are doing business with a company-owned store, or a third-party reseller.  A Bakersfield, Calif., man quickly learned the difference when he bought a mobile broadband service plan from Go Wireless that Verizon says no longer exists.

Allan Fox found out the hard way when his first bill arrived with a steep overlimit fee attached, and without the broadband plan he signed up for.

Fox purchased the discontinued plan from Go Wireless, a third party reseller of Verizon Wireless services.  Fox thought he was purchasing a 3GB plan for $35, with a two-year service contract.  Verizon thought otherwise, and so began weeks of a runaround between Fox, Go Wireless, and Verizon.

It turned out that Verizon no longer offered the plan Fox bought from what he thought was Verizon Wireless itself.  Go Wireless is one of several independent third party companies that resell Verizon Wireless service, often with their own terms and conditions that include early termination fees owed not just to Verizon, but also to Go Wireless.

Go Wireless’ retail stores prominently feature Verizon Wireless’ logo, with their own logo appearing in reduced size, next to a message indicating they were a “premium retailer.”  That presumably sounds better than “third party reseller.”

After several attempts to straighten out the mess, Fox wanted to cancel his contract and just move on.  But then he discovered Go Wireless would charge him a $175 early cancellation fee, even though Fox’s predicament was their fault.  That’s when Fox called a local television newscast for help.

Wirefly is a major online reseller of Verizon Wireless

KBAK-TV news waded into the middle of the dispute that had gone on for nearly six weeks.  Verizon Wireless told the station it was willing to cancel Fox’s service penalty-free, but since Fox purchased the phone from a third-party reseller, and not from a company-owned store, Go Wireless would have to credit their own cancel fee.  Go Wireless, experiencing some turnover in local management, finally agreed to waive the fee, but only after the TV station got involved.

Customers must be careful when purchasing phones or signing contracts with third party sellers — both online and in traditional stores.  Most company-owned stores display their respective carrier logos and nothing else.  Words that usually provide a clue you are dealing with a reseller include: “authorized retailer,” “authorized dealer,” “Service provided by: (name of third party company),” “authorized agent,” and a dead giveaway is a signed contract with anyone other than the cell phone company you are using for service.

Third party resellers make their money on generous commissions earned when a customer signs a new contract or renews an existing one.  That commission can be forfeit if a customer returns the phone or cancels service early, which is why third party dealers protect themselves with their own contracts that include early termination or cancellation penalties owed to them, not the wireless provider.  Some customers can find themselves exposed to $500 or more in total cancellation penalty fees owed between the wireless phone company and the reseller.

So why do people purchase phones from these resellers?  Convenience and savings.

In smaller communities, company-owned stores may be few in number (or non-existent), and in-person help can be a godsend for customers who need to figure out their phone or obtain a warranty replacement.  Online, resellers like Amazon.com, Newegg, Wirefly, and others often charge substantially less than wireless carriers charge themselves for phones.  That savings can often be more than $100.  But these resellers are not for those who are unsure about the phone they want (or the provider).  Returning a phone or canceling service means dealing with two parties — the carrier and the reseller, to end service.  The cost of doing so can be very steep, so always read the terms and conditions before buying.

[flv]http://www.phillipdampier.com/video/KBAK Bakersfield Man has Internet billing trouble 9-26-11.mp4[/flv]

KBAK-TV’s Investigation Bakersfield unit helped a local man untangle a major billing mess that began when he was sold a mobile broadband plan that no longer existed.  (3 minutes)

Earlier this month, many Verizon prepaid customers with texting plans began receiving messages on their phones from the company, typically after completing a minutes refill:

“Starting on October 14th, 2011 when sending a picture or video message, you will be charged for each recipient for each message sent.”

Controversy ensued, as customers interpreted that message to mean Verizon was now only including plain text messages, not picture or video messages, in their texting plans.

But hang on a moment, says Verizon social media rep JoeL_VZW.  It doesn’t mean that at all.  Verizon was attempting to clarify how they charge for messages sent to multiple recipients.  Send it to one person, it counts as one message.  Two people, two messages… and so on.  Customers can still send picture and video messages without extra fees, assuming they have a texting plan with a sufficient allowance.

“If you sent one picture to two people it would count as two messages that would come out of your 250 bundle. You wouldn’t incur any extra picture messaging charges as long as you haven’t exceeded 250 text or pictures,” he says.

Unlimited customers are not impacted by the change at all, but those on texting plans with 250 message allowances might be, if they send a lot of text messages to multiple recipients.

Still, it was easy to interpret the message very differently, all thanks to not having sufficient space in a single text message to explain it better.

AT&T and Verizon: The Doublemint Twins of Wireless

Mirroring AT&T’s announcement last month that it would begin implementing speed throttles for wireless unlimited data plan customers who are among the “top 5% of users,” Verizon Wireless quietly made changes last week allowing the company to throttle its own unlimited data plan “heavy users” who consume more than 2GB of usage per month on its 3G network.

But Verizon claims it isn’t actually throttling the speeds of customers, it is simply engaging in “network optimization practices” and using “network intelligence” to reduce speeds (sometimes to near-dial-up) while connected to a “congested cell site.”

That will prove a distinction without much difference to customers who rely on 3G data usage using cell sites Verizon deems congested.  They may also find the time spent in Verizon’s penalty box unusually long.

“You may experience [reduced speeds] for the remainder of your then current bill cycle and immediately following bill cycle,” Verizon’s FAQ states.

That can mean customers paying $30 a month for an “unlimited data plan” may find 3G usage a very slow experience for a maximum of two months before they are off Verizon’s throttle list.

The new speed throttle policy began Sept. 15.  Verizon:

Network Optimization practices and throttling is network intelligence.  With throttling, your wireless data speed is reduced for your entire cycle, 100% of the time, no matter where you are. Network Optimization is based on the theory that all customers should have the best network possible, and if you’re not causing congestion for others, even if you are using a high amount of data, your connection speed should be as good as possible. So, if you’re in the top 5% of data users, your speed is reduced only when you are connected to a congested cell site. Once you are no longer connected to a congested site, your speed will return to normal. This could mean a matter of seconds or hours, depending on your location and time of day.

Verizon has not said exactly how many of its cell sites it deems as “congested,” at what times that congestion is most likely to occur, and admits there is currently no way customers can learn when they are connected to a congested site so they can make an informed decision about their usage.

But the company does say customers can avoid the penalty:

1. Upgrade to a 4G phone and hope for good 4G LTE coverage.  Customers using Verizon’s 4G network are not currently subject to a speed penalty for “excessive use.”
2. “Upgrade” to a tiered data plan with usage allowances.  Verizon will not throttle the speeds of customers who are not on unlimited data plans.
3. Reduce your data usage, especially in areas where congestion is likely.

Choke collars are in season at AT&T and Verizon Wireless, leaving Sprint's unlimited service looking more consumer-friendly by the day.

Those suggestions require potentially pricey new handsets, require customers to abandon their existing unlimited data usage plan, or simply get you thinking twice before launching a data session, fearing being grounded for up to two months with a dramatically reduced level of service.

The biggest impact of the network speed throttles will be among data-heavy iPhone users.  Apple’s iPhone doesn’t support 4G, and is likely to continue to rely on 3G network coverage when the next version of the popular phone is introduced in October.  Ultimately, Verizon’s new policy means iPhone devotees using more than 2GB per month may have to abandon their phone or their unlimited data plan if they want to avoid the throttle.

Verizon also found a way to keep customers from canceling penalty-free, noting contract changes that reserved the right to implement network management techniques were made in February.  The 60-day window for the “materially-adverse” contract change cancellation policy expired in April.  Verizon:

By alerting customers in February 2011, and including the notice in our terms and conditions as of February 3, 2011, we made sure customers knew we began reserving the right to implement Network Optimization practices.  In February 2011, we began alerting customers:

• Data Management – (note: now named “Network Optimization” to more accurately describe the tools) – Verizon Wireless may reduce data throughput speeds in a given bill cycle for customers who use an extraordinary amount of data and fall within the top 5% of data users.  The reduction will only apply to those using congested cell sites and can last for the remainder of the current and immediately following billing cycle.  The reductions will only apply when appropriate in locations and at times of peak demand.
• Data Optimization – (note: now named “Video Optimization” to more accurately describe its function) – Verizon Wireless is implementing optimization and transcoding technologies in its network to transmit data files in a more efficient manner to allow available network capacity to benefit the greatest number of users, and although unlikely, the process may minimally impact the appearance of the file as displayed on the mobile device.

Interestingly, AT&T’s own speed throttle penalty was estimated to kick in after 4GB of usage, not the 2GB Verizon is using as its benchmark for “network optimization.”  Verizon also says customers with their Mobile Hotspot feature will find that usage exempted from counting towards the 2GB threshold.

Verizon has opened up a new web page explaining the throttling policy.

[Thanks to Stop the Cap! reader Mileena, among many others, who shared the news with us.]

Verizon Wireless has announced a new $50 unlimited talk, text, and web prepaid plan for price sensitive new customers who don’t mind being stuck with a lower-end feature phone.

The new Verizon Unleashed unlimited plan has been test-marketed since April to prepaid customers in southern California and Florida, but will now be available nationwide from Verizon stores, Best Buy, Wal-Mart and Target.

Although existing Verizon Wireless prepaid customers may be able to sign up for the plan on their existing phones, new customers in test markets were limited to a selection of just a handful of “feature phones” that make web use and texting cumbersome:

• LG Cosmos™ 2 — Now into its second generation, this basic feature phone slightly improved its slide-out keyboard.  The phone was rated “adequate” for an entry-level feature phone, but CNET’s detailed review notes it lacks 3G EV-DO service.  That means you will be web browsing on Verizon’s painfully slow 1xRTT data network.  Verizon has no worries customers using this phone will chew up a lot of wireless data.  Customers rated the build quality as adequate, but found the keys on the first generation of this phone did tend to wear out with a lot of use.  It’s a true “throwaway” phone once the warranty expires.  Repairs always cost more than buying a new phone.  Verizon’s website prices the phone at a stiff $189.99 for month-to-month customers, but it will probably remain priced at around $99.99 for prepaid customers choosing the Unleashed plan.
• LG Accolade™ — A real workhorse basic phone for Verizon Wireless, the Accolade is much better for making and receiving calls than doing anything with texting or web use.  The phone has no QWERTY keyboard to type on, and no 3G service either, so its usefulness for data and texting is extremely limited.  But it is cheap, routinely selling for under $40.  CNET has a video review.  We suspect this phone will not be major part of the nationwide rollout of Unleashed, as Verizon appears to have discontinued it recently.
• Pantech Caper — A front facing tiny keyboard features prominently on this phone, which would have been considered cutting edge five years ago.  Now, it’s considered a ho-hum “feature phone” for the non-smartphone crowd.  It received a fair rating from most reviewers, with the biggest complaints coming from unintentional pocket dialing and button pressing, and a lousy built-in camera.  No 3G service.  The Caper also won’t win any awards for its ergonomics.  Verizon Wireless had been selling this phone in test markets for $80 earlier this year.  CNET’s video review is here.

There is a good chance a few different, more current feature phones will be introduced for the Unleashed plan later this week.  But they will all likely dispense with support for 3G service and lack features many customers increasingly seek on smartphones.

Verizon Wireless has traditionally done poorly in the prepaid market, because its plans are considerably more expensive that those offered by competitors, especially T-Mobile and Sprint.  Verizon Wireless had been charging $95 a month for unlimited talk/text prepaid service plus $0.99 per day for web use.  At those prices, Verizon has been losing prepaid customers, now down to 4.4 million.  Many of those customers fled to providers like Sprint’s Virgin Mobile, which saw a 23 percent increase in its customers, which now number 13.8 million.

Verizon’s $50 unlimited plan matches AT&T’s $50 prepaid unlimited GoPhone plan.  Analysts suggest both companies have set prices (and limitations on the phones that work with the plans) at a level that allows them to compete with lower-priced rivals, but does not encourage their contract customers to switch to a cheaper prepaid plan.

For data-hungry smartphone users, there is little here to persuade anyone to downgrade to a $50 prepaid plan.

The Chicago Tribune‘s advocacy for the merger of AT&T and T-Mobile leaves the facts far behind, and raises questions about just how much the newspaper understands about telecommunications company mergers.

In this morning’s edition, the newspaper claims efforts by the Justice Department to block the merger will “slow [wireless] progress to a crawl.” That’s a half-baked conclusion, considering AT&T’s own accidentally-public internal documents reveal a willingness to spend $39 billion on a merger while balking at spending one-tenth of that amount to upgrade its own 4G network.  The injury to rural America the Tribune fears most was self-inflicted by AT&T even before the merger was announced.

Access to advanced wireless Internet is the key. A merger of AT&T and T-Mobile would bring an under-served swath of America into the 21st century of high-speed mobile data communication. Much like the rural electrification movement of the 1930s, this deal offers a chance for many Americans to leap ahead technologically.

If Justice gets its way, progress will slow to a crawl. We think the FCC should approve the merger after obtaining appropriate concessions — and Justice should settle its case sooner, not later. Dragging out this proceeding stands to hurt a nation that can ill afford more damage from a government too often hostile to business interests.

Evidently the editorial writers at the Tribune have been drinking AT&T’s Kool-Aid.  There is more to see here than AT&T’s advocacy kit, if one is willing to look beyond lucrative, saturation advertising campaigns and lobbying.

The government got the bright idea of helping wire rural America for electricity when commercial providers refused.

AT&T’s own merger announcement spoke glowingly of the “increased efficiencies” a more concentrated wireless marketplace will deliver, but said very little to investors about T-Mobile’s cellular network being the key to unlock rural wireless.  The reason is simple: T-Mobile doesn’t have a rural wireless network.  In fact, T-Mobile’s long-standing focus on urban markets means considerable duplication of resources in medium and large cities — resources that might help reduce the number of dropped calls in cities like New York, Chicago or San Francisco, but hardly a boon for residents of Ottumwa, Iowa, who barely get a signal today from AT&T, much less T-Mobile.

We agree with the Tribune editors when they say improved advanced wireless Internet is important to rural America. But nothing within AT&T’s massive document dump guarantees rural 4G service, especially after four national companies judged it didn’t make much business sense.  Three national carriers hardly strengthens the case.  In fact, investors will expect AT&T to use precisely the same Return on Investment-formulas that have always ruled rural 4G wireless out of bounds.

The Tribune forgets rural electrification came in spite of private power companies, who viciously opposed government electrification projects (unless they benefited from them).  The reason rural Americans went without electrical service until the late 1930s was the same reason rural Iowa doesn’t have lightning-fast 4G service — it doesn’t make much business sense to provide it.

When President Franklin D. Roosevelt declared electricity an essential utility service every American should be able to access at a fair price, government resources picked up where Wall Street left off — financing electric generation projects and encouraging the development of power cooperatives and municipal utilities. It often took more than 20 years to pay off the costs of the infrastructure — at a price (and wait) unwilling to be covered by giant power companies like Chicago’s Commonwealth Edison at the time.

It’s much the same story for AT&T today.  The enormous telecommunications company was provided an estimate of $4 billion to upgrade its network to 4G service nationwide.  Company executives refused, suggesting the time required to recoup that investment was too far out for their tastes.  But a $39 billion dollar merger with T-Mobile, despite the much higher price tag, delivers immediate benefits they can take to the bank: decreased competition and pricing innovation.  T-Mobile delivers both on its own, and even in fourth place influenced the service plans and pricing at other wireless carriers.  By eliminating that competition, the pressure to reduce prices or enhance service is diminished.  The ability to raise prices, or reduce the number of services, is enhanced.

Astonishingly, the Tribune writers completely ignore the biggest reason why AT&T cannot afford to slow progress to a crawl.  Its name is Verizon Wireless, and AT&T ignores its own network at its peril.  That’s why competition, even from America’s #4 carrier, remains critically important.

While the Chicago Tribune seems comfortable rallying for the cause of one of their advertisers — a multi-billion dollar corporation it sees as a victim of government “anti-business” hostility, we’re more concerned about protecting American wireless consumers from the results of AT&T’s efforts to cut competition (and consumer-friendly services) to a bare minimum.  AT&T’s carrot is the illusory promise of enhanced wireless service in rural communities the company routinely ignores.  The Justice Department, thankfully, prefers the stick — recognizing an anti-competitive, anti-trust feeding frenzy when it sees one, and is correct when it gives it a good whack.