Genachowski

Federal Communications Commission Chairman Julius Genachowski spent this morning in Orlando delivering a keynote address opening the wireless industry’s annual trade show.

Stop the Cap! spent part of the morning following the event over a live stream that most wireless customers would never dare to watch — fearing they’d blow past their monthly usage limits.  Genachowski steered well clear of commenting on yesterday’s merger announcement between AT&T and T-Mobile.  But then AT&T must have hacked their way into the tablet the FCC chairman was reading from, because he suddenly launched into a series of talking points that could have come right off of AT&T’s government affairs website.

“Mobile broadband is being adopted faster than any technology in history, but there’s a catch,” Genachowski said. The chairman said the demand for wireless broadband is overwhelming the country’s wireless infrastructure. “The coming spectrum crunch threatens America’s leadership in mobile,” Genachowski said.

It appears Julius has been listening to AT&T executives who have made the spectrum crunch and “America’s leadership in wireless broadband” bullet points a hallmark of their argument for a merger with T-Mobile.

In fact, although T-Mobile delivers AT&T additional mobile broadband capacity in selected major cities, the company is likely to find many of T-Mobile’s cell sites redundant, and some of T-Mobile’s spectrum is incompatible with AT&T’s network unless customers are handed new devices.

America’s “leadership in mobile broadband” can be judged in many different ways.  For example, we feel many in Washington are helping AT&T lead the way to a mobile duopoly.  We are also leading with some of the most expensive mobile broadband service in the world, a fact of life that will never change in America’s shrinking competitive landscape.

Spectrum issues are solvable by the FCC without destroying competition with yet another colossal merger.  The chairman’s telegraphing of AT&T’s talking points can only be seen as an encouraging road map by which the huge telecom company can sell its deal to regulators by selling out consumers.

Rogers, one of Canada’s largest telecom companies, will do anything to sell you their 3G wireless broadband Rocket Stick, even if it means scaring you away from using their own Wi-Fi hotspots.

Michael Geist, a popular columnist in Toronto, called Rogers about another matter, but the customer service agent soon began asking if Geist’s family used a laptop to access public Wi-Fi networks.

When I said that I did, he asked if I knew the dangers of using public Wi-Fi, which I was told included the possibility of hackers accessing my data or inserting viruses onto my computer.  Given the risks, the agent continued, might I be interested in the Rogers’ Rocket Stick?

Geist was completely unimpressed with Rogers’ attempts at upselling through scare tactics.

“Mobile internet services are good products that can and should be sold on the basis of the convenience they provide, not by scaring consumers into thinking that alternative access services are unsafe,” Geist wrote.

More importantly, the irony of Rogers’ statements can’t be missed, as Geist notes:

• Rogers operates hundreds of public wifi hotspots across the country. When promoting its hotspots, it describes them as providing “high-speed, secure access to the Internet.”
• Rogers permits Internet tethering from many smartphones. Many users may find that tethering provides a more cost effective solution than purchasing yet another mobile Internet device.  The agent did not mention this alternative.
• There are risks with public wifi, but those can be mitigated through a variety of steps on users’ computers. Advice on what do include Microsoft’s advice on public wifi networks, Lifehacker on how to stay safe on public wifi networks, and Ars Technica on staying safe at public hotspots.

Stories about the risks of Wi-Fi are not limited to Rogers.  Several media outlets have been running stories ranging from the plausible:
[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CTV British Columbia – How to secure your Wi-Fi surfing 10-7-10.flv[/flv]

CTV in Southwest Ontario reports some area residents believe Wi-Fi causes diabetes and other ailments and wants Wi-Fi pulled from schools.  (7 minutes)

Also not to be missed are Rogers’ impenetrable “Flex Rate Plans.”  Would it not be easier to just say customers will be charged the amount of the rate plan that corresponds with their actual usage?

Flex Rate Plans
Rogers unique Flex Rate service automatically adjusts the monthly fee based on your actual monthly usage. As you use more or less data, Rogers Flex Rate Data Plan will automatically roll up or down to the next best rate available. This guarantees you the best rate based on actual usage.
Tier	Monthly Fee	Data Included**	How Rogers Flex Rate Works
1	$35	500MB	You will start each month at Tier 1. If your monthly usage exceeds 500MB, then you move up automatically to Tier 2 and will be charged $40.
2	$40	1GB	If your monthly usage exceeds 1GB, then you move up automatically to Tier 3 and will be charged $55.
3	$55	2GB	If your monthly usage exceeds 2GB, then you move up automatically to Tier 4 and will be charged $70.
4	$70	5GB	If your monthly usage exceeds 5GB, $0.05 per additional MB will be charged.

Monthly prices above do not include the Government Regulatory Recovery Fee*

A Sprint customer in Tulsa, Okla., was recently sold a Blackberry plan that included a data add-on service that allowed him to tether his Sprint wireless connection to his laptop, perfect for wireless broadband on the go.

John signed a two-year contract with the company, which included a copy of his plan choice and the charges associated with his account. There it was, right on his bill — Sprint’s “Phone as Modem” add-on, priced at $15 per month.

A few weeks later, the service stopped working, and after multiple phone calls with Sprint, John was told he should have never been sold that data plan add-on; it was only available to corporate customers, not individuals.

John pointed to his contract with Sprint, which clearly showed he was paying to receive the service, but Sprint didn’t care.  Nor would it permit him to exchange his phone for wireless broadband equipment that would provide him with the broadband service he needed.  Why?  Because he was already into his two year contract.

John was left fuming, wondering why Sprint’s contracts allow them to renege on a deal made fair and square while trapping him with equipment he can no longer use to obtain the service he needs.

“To me, they voided the contract when they took away the service without my knowledge,” John told KJRH-TV’s Problem Solver Pete Knutson. “This is principle, this is sole principle.”

John canceled his contract, but Sprint promptly billed him a $125 early termination fee and sent his account to collections, threatening his credit rating.

John was not alone in his predicament.

Sprint quietly canceled its individual “phone as modem” tethering option for Blackberry owners last April, literally stripping the feature off of any plan set up with a personal Social Security number.  Business accounts configured with a Taxpayer ID Number associated with the business name on the account kept the option.

Sprint was supposed to notify affected customers through bill inserts, but since most Sprint customers are now billed electronically, few customers got the message.

Several customers reported they were “notified” when the service simply stopped working one day last spring.  One Shenandoah Valley customer found out the hard way.

“My wife used her 8330 for internet access, and we purchased the MBR900 to tether the phone so she could have it in the best place for reception,” the customer notes.  “Sprint decided to disable the use of the phone as a modem, I thought the router went kaput until she called Sprint.”

It took five rounds of calls with Sprint customer service before finding a support representative with the real answer.

An even bigger question is why a Sprint salesperson pitched John a plan with an option that has not been sold to individuals for nine months.

As has so often been the case, phone companies seeking to avoid bad publicity nearly always waive fees and credit a customer’s account when the media comes calling.  John’s account balance was brought back from collections and promptly credited to reflect a zero balance.

Sprint refused to provide a specific explanation for how this happened. Channel 2’s Knutson advises customers to always check their cell phone contracts to make sure they are actually getting the services they are paying to receive.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KJRH Tulsa Cell company drops service still charges cancellation fee 1-13-11.flv[/flv]

KJRH-TV in Tulsa shares the story of John, a former Sprint customer who didn’t get the service his contract promised.  (2 minutes)

Unless you own Sprint’s premiere smartphones — the Evo 4G and the Epic, get out your wallet — Sprint is increasing the price on its unlimited data plan by $10, effective later this month.

Evo and Epic owners already pay the $10 “premium data” fee that will be extended to all smartphone customers Jan. 30 (customers on existing contracts will not be affected).

The reason for the price increase?  Heavy usage on its wireless network, which partly includes Virgin Mobile (ending its unlimited service Feb. 14) and Clearwire, which heavily throttles speeds of customers deemed to be “using too much.”

Chief executive Dan Hesse says Sprint will retain its unlimited service plans, which the company calls the best value in the wireless industry.  But the pricing change will present minor challenges as Sprint markets themselves as the least costly.

Sprint's marketing focuses on its unlimited use offers, some of which are about to get more expensive.

Sprint’s “Everything Data” plan, which also includes unlimited cell-to-cell calls will now cost $79.99 per month.  Comparable plans from T-Mobile are priced at $99.99 for that company’s 4G network and $119.98 on Verizon Wireless’ slower, but more ubiquitous 3G network.

“Sprint has been the price leader in the market,” said Jennifer Fritzsche, a Wells Fargo & Co. analyst in Chicago who has an “outperform” rating on the stock. “Sprint may be more confident in the pricing power it has with customers.”

The Wall Street Journal also shares positive views of the price increase from Wall Street:

Wall Street applauded the move, with many seeing it as a sign of pricing power returning to the wireless industry. “It is more likely that Sprint believes that consumers value unlimited and that they can get away with higher pricing,” said Jonathan Chaplin, an analyst at Credit Suisse.

The price hike also suggests that Sprint has seen stronger smartphone growth over the past three months, he added, noting that the carrier likely wouldn’t have made the change if it were still concerned about stabilizing its base on contract customers.

But some other analysts are less impressed with Sprint, especially because of challenges the company faces with its Clearwire partnership.

Patrick Comack from Zachary Investment Research has downgraded Sprint stock, particularly because of technology issues Clearwire faces.

Comack told CNBC Clearwire is stuck with defective spectrum for much of its wireless broadband service.

“It can’t penetrate walls,” Comack said, noting most Clearwire customers are trying to use wireless broadband in the 2GHz range, which presents plenty of problems from obstacles between the tower and the customer.

Comack also believes Sprint’s network simply cannot compete with Verizon Wireless, which he suspects could pick up a number of Sprint customers once it fully activates its 4G network nationwide.

Verizon Wireless network delivers significantly better coverage than Sprint, which focuses on urban and suburban markets, and the major highways that connect them.

[flv]http://www.phillipdampier.com/video/CNBC Sprint 1-12-11.flv[/flv]

CNBC: Debating Sprint and Clearwire, with Todd Rethemeier, Hudson Square Research and Patrick Comack Zachary Investment Research.  (6 minutes)

(Thanks to Stop the Cap! reader PreventCAPS for sharing the news.)

Virgin Mobile has begun notifying their Broadband2Go customers of how they plan to continue delivering “an outstanding customer experience”: by throttling the speeds of any customer who exceeds 5GB of usage per month.

Many Virgin Mobile customers have been in touch with Stop the Cap! about they feel is bait and switch pricing engaged by Sprint’s prepaid mobile division.  At issue — customers who invested $75-150 in equipment to sign up for a service they were sold on being “unlimited.”  Virgin Mobile made the “unlimited” part of its service the focus of its marketing.

The company characterizes the decision to adopt an Internet Overcharging scheme “a difficult choice,” but it’s one that that will ultimately help the company’s bottom line while costing many of their customers a substantial amount of money for a service they might never have purchased had they known it was going to be limited.

As is the case with almost every Internet Overcharging scheme we’ve seen, the same marketing that promised an “unlimited” experience now promises that such usage limits won’t impact most customers.  In fact, the company’s notification states, “you can send over 500,000 e-mails or browse the web for 250 hours a month!”  Of course, nobody except spammers send that much e-mail, so that kind of boasting is ultimately meaningless to customers.

What is more meaningful is that Virgin’s new 5GB cap will effectively mean customers have to heavily ration their online experience, especially if it includes multimedia.  In fact, customers won’t be able to watch more than a handful of HD movies using the service.  That’s a $40 movie pass some customers would have passed up had they known it came with limits.

This notification arrived in our e-mail box this morning. Despite the spin, the e-mail is likely to enrage customers, especially those who only recently invested money in Virgin Mobile equipment they can no longer return for a refund.

In fact, Virgin Mobile’s return to the land of Internet Overcharging is nothing new for the company.  Customer response to the company’s earlier prepaid wireless broadband plans were, to say the least, underwhelming.

Virgin Mobile’s new usage limits are less about “delivering the same quality service you’ve come to expect” and more about protecting Sprint’s more lucrative postpaid mobile data customers who pay more to use the same 3G network.  While Stop the Cap! agrees delivering an unlimited wireless broadband service remains a difficult challenge with the current limits on wireless capacity, Virgin Mobile’s about-face comes uncomfortably fast — just six months after unveiling and heavily promoting its “unlimited” service.  Just as with Clearwire, Sprint has managed to oversell its network and not invest sufficiently in expanding it to meet customer demands.  Nor has either company educated customers about the inherent limitations wireless broadband has, especially on an overcrowded network.

Sources tell us Virgin Mobile, much like Clearwire, suffered from some customers trying to use peer to peer software, sometimes for days on end (simply a ridiculous endeavor on most of the wireless networks we’ve experienced).  But the company did little to explain to customers that such software often does not work well on these types of networks, and using it 24/7 is likely going to create issues not only for that customer, but for others as well.  Instead, blanket usage limits punish everyone.

Customers deserve more than platitudes from Virgin Mobile.  Any customer that wants to cancel their service should be given a full refund by Virgin for equipment costs they incurred when signing up.  Further, Virgin Mobile’s customer policies do not generally allow money on account, but as of yet unspent, to be refunded to departing customers.  That policy should be waived in this instance.  Any unspent funds should be credited back to the customer’s credit card or refunded by check.