Verizon Wireless is contemplating the end of flat rate, unlimited data plans as it introduces fourth generation data networks this year.

“We will probably need to change the design of our pricing where it will not be totally unlimited, flat rate,” John Killian, chief financial officer of Verizon Communications Inc., the wireless unit’s parent, said in an interview at Bloomberg’s headquarters in New York.

Verizon expects “explosions in data traffic” as the company introduces customers to its 4G network, potentially ten times faster than older mobile broadband technology.  Verizon Wireless, already capturing enormous sums of revenue from consumers forced into mandatory, expensive data plans when they upgrade to smartphones, will soon discover some serious limits on those plans.

The irony is, Verizon’s 4G upgrade will bring wireless broadband speeds to consumers they realistically cannot use for much more than web browsing, e-mail, and low-bandwidth apps.  Video downloads will burn through data limits imposed at the level AT&T introduced for its customers earlier this month.

Killian

Wall Street wants consumers re-educated to believe broadband can never be unlimited and must be treated as a precious, limited resource.

“The more bandwidth that you make available, the faster it will be consumed,” said Craig Moffett, analyst at Sanford C. Bernstein & Co. in New York. “From Verizon’s perspective, the last thing you want is for another generation of consumers to be conditioned to the idea that data is always going to be uncapped.”

Moffett’s clients hope that is true because usage limits will control costs and make customers think twice about using their data features on their phones.  Reduced demand equals increased revenue, just what Wall Street ordered.

Verizon Wireless has already set the stage for that increased revenue with mandatory add-on plans that boost customer bills, especially for those buying smartphones.  Although just 17 percent of Americans own smartphones today, Verizon predicts 70-80 percent of customers will upgrade to smartphones in the next few years.  That guarantees an “upgraded” bill as well.

Estimates about current average data usage from smartphone customers ranges from 200-600 megabytes per month, but that was before the arrival of video-friendly 4G network technology and the newest generation of phones optimized for video, which can easily consume ten times as much.

Verizon recognizes the “video threat,” and press reports suggest the limits will only be imposed on the 4G network.  Current generation 3G networks make viewing video tedious, a natural barrier for customers planning to “use too much.”

Verizon’s widely anticipated limits, almost certainly to be equivalent to AT&T’s with respect to allowances and pricing, may dampen enthusiasm for the iPhone on Verizon’s network.  Any existing AT&T customer is grandfathered into unlimited data plans for their smartphones.  If those customers leave AT&T, they will be forced to take a usage-capped data plan from Verizon with no looking back.  AT&T won’t provide unlimited plans for customers returning to their fold.

Tired of paying that high Verizon Wireless bill?  Verizon’s handsome profits can translate into some great benefits, if you’re an employee.

For western New Yorkers, here’s your chance.

Verizon Wireless is hiring 200 call center employees in Rochester this year to bolster its existing 1,200 employee customer service department.

“As our customer base grows and the devices and services they use become more sophisticated, providing an outstanding customer experience becomes even more important,” said Russ Preite, president of Verizon Wireless’ Upstate New York Region. “We’ve been fortunate to continue to find top-quality, highly skilled talent in the Rochester area. Today’s announcement further endorses our commitment to Rochester and to maintaining superior customer service for our customers.”

Verizon can afford to pay employees some nice benefits:

• competitive salaries
• health, dental and vision coverage that begin on the first day of employment
• a 401(k) program with a 6 percent company match of the employee’s contribution
• annual bonus program
• profit sharing
• merit increases
• tuition assistance
• adoption assistance
• an on-site health and wellness facility, and more.

You can apply online.  If you land a job there, why not take a portion of your paycheck and send Stop the Cap! a contribution.  We’ll put their money to good use.

Apple's iPhone 4

As expected, Steve Jobs introduced America to the new Apple iPhone 4 today at Apple’s Worldwide Developer Conference in San Francisco.  Karl Bode at Broadband Reports did a great summary on what’s new, so I won’t reinvent the wheel:

As everyone had expected, Apple just announced the long-awaited iPhone 4. According to his Jobsness, the phone is 24% thinner than the iPhone 3GS and as expected has a more powerful primary 5MP camera with flash — and a new camera on the front that will be used primarily for video chat. The phone’s stainless steel frame (sandwiched by glass) is being partially used as an antenna, something that may prove helpful for connectivity issues.

Other specs: Dual mics, 802.11n WiFi, GPS, compass, accelerometer, Quad band HSDPA (7.2Mbps), gyroscope (perfect for gaming, insists Jobs). The company says they’ve also improved the device’s battery. It can now handle 7 hours of 3G talk, 6 hours of 3G browsing, 10 hours of Wi-Fi browsing, 10 hours of video, or 40 hours of music. The phone also records HD video (720p at 30fps, insists Steve), and the new flash will stay on during video recording.

Amusingly, Apple ran into network connectivity issues while trying to demonstrate the phone’s higher resolution screen (join the club, Jobs). According to Apple, the phone comes in white or black, with the 16GB version costing $199 and the 32GB version costing $299. The phone will be available on June 24, with pre-orders beginning on June 15.

Karl also notes, as others have confirmed with us, AT&T is so eager to get this new phone into your hands (along with a new two-year contract), they are waiving the usual two-year waiting period before customers can upgrade their phones.  If your contract expires anytime this year, you can obtain the phone at the subsidized price.

But should you?

For many, the iPhone 4 will represent an incremental upgrade, especially if you aren’t a power user.  In this economy, is it worth $200-300 for a new phone and a new service commitment?

The upgrade for current customers, who can keep their unlimited data plan, may make sense -if- you receive tolerable service from AT&T and feel the latest phone would directly benefit you.  You should consider, however, that signing a new contract will lock you into another two year marriage with the company that drove more Americans crazy with bad service, dropped calls, slow data, and irritating customer service than any other.  A divorce will cost you up to $325 per phone. Their 3G coverage isn’t all that, either.

It also gives the company that loves to cap more of your money.

Unfortunately, waiting for the iPhone to arrive at Verizon Wireless is increasingly less likely to be a panacea for AT&T’s Internet Overchargitis.  That’s because AT&T and Verizon are the Mary Had a Little Lamb of big telecom:

Everywhere that AT&T went,
AT&T went, AT&T went,
Everywhere that AT&T went
Verizon was sure to go.

It’s a safe bet that by the time Verizon brings forth the coveted iPhone, it will have an Internet Overcharging scheme matching AT&T’s.

If you are seeking to upgrade to a smartphone, it’s increasingly likely you’ll find a better deal with Sprint or T-Mobile, both of which have no plans for AT&T’s pricing schemes.

The best way to get a company like Verizon or AT&T to pay attention is to avoid their products when they charge too much.  A dramatic reduction in demand for AT&T’s iPhone among new customers, for example, would send a clear message to Wall Street that their love of usage caps is hurting shareholder value in a big way.  They follow the money.  If existing customers hang on to their $30 unlimited plans while other customers head elsewhere to avoid AT&T’s Internet rationing, you’ll see an overnight conversion among many industry players suddenly demanding a return to the unlimited buffet.

Or better yet, how about giving every customer a choice of both types of plans — pay less for limited service or pay today’s prices for unlimited.

[flv width=”636″ height=”380″]http://www.phillipdampier.com/video/Apple – iPhone 4 6-2010.mp4[/flv]

Apple proclaims the arrival of iPhone 4, calling it a revolutionary upgrade.  Apple released this video showcasing iPhone 4’s video capabilities that AT&T has now effectively hobbled with a wireless Internet rationing plan that punishes customers who try to use the phone’s new features.  (6 minutes)

“The world is calling. Answer it. With Verizon Wireless, you can call and text in more than 220 countries.”

Verizon Wireless has taken some liberties in its latest advertising, claiming to provide service to “more than 220 countries” worldwide.

That’s an amazing feat, considering there are fewer than 200 recognized nations on Earth.

In fact, although recognized authorities peg the number of nations somewhat differently — the United Nations recognizes 192, National Geographic 193, and the World Atlas 195 — nobody comes close to Verizon Wireless.

The company told Consumerist, who made inquiries, that it counts special administrative regions, dependent territories, and other special zones as individual countries.

Norfolk Island, part of the Commonwealth of Australia, enjoys full sovereignty as an independent nation in the eyes of Verizon.

So do the Falkland Islands (or Las Islas Malvinas if you prefer), a fact sure to upset Great Britain which fought a war over the matter in the early 1980s.

Even the Åland Islands, a Swedish-speaking territory of Finland, ends up on the list. The neutral Åland Islands were considered the Switzerland of the Baltic Sea during World War 2, where merchant ships delivered goods for both the Axis powers and the Allies.  These days, both Germans and the English can text one another with Verizon Wireless.

At this rate, Verizon could claim South Bass Island, one of several Lake Erie Islands, as an independent nation, too.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WTTG Washington Verizon Ad Makes Confusing Claim 4-16-10.flv[/flv]

WTTG-TV in Washington explores Verizon’s confusing claim that it delivers service in more countries than exist on planet Earth.  (1 minute)

FCC Headquarters in Washington, D.C.

America’s broadband blueprint could wither on the vine of good intentions if some of America’s largest telecommunications companies prevail in efforts to derail the parts they dislike.  This morning, Reuters reports Julius Genachowski, the chairman of the Federal Communications Commission, and his circle of advisers are weighing options to try and keep the Obama Administration’s broadband policies on track.

They have their work cut out for them.

Net Neutrality vs. Restraint of Trade

In January, the Federal District Court of Appeals for the District of Columbia gave a hostile reception to the Commission’s argument it had the authority to order Comcast to stop throttling the speeds of their broadband customers.  Although Comcast complied, they also filed suit claiming the FCC overstepped its boundaries when it interfered with the company’s business practices.

A favorable court ruling for Comcast could create major problems for the Obama Administration’s Net Neutrality plans and broadband industry oversight in general.

Those monitoring the DC Circuit suspect the court will find for Comcast, but to what degree is unknown.  A narrow ruling could simply find the FCC erred in how it censured Comcast.  A broader ruling could require the Commission to seek more explicit authority from Congress to oversee broadband.  A sweeping ruling could wipe away the Commission’s ability to involve itself in broadband oversight, period.

Plan B: Regulate Broadband Under Existing Telephone Rules

One way around a court ruling unfavorable to Commission oversight powers would be to regulate broadband services under the existing rules governing phone service.  The most controversial aspect of those rules are found in “common carrier” provisions — including those that could potentially force open the broadband networks offered by cable and telephone companies to third party competitors.

While telephone companies have grudgingly accepted their more regulated status under the Commission’s regulatory service model, broadening it to also cover broadband will start World War III, according to Susan Crawford, former special assistant to President Barack Obama for science, technology, and innovation policy.

With billions in profits at stake, large telecommunications companies from AT&T and Verizon on the telephone side to Comcast and Time Warner Cable on the cable side would likely file lawsuits demanding such regulatory policies be deemed unconstitutional or also exceed Commission authority.

One warning sign that Obama’s FCC is not the same as the one in place under President Bush arrived in last week’s approval of a merger between Skyterra, a satellite company planning a nationwide 4G mobile network, and private capital equity firm Harbinger.  The FCC included provisions in the approval permitting the agency to review any plans by SkyTerra to lease or provide wholesale access of its spectrum to AT&T Mobility or Verizon Wireless.  In effect, the Commission can veto moves by the two mega-carriers to become even larger through SkyTerra.

AT&T and Verizon Wireless called the FCC’s approval terms “flawed” and “manifestly unwise and potentially unlawful.”

Congressional Action: Reopening the Telecommunications Act of 1996

The presidential signing ceremony for the 1996 Telecommunications Act

Another possible option for the FCC is to seek expanded authority with the passage of new telecommunications laws enacted in Congress.  The last wholesale review of telecom policy was during the second term of the Clinton Administration.  The 1996 Telecommunications Act was a gift to the industry, delivering sweeping deregulation, allowing increased consolidation and reduced oversight.

Opening the door to a 2010 Telecom Act would bring millions of dollars in lobbying by large players to preserve, protect, or expand their positions in the marketplace.  Many providers still favor telecommunications reform that would further deregulate their businesses.

Amit Schejter, professor of telecommunications policy at Penn State University, told Reuters he doesn’t believe Congress can pass such legislation at this time, especially with a divided, partisan Congress.

Not everyone is concerned that the FCC’s position between a rock and a hard place is all that unusual.  The last administration’s FCC rarely tangled with the telecommunications industry.  That Chairman Genachowski may be leading the Commission in a different direction is welcome news for some.

“The only reason this looks new and shocking is that for so long the FCC hasn’t made a decision opposed by a major company,” Ben Scott, policy director for Free Press told the Washington Post. “The FCC has spars with companies on a regular basis and this is good news.”