WTTG's "Ask Allison" segment answers a question about unwelcome mandatory data plans

Ever wonder why your cell phone bill seems to keep increasing when you renew your contract?

American wireless phone companies have discovered that subjecting an increasing percentage of customers to required data plans can create a revenue bonanza for companies, whether customers use many data services or not.

Many customers are just learning of new, mandatory data plans now required by all four of the country’s major carriers.  Verizon, AT&T, Sprint, and T-Mobile now compel customers upgrading to new “smartphones” — designed to be used for accessing online services — to also choose an extra add-on plan to cover their data usage.  In some cases, that can add an additional $30 a month to monthly cell phone bills.

Some Verizon customers have learned about this the hard way when they tried to buy a new phone at the end of their two year contracts.  For those longstanding Verizon customers grandfathered on service plans developed five or more years ago, being forced to switch to one of Verizon’s current plans carries quite the sticker shock, especially for those who only occasionally send text messages or use data features.

The insistence by Verizon that Smartphone owners commit to their $29.99 unlimited data usage add-on plan adds considerably to monthly bills.  Many Verizon customers don’t care about increasing sizes of calling allowances — Verizon customers already enjoy free night and weekend calling and free calls to other Verizon Wireless customers (of which there are many — Verizon is now the nation’s largest wireless provider).

Here is a comparison between two near-equivalent Verizon Wireless calling plans, ones from 2005 and the other currently in effect.  There is a dramatic difference in pricing, particularly for those who would find a 250 text message allowance, and data usage counting against your minutes allowance more than sufficient to meet their needs:

AMERICA’S CHOICE II FAMILYSHARE PLAN (2005)

Plan Details

Promotion details

UNLIMITED N&W MINUTES, UNLIMITED VERIZON-TO-VERIZON CUSTOMER CALLING, MOBILE WEB – WEB USAGE COUNTS AGAINST MINUTE ALLOWANCE

Additional features

250 MESSAGE TEXT PLAN, INCLUDING TEXT AND VIDEO ($5 PER MONTH)

NATIONWIDE FAMILY TALK & TEXT SHAREPLAN (2010)

Plan Details

Promotion details

UNLIMITED N&W MINUTES, UNLIMITED VERIZON-TO-VERIZON CUSTOMER CALLING, UNLIMITED TEXT, PICTURE, AND VIDEO MESSAGING

Additional Features

REQUIRED UNLIMITED DATA PLAN (SMARTPHONE) ($29.99 PER MONTH)

Before taxes, fees, and surcharges, Verizon Wireless customers holding onto their legacy FamilyShare plan from 2005 would pay $65.00 per month for two lines sharing 700 minutes of calling, with one line also getting 250 text, picture, or video messages, and a data plan that ate from your minutes allowance, instead of charging you per megabyte.

Today’s plan costs far more — $129.98 — more than double, for most of the same features.  The only difference is that Verizon Wireless doesn’t presently limit your data usage or messaging on their SharePlan.

No wonder consumers are getting sticker shock when upgrading their phones.  The paradigm shift to a “required data plan” forces customers away from older service plans onto new ones.  The result is a much higher monthly bill.

All this and the same companies that have figured out how to effectively double your cell phone bill in five years are also contemplating taking away the “unlimited” part of the required data plan.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WTTG Washington Is It Legal to Require A Phone Data Plan 5-7-10.flv[/flv]

WTTG-TV’s “Ask Allison” feature recently answered a question from a viewer who just discovered the “mandatory data plan” as an unwelcome part of her new phone purchase.  The Washington, D.C. viewer wants to know if that’s legal.  Allison educates viewers in the nation’s capital that isn’t the only trick or trap cell phone companies have in store for you.  Bottom line: maybe you don’t want that new phone after all.  (3 minutes)

Sometimes you have to wonder who telecom front groups hire to push their agenda.  In the Stop the Cap! e-mail box came a news tip last week that a new study proved beyond doubt that passing Net Neutrality would put up to 1.5 million jobs at risk by the year 2020.  Just as bad, the study warns, broadband investment would plummet as a result, causing an investment retreat worth up to $5 billion dollars.  They thought I should know.

All of this ruinous news results from a government that wants to make sure your Internet Service Provider doesn’t block, impede, or censor the traffic of independent websites that don’t  pay a protection fee to keep their content online and accessible.  What’s that I smell?  The easily recognized scent of plastic grass — more astroturfing from a broadband industry intent on keeping broadband regulation as far away from them as possible.

The Employment and Economic Impacts of Network Neutrality Regulation: An Empirical Analysis, by Dr. Coleman Bazelon — working on behalf of something called “The Brattle Group, Inc.,” is a real page-turner.  I tore right through it myself.

Just reading the background of Dr. Bazelon rang all sorts of warning bells:

• Dr. Bazelon consulted and testified on behalf of clients in numerous telecommunications matters;
• Dr. Bazelon frequently advises regulatory and legislative bodies;
• Dr. Bazelon was a vice president with Analysis Group, an economic and strategy consulting firm.

More ordinary folks use a different, less fancy term to cover all this: lobbyist tool.

The key finding for the report:

New network neutrality regulations proposed by the FCC could slow the growth of the broadband sector, potentially affecting as many as 1.5 million jobs, both union and non-union, by the end of the decade.

So how does Bazelon come to this conclusion?

The academic literature on possible effects of network neutrality regulation does not provide a consensus view on whether such regulations should be expected to help or harm the broadband sector, although several economists have concluded that such regulation would be harmful.

I tore right through Bazelon's report.

Many of those economists were paid by the broadband industry to conclude that in their own “reports.”  Many of Bazelon’s footnotes reference himself, telecommunications company executives, or other connected parties who have a financial interest in opposing Net Neutrality or broadband regulations.

At the heart of Bazelon’s theory is that content-related jobs, those involving the development of the websites you like to visit to read, listen, watch, or download from, cost more money to create than broadband “dumb pipe” jobs.  In other words, if you’re developing iTunes content or a network to stream Netflix movies, your job cost more (and probably pays more) than a line splicer at AT&T who is rolling out 3 Mbps DSL service in Rolla, Missouri.

So, if we penalize content developers with Internet Overcharging schemes or speed throttles that discourage your use of iTunes or Netflix, AT&T can use the savings from dramatically lower demand and hire more people to wire up communities for basic DSL service.  That’s okay, because it creates new jobs: “to the extent that the absence of network neutrality regulations leads to a transfer of ‘wealth’ (or sector revenues) from the Internet content sector to the broadband sector, such a transfer would be expected to have a positive impact on employment.”

That’s a great deal for you, right?

Net Neutrality doesn’t impede bigger profits for broadband providers – it just insists that they don’t earn those profits parasitically on the back of someone else’s content.  If your cable or phone company owned Netflix, there wouldn’t be an issue.  They would provide a service and earn from it.  But they don’t, and demand a piece of the pie anyway.

By the way, Bazelon’s myopic report completely misses another fundamental fact.  In today’s non-Net Neutral world, large phone companies like Verizon and AT&T have slashed tens of thousands of jobs just fine without pesky Net Neutrality or other broadband regulations getting in the way.  It’s like telling a New Orleans resident standing in four feet of water during Hurricane Katrina that if we don’t do something about the levees next year, the city could be flooded.

The author also states the obvious:

Broadband open access and net neutrality regulations are both regulatory interventions aimed at restricting a broadband network owner’s ability to exercise market power. The first acts at a structural level to eliminate any potential market power in the provision of the good; the second acts at a behavioral level restricting the broadband provider’s ability to benefit from any such market power.

Sounds like a plan to me and millions of other consumers who see the results of the industry’s market power workout routine… in the form of ever-increasing monthly bills.

Bazelon's vision for the Internet's future

Bazelon is even willing to predict some winners and losers with the FCC’s proposed Net Neutrality regulations:

Under the strict network neutrality regime being considered by the FCC, different Internet content might flourish. In particular, some Internet content is less commercial and generates very little revenue. Content that does not generate much economic value may be advantaged by a network neutrality regime. It is worth noting, however, that such content, by not primarily being engaged in the economy, does not significantly impact employment. Larger commercial sites have the potential of doing better or worse under network neutrality regulations. On the one hand, potentially lower costs of access should benefit them; on the other hand, potentially less developed broadband infrastructure could harm their businesses. With some content winning and some content losing, there is no reason to believe that the total amount of content will be more or less (or more or less valued by Internet users) under one regime or the other. Some business models will do well under one regime, others under the other regime.

In other words, in Bazelon’s world, the formerly level playing field where content is king and website value is decided on its merits is replaced with a corporate-controlled broadband network where only the big, well-financed players will get to play.  If you’re CNN or Amazon.com, you’ll have no problem meeting the protection racket prices providers could demand to guarantee your content isn’t blocked or slowed to a crawl.  But if you’re a poor blogger, a new business start-up, or use the web to argue for and against various causes, get to the back of the line (if you are allowed in the line in the first place.)

The Internet gets reincarnated as Prodigy, for those old enough to remember using that online service.

Ultimately, Bazelon believes only big broadband providers can create economic success stories in our online future.  Making them play by certain rules will kill that success, he argues.

Only one problem – when Bazelon gazes up into the sky, he sees AT&T logos everywhere he looks.  That’s because Mobile Future, the group that paid for the study, is yet another creature of AT&T.  To hide the fact this is yet another AT&T front group, several of AT&T’s usual friends also turn up on the membership roster.  Just a few days after calling out LULAC – the League of United Latin American Citizens for selling out the Latino community to AT&T’s agenda, here they are again — joined at AT&T’s hip as a member of Mobile Future.

A selection of other Mobile Future (brought to you by AT&T) members

Asian Business Association – No national website, which already makes this suspicious, but the San Diego chapter admits AT&T is a corporate sponsor.

Asian Women in Business – AT&T underwrote their website.

Bump.com – The company is self-described on Mobile Future’s website as “the world’s largest purpose-formed safety, communication and marketing network. BUMP uses safe and convenient voice recognition and ALPR (automatic license plate recognition) to provide drivers worldwide with a communication platform that promotes safety on the roads and builds a unique global network.”  They should win an award for puffery.  In fact, this “world’s largest” enterprise doesn’t even have a website.  It claims it was founded in 2009, but its Facebook page just showed up April 15th of this year with a handful of photos showing… license plates.  Why license plates?  Because the group’s real aim is to set up a registry of those willing to receive text messages sent by typing in someone’s license plate and quietly linking it to your cell phone.

The Century Council – Public interest group padding.  Ask yourself what a group fighting underage teen drinking and driving built from and run by distilleries has to do with mobile broadband, Net Neutrality, spectrum demand, and wireless phone taxes — the primary issues Mobile Future seeks to address.

Climate Cartoons – The group’s CEO is a Washington, DC lobbyist specializing in fighting telecommunications issues.  Among Arnold Consulting Group’s “accomplishments:” building a “telecommunications coalition that successfully opposed federal and state ‘Net neutrality’ legislation” and a “cable television coalition that successfully opposed federal, state and local efforts to enact open access broadband regulations.”  Need I say more?

Hispanic Technology and Telecommunications Partnership – Another LULAC — follows AT&T policy initiatives around like a friendly puppy.  HTTP was busted by Ars Technica when asked whether AT&T had any hand in helping the group draft its opposition to Net Neutrality.  HTTP’s Sylvia Aguilera insisted she initiated the drive to oppose Net Neutrality, but was silent on whether AT&T helped draft the letter opposing it.

That’s only halfway down their so-called “coalition” list.  You get the point.  The only name that truly matters among all of Mobile Future’s members is AT&T because they are the ones spreading the money around to pay for it.  At the same time, if AT&T is writing contribution checks to your public interest group, or hiring your consulting/lobbying firm to represent your agenda, those are two compelling reasons for both to hurry on over to sign up for the cause in this, and other astroturf front groups.

On behalf of Climate Cartoons, which purports to “lure people into earth friendly behavior,” please be sure to give all due respect to this latest industry-backed study from Dr. Bazelon by tossing it into the nearest recycling bin.

Reach Out and Touch Someone... With Cash

Stop the Cap! readers Terry and Scott write to let us know it was an Astroturf weekend in the pages of the New York Times‘ ‘Letters to the Editor’ section as two traditional allies in big telecom’s fight against Net Neutrality and broadband regulation blasted the newspaper’s recent pro-FCC regulatory authority editorial.

Mike Wendy, vice president of the Progress and Freedom Foundation, a disingenuously-named telephone and cable-backed front group, was first up, proclaiming the bipartisanship of the glorious Telecommunications Act of 1996 which made unregulated broadband’s growth possible:

Over the last five years alone, American companies — incentivized by the absence of Internet regulation — have invested more than half a trillion dollars to build broadband infrastructure. Consequently, this has exploded broadband choice and access, boosting jobs, productivity and commerce, as well as other important societal-civic benefits, for more than 90 percent of America. This growth will continue, fostered by vibrant competition among cable, wireless, wire line and other evolving means.

It is understandable that you ignore the second fact: it reveals an inconvenient truth. The Telecommunications Act of 1996, which put Internet services outside of 75-year-old telephone regulations, was passed by a Republican Congress and signed into law by a Democratic president, in an overwhelmingly bipartisan manner. The Bush-era regulatory changes, which ensure that Internet services get treated in accord with the law, only followed through on the pro-deregulatory, pro-marketplace intent of the law.

Speaking of inconvenient truths, it took the newspaper’s editors to fully disclose that “the writer is vice president of […] a think tank that takes support from the information technology, telecom, wireless, media, cable and content industries.”  Kudos to the Times for disclosing that — too often such hackery goes unchallenged, without informing readers who is paying for it.

In the case of P&F, it’s all our favorites:

Translation: We don't represent consumers

• AT&T
• Comcast Corporation
• Cox Enterprises
• National Cable & Telecommunications Association
• Time Warner Cable
• T-Mobile
• USTelecom – The Broadband Association
• Verizon Communications

Of course, those big dollar amounts representing industry investments ignores the even bigger profits reaped from those investments, particularly in barely-competitive broadband.  Nobody in the broadband industry is lining up for a bailout, that’s for certain.

As to the group’s assertion that bipartisan bliss made telecom deregulation all worthwhile, the only thing they managed to prove is that both political parties are ready and willing to be suckered into believing the broken promises of lower pricing and better service for their constituents (helped along with a generous campaign contribution to ease any disappointment later on.)

President Clinton, who signed the Act, considers it one of his mistakes after he saw the results.

Just days after the governor of Arizona signed a highly controversial border enforcement measure into law, LULAC labels Net Neutrality opposition its "top news story." Is this a group that represents the real interests of America's Latino community, or that of its backers AT&T and Verizon?

Next up is a letter from Brent A. Wilkes, Executive Director, League of United Latin American Citizens (LULAC).  He doesn’t like Net Neutrality either, and regurgitates familiar industry talking points our readers can recite in their sleep:

We’ve seen more than $200 billion invested in broadband networks — more private investment than anywhere in the world — and the Internet in the United States has been an unquestioned success.

Second, network neutrality regulations are largely a solution in search of a problem. The F.C.C. adopted “Open Internet” principles in 2005. Since then, there have been only a few alleged breaches that were quickly resolved under this framework.

On the other hand, net neutrality regulations could shield the companies that make billions in profits from the Internet — search engines and other providers — from contributing toward the $350 billion in investment broadband upgrades needed to handle bandwidth demands, which double every two years. That would shift these bandwidth costs exclusively — 100 percent — onto consumers and could thereby deter broadband adoption in Latino and other communities.

Net neutrality could also bar broadband providers from managing, in a nondiscriminatory manner, the few bandwidth-hogging applications and services that can consume nearly all of a neighborhood’s bandwidth. If and when critics identify a real problem, Congress should quickly grant the F.C.C. the express authority to fix it.

Now why would a Latino interest group be so ready and willing to carry the industry’s water in the pages of the New York Times?  Whenever AT&T and Verizon have a public policy concern, LULAC is sure to follow.  For years, this group has been a part of more than a few industry-backed astroturf campaigns designed to trick consumers into buying their corporate agenda.  For disadvantaged Latino communities already hard hit with an ever-expanding price tag for telecommunications services, it’s shameful to see a group openly advocating an agenda that extracts more money from consumers’ wallets.

LULAC has received millions in support from General Motors, AT&T and Verizon

LULAC was there as a card-carrying member of both TV4Us and Consumers for Cable Choice, front groups promising consumers in states served by AT&T that statewide video franchises would lower their cable bills.  LULAC was front and center in the cheerleading section.  Only Latino Wisconsins, along with everyone else, got rate increases instead.  Thanks, LULAC!

Telecom analyst Bruce Kushnick tears the lid off:

This “deception … is about playing on America’s caring about the public interest and about minorities getting a fair shake,” Kushnick says . Worse, “these organizations have very deep-pocketed funders with lobbying groups, PR firms and others to get them the loudest ‘volume’ in the media or access to regulators and legislators. They often overwhelm the message of independent consumer groups.”

LULAC was there in states like New Jersey when Verizon was looking for its own statewide franchises.  To not offer them, LULAC suggested, would harm Latino communities across the region.  Actually, for many of them, the fact their cable and phone bills continue to march relentlessly higher actually hurts more.

The group is an equal opportunity sellout.  During discussions about XM Radio and Sirius merging, LULAC was ready with a letter of support for the merger.  Because when you think about pressing concerns for today’s Latino community, dwelling on the merger of two satellite radio services is a real front burner issue.

When Verizon wanted to acquire Alltel, guess what group was there to cheer the deal on:

LULAC supports this merger because the networks of the two companies are largely complementary. That means that when the merger is complete, even more consumers will enjoy the innovations Verizon Wireless plans to bring to market in years to come.

It’s getting hard to find a cause célèbre for AT&T or Verizon where LULAC doesn’t have their back.

But why?

Money, of course.

AT&T and Verizon have both donated millions of dollars over the years to LULAC.  General Motors, which had a direct interest in the outcome of the XM/Sirius merger is a donor as well.

Don’t fall for hackery.  Net Neutrality protects consumer interests and guarantees online freedom, something especially important as the forthcoming immigration reform debate begins anew.  That’s an issue Latinos are concerned with.  Too bad those issues don’t generate multi-million dollar contributions, which might get groups like LULAC to stop advocating against the interests of their own members.

Bell Labs, a division of Alcatel-Lucent, has found a way to extract more speed over aging copper wire most phone companies still rely on to deliver service.  Its latest achievement, in the lab anyway, proved those wires could accommodate 300Mbps downstream speeds, at least if you were within 400 meters (that’s just over 1,300 feet) from phone company facilities.  Further on, the company was able to achieve 100Mbps speeds over a distance of one kilometer (0.62 miles).

Stop the Cap! reader Jeff writes wondering what impact such improvements have when they are measured in distances more commonly associated with a sprinting event.  Phone companies are well aware of the limitations of their legacy networks.  Some, like Verizon, decided the network designed more than a century ago was destined for the scrap heap.  They began to deploy fiber-optic based networks instead.  Others are trying to extract as much as they can from copper, as cheap as they can for as long as they can.

The problem with copper wiring is that the longer the distance, the slower the data speed those lines will support.  Interference or crosstalk from neighboring cables crammed together into a bundle can also create major problems, especially at longer distances.

Bell Labs says it has devised a way around the crosstalk problem with the testing of its “DSL Phantom Mode” solution:

At its core, DSL Phantom Mode involves the creation of a virtual or “phantom” channel that supplements the two physical wires that are the standard configuration for copper transmission lines. Bell Labs’ innovation and the source of DSL Phantom Mode’s dramatic increase in transmission capacity lies in its application of analogue phantom mode technology in combination with industry-standard techniques: vectoring that eliminates interference or “crosstalk” between copper wires, and bonding that makes it possible to take individual lines and aggregate them.

In the eyes of Alcatel-Lucent, Bell Labs has found an answer to the dilemma of what role phone companies can play in a 100Mbps broadband future.

“We often think of the role innovation plays in generating technologies of the future, but DSL Phantom Mode is a prime example of the role innovation can play in creating a future for existing solutions and injecting them with a new source of value,” said Gee Rittenhouse, head of Research for Bell Labs. “What makes DSL Phantom Mode such an important breakthrough is that it combines cutting edge technology with an attractive business model that will open up entirely new commercial opportunities for service providers, enabling them in particular, to offer the latest broadband IP-based services using existing network infrastructure.”

Before getting too excited, remember these demonstration tests occurred in a laboratory environment.  No squirrels chewed up the cables. No water leaking into cracks in the cable’s insulation or a connection box caused issues.  No aging splices of corroded copper wiring up on poles since the late 1960s were found.  Your home’s own phone wiring was also never part of the equation.

Distance is still a considerable limiting factor in DSL deployments.  Most of the benefits of this research will go to companies like AT&T, which uses a hybrid fiber-copper wire network in its U-verse areas.  The fiber cuts down the distance from a phone company office to a neighborhood.  Once in your neighborhood, traditional copper wires run the rest of the way, right up into your home.  If AT&T can leverage additional speed from its weakest link — the copper-based phone line — it may be able to use the additional bandwidth to boost broadband speed or accommodate more concurrent applications they cannot support today.

For phone companies still dependent on long distances of copper wiring, the expense of bootstrapping Alexander Graham Bell’s century-old network begins to look silly.

Sometimes it’s better to build anew instead of repeatedly trying to fix the old.  And many are doing exactly that.

Hundreds of small independent telecoms, broadband service providers, municipalities and cable television companies have brought gigabit-enabled, all-fiber service to a total of more than 1.4 million North American homes – about a quarter of all fiber to the home connections on the continent – according to the Fiber-to-the-Home (FTTH) Council.

The FTTH Council noted in a recent study more than 65 percent of small independent telephone companies that have not upgraded to FTTH said they would very likely do so in the future, with another 11 percent saying they were somewhat likely. More than 85 percent of those that have already deployed FTTH said they would be adding more direct fiber connections going forward.

Surprisingly most of this expansion outside of Verizon’s FiOS service comes from small family-owned companies, cooperatives, and the remaining independent phone companies not snapped up by Frontier, Windstream, and CenturyLink.

“To continue to meet the rapidly growing bandwidth requirements for emerging applications and services, these companies know that they have to ‘future-proof’ their networks by running fiber all the way to the premises – and that’s why we are seeing all this activity,” says Joe Savage, President of the FTTH Council.

“In many cases, these small telephone companies are longtime family-owned businesses that are deeply involved in local affairs and are responsive to their community needs for faster broadband as a key to future economic development,” said Mike Render, president of RVA LLC and the author of the study. “That’s why so many of these companies are looking to get into FTTH or expand their deployments,” he said.

“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)