Verizon Wireless News

Verizon has announced that it will turn on its mobile 5G network in Chicago and Minneapolis on April 11.

For those who own the carrier’s first 5G-capable phone, the service -- dubbed "5G ultra wideband” -- will be available for an extra $10 per month. The first three months of access will be free.

The carrier said it would begin taking pre-orders for 5G Moto Z3 Mod on March 14. The $50 accessory will enable the Motorola Moto Z3 device to connect to the 5G network.

Coverage areas

For those in Chicago, Verizon said 5G service will initially be “concentrated in The Loop, specifically areas of the West Loop and the South Loop, around landmarks such as Union Station, Willis Tower, The Art Institute of Chicago, Millennium Park and The Chicago Theatre.”

“You will also have 5G Ultra Wideband coverage around our Verizon store on The Magnificent Mile, and throughout The Gold Coast, Old Town and River North,” officials said.

In Minneapolis, 5G will be available mainly in the Downtown area, including Downtown West and Downtown East, around landmarks such as the Minneapolis Convention Center, the Minneapolis Central Library, the Mill City Museum, Target Center and First Avenue venues, The Commons as well as inside and around U.S. Bank Stadium.

Coverage will also be available in areas of Elliot Park and in in the Verizon store at the Mall of America.

All four major carriers are gearing up to launch 5G throughout the U.S. AT&T deployed its 5G network in 12 cities last year, and Sprint said recently that it will activate its 5G network in four cities in May. T-Mobile has confirmed that it will also offer 5G but hasn’t announced when or where it will launch first.

5G support will equip devices the ability to move more data with greater speed. Verizon says customers can expect average Wi-Fi speeds of 300 mbps. The new network will also offer more responsive access with lower latency and the power to connect more devices at the same time.

Verizon has said it’s planning to launch 5G in at least 30 U.S. cities this year, but hasn’t disclosed which cities will get the new network after Chicago and Minneapolis.

Verizon is expanding on its 2018 offer of six months of free access to Apple Music for select users. This week, the wireless carrier announced that new and existing customers can get access to Apple Music at no additional cost and with no six-month cap starting January 17.

Verizon decided to expand its partnership with the streaming service because its original free trial offer went over well with customers, said Angie Klein, Verizon’s vice president of marketing.

"When we introduced six months free of Apple Music to Verizon Unlimited subscribers, we said it was just the beginning of a great collaboration between Verizon and Apple to bring music streaming to our loyal customers,” Klein said in a statement.

"Our customers loved the offer, so we’re expanding the value of our Beyond Unlimited and Above Unlimited plans by including Apple Music at the same plan price. You can stream more of the music you love on the network you deserve.”

The free Apple Music offer is available to customers paying for the two more expensive Unlimited plans: Beyond Unlimited and Above Unlimited. For Go Unlimited customers, the six-month trial will still available.

Apple Music is still aiming to catch up to competing streaming services, such as Spotify.

As of May 2018, Apple Music had more than 50 million members (both paying and free-trial), Apple CEO Tim Cook said in an interview with Bloomberg last summer. As of September, Spotify had 87 million paying customers and an additional 109 million members using the ad-supported version.

On Monday, Verizon said that more than 10,000 employees (or around 7 percent of its workforce) accepted its buyout offer, first announced in September.

The carrier said previously that it aimed to save $10 billion by 2021 and thin out its workforce as part of its effort to prepare for the launch of its 5G network service.

In addition to cutting costs, the buyout program was intended to give Verizon "an opportunity to find more efficiencies in the size and scope of our V Team and help expedite the building of an innovative operating model for our future," CEO Hans Vestberg said in a memo to employees in September.

Restructuring ahead of 5G rollout

Verizon offered 44,000 employees across all of its business segments three weeks’ pay for every year at the company, up to 60 weeks. Verizon promised earlier this fall that its cost-cutting drive wouldn’t affect sales executives or managers in "crucial company roles.”  

The end dates for the employees who accepted the buyout offer range from the end of 2018 to June 2019.

“For those who were accepted, the coming weeks and months will be a transition. For the entire V Team, there will be opportunities to work differently as we prepare for the great things to come at Verizon,” Vestberg said in a note to employees.

Verizon is currently taking steps to prepare for the rollout of 5G network service.

“These changes are well-planned and anticipated, and they will be seamless to our customers,” Vestberg said in a statement. “This is a moment in time, given our financial and operational strength, to begin to better serve customers with more agility, speed and flexibility.”

Verizon’s voluntary severance package offering, made last month, was extended to roughly 44,000 employees, the company confirmed to The Wall Street Journal. That works out to more than a quarter of the carrier’s total workforce.

The severance packages are part of a four-year plan to save the company $10 billion and give it "an opportunity to find more efficiencies in the size and scope of our V Team and help expedite the building of an innovative operating model for our future," CEO Hans Vestberg wrote in a memo to employees and reviewed by the Journal.

Employees eligible for the severance packages were offered three weeks’ pay for every year at the company, up to 60 weeks.

Verizon -- which has more than 153,000 employees -- said the cost-cutting drive won’t affect sales executives or managers in "crucial company roles.”  

The same day the severance package offer was announced, the carrier notified about 2,500 of its IT employees that they were being transferred to Indian outsourcing giant Infosys as part of a $700 million outsourcing agreement. Employees that received this notification aren’t eligible for severance payments and will not receive their 2018 bonus if they are offered a job at Infosys and do not accept it.

Verizon is currently rolling out the nation's first 5G wireless service in a number of cities. Last month, the carrier began inviting people in the selected cities (Houston, Indianapolis, Los Angeles, and Sacramento) to sign up for the service.

Starting August 16, new and existing Verizon customers can get six months of free access to Apple Music with an unlimited plan. The deal will give customers full, ad-free access to the music streaming service's 45 million songs on any of their devices.

In a statement, Verizon hinted that more perks will grow out of this partnership by noting that this is “just the first step.”

"It gives our customers exactly what they want: Apple's best-in-class music streaming experience, paired with an unlimited plan tailored to them, on the network they deserve," said Angie Klein, Verizon's vice president of marketing, in a statement.

"And now that you can mix and match our unlimited plans, every person in your family can stream worry-free on the unlimited plan they need, without paying for things they don't."

Competing with rivals

In June, Verizon introduced a higher tier plan with added high-speed data. Sprint and AT&T both relaunched their data offerings to include more expensive options. As ConsumerAffairs recently reported, T-Mobile took a different route by announcing a cheaper, stripped down unlimited plan that is set to launch on Friday.

Verizon is joining other carriers that have introduced plans that allow consumers to bundle with music streaming services. Sprint has been giving away free Tidal subscriptions with its Unlimited Plus plan for some time. Prior to its partnership with Tidal, Sprint used to bundle plans with access to Spotify premium.

Verizon will post more about the registration process for the offer on its website August 16.

Earlier this month, it was announced that Yahoo Messenger would be shutting down after 20 years in operation. Now, Oath -- a Verizon subsidiary that owns both Yahoo and AOL -- has unveiled two new versions of Yahoo Mail.

A revamped mobile web version of Yahoo Mail will include the addition of several new features, while a new app targeting Android Go smartphones will be smaller and more lightweight than the standard app.

Yahoo’s new mobile web service is geared toward users who don’t want to download an app that takes up more storage on their device, according to senior director of product management for Yahoo Mail, Joshua Jacobson.

“We’ve heard loud and clear from users that they’re not always ready to make the big leap to downloading an app that takes up any storage space on their phone,” Jacobson said in a statement.

“People with high-capacity phones may want to save that space for photos or videos, while others with entry-level smartphones may just have limited space from the get-go. Further, some folks share devices or borrow a family member’s to access their email. This is all especially true in developing markets.”

New mobile web features

The new mobile site update adds a feature that lets consumers “swipe” through their inbox to delete or mark an email as read. It also adds a pop-out sidebar for folders, as well as a new option to customize your inbox with color themes.

The redesign also adds email address suggestions, infinite scroll on the inbox, and support for Android’s ability to add browser shortcuts to the home screen.

Meanwhile, the Yahoo Mail Go app is optimized for Android Go devices, which have 1GB of RAM or less and are typically sold in markets where people need inexpensive phones that can operate on low bandwidth. It has the same features as the current Android app but keeps the RAM usage below 50 MB and the installation size below 10 MB.

In creating the new versions of Yahoo Mail, the company hopes to get consumers using Yahoo Mail more regularly and boost stagnated user growth. The company currently has 227.8 million active users per month, which is an increase of about two million from one year ago. However Yahoo’s user base is far smaller than Google's user base. In April, Google’s Gmail client had 1.4 billion users.

On Thursday, Verizon released a pricer, third-tier unlimited data plan entitled “aboveunlimited.” The new plan joins “gounlimited” and “beyondlimited,” both of which vary in terms of what they offer customers.

Unlimited data plans have experienced a great deal of evolution over the years. Last year, Verizon broke its unlimited plans into two options for customers, and it ultimately comes down to cost. Now, the company has introduced a third plan into the mix.

“It’s very simple,” said Ronan Dunne, president of Verizon Wireless. “We’re confident people will enjoy the choice.”

What “aboveunlimited” looks like

The “aboveunlimited” plan appears to be designed for users who use a ton of data.

The plan includes unlimited data for high-definition videos for up to 75 GB of data before Verizon intervenes, as well as 20 GB of mobile hotspot data at LTE speeds, five “TravelPasses” that offer one day of international data usage per month, and 500 GB of Verizon Cloud service. Prices range from $60 to $95 per line.

With an additional unlimited plan, Verizon is now allowing customers to mix and match between three different tiers for different phone lines on family plans. Under the current system, all lines must be on the same plan. Customers are free to switch back and forth between the tiers as they see necessary, and existing customers can also make the change.

“When I introduced the Verizon unlimited plan back in February of last year, it was a real reset of the market and a game changer,” Dunne said. “And we said at the time we would continue to evolve and expand that portfolio to broaden out the match with customers.”

According to Dunne, “aboveunlimited” is geared towards “the person who wants it all.”

With the announcement of the new plan, Verizon also reduced its charge per line for all three tiers of unlimited plans as a customer adds more lines. For example, with the “aboveunlimited” plan, customers will pay $90 per month per line for two lines, $70 with three lines, and $60 with four lines.

Market trends

Verizon didn’t enter the unlimited data market until last February, though other carriers had offered customers unlimited data for some time. When first released, Verizon only offered one unlimited plan. It later expanded to a cheaper, though more restrictive, tier in August.

At the time of the first unlimited plan release, Verizon was struggling with losing customers. Before unlimited data, Verizon lost a net of 398,000 regular monthly phone customers -- the most it had ever lost in a quarter. In adding the unlimited plan, though one that was pricier than competitors like Sprint and T-Mobile, the company regained 109,000 monthly customers.

However, the release of this latest unlimited plan comes at a better time for the company. Verizon reported having added 260,000 regular monthly subscribers in the first quarter.

Despite the positive news, Verizon decided to raise prices of this latest unlimited plan at a time when other cell phone providers are looking to keep customers -- for cheaper. Last week, Sprint introduced a plan that would cost just $15 a month -- with a promise to never go up. T-Mobile offers free Netflix and AT&T throws in HBO with an unlimited plan. However, Verizon is steadfast in its belief that customers are paying for a higher quality provider.

“There’s been a very positive, consistent trend in the performance of Verizon Wireless over the last few quarters,” Dunne said. “I think it’s fair to say objectively based on our performance since some of our competitors changed their offerings, we’ve not seen any increase in our churn... and we’ve continued to see high levels of customer engagement and satisfaction.”

After 20 years in operation, Yahoo Messenger will be shutting down on July 17.

The news -- which was announced by Oath, a Verizon subsidiary that owns both Yahoo and AOL -- comes six months after AOL Instant Messenger (AIM) was shut down.

Competition from messaging apps built by Skype, Microsoft, Google, and Facebook has made it difficult for Yahoo Messenger to stay relevant. Going forward, Yahoo says it will be “focusing on building and introducing new, exciting communications tools that better fit consumer needs.”

The company is redirecting users to its new group messaging application, Squirrel.

“There currently isn’t a replacement product available for Yahoo Messenger. We’re constantly experimenting with new services and apps, one of which is an invite-only group messaging app called Yahoo Squirrel (currently in beta),” Oath said.

Consumers can request access to the beta version of Squirrel here.

For the next six months, users can download their chat history from Yahoo Messenger by visiting this website, signing in with their Yahoo account, choosing a verification method, and then entering an email address where the download can be sent.

The long-awaited acquisition deal of Yahoo by Verizon finally reached a conclusion on Thursday after Yahoo shareholders approved the sale of the business. That means on Tuesday, Yahoo will officially become Altaba, which will take the cash from the sale and Yahoo’s holdings in Yahoo Japan and Alibaba group.

Unfortunately, the closing of the deal isn’t going to be good news for everyone. TechCrunch reports that Verizon will cut around 15% of the staff from Yahoo and AOL after the merger closes, eliminating around 2,100 redundant jobs between the companies. The new combined entity, named Oath, will be headed by AOL CEO Tim Armstrong.

“Oath’s strategy is to lead the global brand space. With access to over 1 billion consumers upon close, we will be positioned to drive one of the most important platforms in the consumer brand space. Consistent with what we have said since the deal was announced, we will be aligning our global organization to the strategy,” said an AOL spokesperson.

Long road

Verizon’s acquisition of Yahoo faced many bumps in the road on its way to finality. An initial deal was struck between the companies last July for $4.8 billion, but the waters were muddied after news broke that Yahoo had experienced two large-scale data breaches affecting over 1.5 billion user accounts.

Verizon executives immediately backed off from the deal, saying that they needed more information about the breaches before the deal could continue. Rumors even circulated for some time that the company was seeking a $1 billion discount on its purchase.

Pressure from shareholders mounted for both companies, and eventually Verizon settled for a price cut of around $350 million and a promise that Yahoo would share responsibility for any legal ramifications connected to the breaches.  

After the vote on Thursday, the New York Times reports that Yahoo’s share price rose by $5.16, closing at $55.71. That’s at least some relief to the Yahoo employees who will lose their jobs in the transition, since it will increase the payouts they’ll earn on stock options.

We recently reported that Yahoo and Verizon were making progress in closing their acquisition deal. The agreement had faced many headwinds, from multiple Yahoo data breaches to circulating rumors about Verizon asking for a huge discount on the deal.

Despite those challenges, the companies remained in negotiations, and sources close to the situation said last week that Verizon could be asking for a $350 million discount and shared responsibility with Yahoo over any legal ramifications connected to recent data breaches.

Now, the Wall Street Journal reports that the companies will cut $350 million off the original $4.83 billion agreement and will evenly split costs connected to the breaches, according to sources. Verizon and Yahoo have not yet formally announced the revised agreement but are expected to in the near future.

Not out of the woods yet

Both companies are facing some pressure when it comes to cementing the deal.

Yahoo has already made plans that it intends to follow through on if the acquisition is successful, including changing the name of its remaining business to “Altaba” and paring down its number of board positions. One source speculated that the company is also eager to sell stakes in Alibaba Group Holding Ltd. and Yahoo Japan Inc.

For Verizon’s part, the deal comes with plenty of positives and negatives. Upon successfully acquiring Yahoo’s internet business, it would be able to expand its mobile media and advertising markets and take advantage of the large user base connected to the Yahoo platform. However, company shareholders are being cautious about doing business after the recent data breaches that affected over one billion Yahoo accounts.

While these same shareholders will ultimately have to approve the revised acquisition agreement, the companies hope that the deal will close by mid-April. 

The Yahoo and Verizon acquisition deal has faced many bumps in the road since the deal was first struck last July. In September, details on Yahoo’s data breach of 500 million accounts were made public and threatened the security of the arrangement.

Unfortunately, things only seemed to escalate from there. Rumors circulated that Verizon was seeking a $1 billion discount on the deal, and executives stated that they needed more information before things could move forward. Then, in December, a separate data breach of one billion user accounts was revealed, and many experts proclaimed that the acquisition was as good as dead.

However, Verizon hasn’t left the negotiating table, and now sources are saying that a new deal could be imminent. Bloomberg quotes sources close to the matter as saying that Verizon is close to renegotiating a deal that would reduce the original $4.8 billion price tag by about $250 million.

Additionally, sources say that Yahoo’s renamed entity Altaba would share ongoing legal responsibilities related to the data breaches. While a specific timetable for the announcement has not been set, and the deal could be renegotiated further, sources say the deal could be announced as soon as a few days or as late as a few weeks from now.

Cementing a deal

Yahoo has been under pressure to cement the deal for some time. CEO Marissa Mayer, who was brought in specifically to turn things around for the struggling company, has been at the helm as each data breach was publicized. However, earlier reports suggest that she will be stepping down as a director pending a successful acquisition deal.

Verizon has faced a different sort of pressure connected to the deal. Yahoo’s platform of one billion users would greatly help the company expand into the mobile media and advertising markets, but some shareholders may be leery about doing business with a company that has suffered so much scandal in such a short amount of time. However, ultimately, those same shareholders would have to approve a revised deal before it could go forward.

On news of the deal, Yahoo’s stock jumped 2% to $45.93 just before 11:00 a.m. Consequently, Verizon shares slipped 0.7% to $47.95. 

Consumers have been attempting to manage the data they use on their mobile devices for years, with mixed success. But as technology continues to advance and new media trends take hold, it has gotten more and more difficult to do. Certain services, such as video streaming, can take a big bite out of users’ data if they’re not careful, which can lead to hefty overage charges.

It is for this reason that many providers have changed or abandoned unlimited data plans, which are potentially less lucrative than raking in exorbitant fees related to data limits. However, Verizon recently announced a new mobile data plan that allows users to buy unlimited data for small chunks of time.

The plan, called PopData, allows consumers to take advantage of 30- and 60-minute periods of unlimited data, which could be very useful if you need to download a large file or find yourself in an area without Wi-Fi. The company is pricing the 30-minute periods at $2 per extension and the 60-minute periods at $3 per extension, and the total cost of all extensions will be added to each customer’s bill at the end of the month.

Shortcomings

While the new plan may seem great at first glance, critics have been quick to point out its shortcomings. First, customers should be aware that PopData is only available while they’re in an LTE network; consumers in an area where Verizon’s 3G network is only available WILL NOT be able to use PopData, so data limits will still apply. The plan is also only available to postpaid subscribers, which means prepaid customers won’t be able to access it.

Perhaps more worrying is the way that the timer works on the plan. Once a user selects an extension and starts the timer, there is no stopping it. If there are network problems, like slow speeds or bad performance, the timer will continue to tick down anyway.

For users on less congested networks, this might not be too much of an issue. But for those who might be sharing a network in a city or highly-populated area, having a set time of unlimited data isn’t all that helpful if the network speeds are slow.

So, before signing up for a block of unlimited data, consumers should be well aware of network conditions and how it might affect their mobile activities. To learn more about PopData, visit the plan’s page here and peruse the FAQ section here.

When we first reported details about Yahoo’s massive data breach, which compromised user data on 500 million accounts, we mentioned how the timing of the disaster might negatively affect the acquisition deal it established with Verizon.

The telecommunications giant snatched up the struggling data company in July for $4.8 billion. However, since the breach happened in 2014 and it wasn’t properly communicated, that gives Verizon some leverage to re-negotiate a price or back out of the deal entirely.

Now, a new report from the New York Post says that Verizon is pushing for a $1 billion discount off the deal. It seems that news of the breach, along with allegations that Yahoo scanned emails for terrorist signals for a government agency, has put a strain on the negotiations.

“In the last day we’ve heard that [AOL boss] Tim [Armstrong] is getting cold feet. He’s pretty upset about the lack of disclosure and he’s saying, ‘Can we get out of this or can we reduce the price?’” said a source close to Verizon.

Yahoo pushes back

Asking for a discount simply makes good business sense, since the scandal and any financial consequences diminishes Yahoo value. On top of the discount, sources say that Verizon is putting aside $1 billion in reserve to deal with any fallout from the breach. It’s a move that former Yahoo CEO Ross Levinsohn detailed to CNBC on Wednesday.

“If I’m sitting at Verizon right now . . . just from a business standpoint, I’d probably reserve a bunch of money against the deal or go back to Yahoo and ask for a discount,” he said.

At the same time, however, Yahoo is pushing back against the suggestion. The company has balked at the prospect of a discount, saying that Verizon should honor the established deal and that it has no legal avenue to change the terms at this point. Yahoo’s board is set to meet in two weeks to address the issue, but discussions will continue up to that point.

“Tim was out there this week laying the law down and [Yahoo CEO] Marissa [Mayer] is trying to protect shareholders. . . Tim knows how to be fair, while Verizon is pushing him, he can bridge the gap,” said a source close to the situation.

Incentive for a deal

On Verizon’s end, the breach comes at an inopportune time for its other business prospects. The company acquired AOL nearly a year and a half ago for $4.4 billion and had hoped to combine it with its Yahoo acquisition to create a competitive rival to Google and Facebook in the digital advertising market.

Estimates suggest that the combination will reach 1 billion consumers if it closes in the first quarter, and that number could grow to 2 billion by 2020. Wanting to get the Yahoo acquisition put together may provide incentive for Armstrong to hammer out a deal quickly, but at this point the going may be slow and nothing is set in stone.

“They’re being cautious because they don’t know what they’re going to find,” one source said.

In the late 1990s, when few internet users had even heard of Google, Yahoo was the search engine of choice. Since then it has positioned itself more as a content provider and struggled to remain relevant.

Its long expected acquisition by another company is finally taking place, as Verizon announced over the weekend it will purchase Yahoo's operating business for $4.83 billion. The purchase will give Verizon access to more than one billion users for its mobile platform.

For Yahoo, it's the end of a long search for a suitor. For Verizon, it's part of a strategy to combine the company's mobile platform with a steady stream of content.

Linking Yahoo and AOL

“Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers,”said Verizon Chairman and CEO Lowell McAdam. “The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising.”

Verizon said Yahoo will be integrated with AOL and both units will operate under a Verizon executive. Yahoo's core Asian assets – primarily its huge stake in Chinese online retailer Alibaba – are not included in the sale. Yahoo CEO Marissa Meyer said the decoupling will create value for Yahoo shareholders.

“This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social,” Meyer said.

Verizon says the addition of Yahoo to AOL creates a powerful combination of content and distribution. Combined, the company will have more than 25 brands under one corporate roof. Yahoo will add information content in finance, news, and sports, as well as an email platform with 225 million active users.

Verizon said it expects the deal to close in early 2017, pending approval by regulatory agencies and Yahoo's board of directors.

Verizon Wireless is launching new wireless plans that will cost more but give customers access to more data.

Also, for the first time, customers on the new plans will be able to save unused data for the following month, a feature the company calls “Carryover Data.” The new plans and features take effect July 7.

Customers may switch to one of the new plans using the MyVerizon app. The lowest-cost plan is the S plan, which goes from $30 to $35 a month but doubles the data to 2 gigabytes (GB) per month. The M plan also goes up by $5 while the data allowance goes from 3GB to 4GB.

The L plan rises $10 a month but will offer 8GB a month of data instead of 6GB. The XL plan goes from $80 to $90 but the data allowance jumps from 12GB to 16GB. The largest plan, the XXL, also goes up another $10 to $110. The data allowance goes from 18GB to 24GB.

MyVerizon app

The company says the MyVerizon app will allow you to view your bill at any time, show you how much data is being used, and allow you to get more.

The app will also allow you to order additional devices, pay your bill, and connect with technical support.

“The new Verizon Plan puts your mobile experience in the palm of your hand with the My Verizon app, giving you greater value with new capabilities that get rid of the fear of overages, offer bill simplicity, and help you better manage your overall mobile experience with a few quick taps,” said Verizon marketing VP Nancy Clark.

Catching up to competitors

Clark adds that the app is just a way of putting consumers in charge of their accounts. If Verizon customers like the new options, they can thank many of Verizon's competitors, who adopted many of them years ago.

With the changes, you can have up to 10 consumer and business lines on an account. Some things will remain as they are: line service charges for smartphones is $20 per month, tablets and Jetpack devices are $10 per month, and connected devices are $5 per month.

But Verizon says connected devices won't count toward the limit for devices on an account, whether they’re offered by Verizon or not.  

Technology keeps moving farther along, pushing the envelope, so you're probably wondering when your cell phone is going to have faster speed.

According to Verizon, it's coming soon, with field trials for 5G technology starting next year.

"5G is no longer a dream of the distant future," said Roger Gurnani, executive vice president and chief information and technology architect for Verizon. "We feel a tremendous sense of urgency to push forward on 5G and mobilize the ecosystem by collaborating with industry leaders and developers to usher in a new generation of innovation."

50 times faster

The current state-of-the-art in mobile speed is 4G. Verizon says 5G is expected to provide about 50 times the throughput of current 4G LTE, latency in the single milliseconds, and the ability to handle exponentially more Internet-connected devices to accommodate the expected increased demands of the Internet.

"When you're planning a technological evolution at this scale it must be a collaboration of players in the ecosystem," said Marcus Weldon, chief technology officer of Alcatel-Lucent and president of Bell Labs. "Having Verizon initiate this effort now, even as 4G LTE technology has so much headroom left, will no doubt add to the rich fabric of our digital lives for many years to come."

Rima Qureshi, chief strategy officer for Ericsson, says the current effort to deveop 5G keeps the U.S. communications industry vibrant and globally competitive. To date, she says a lot of the work of developing 5G technological has come from Asia.

"It's exciting to see a U.S. company accelerate the rate of innovation and introduce new partners," she said.

Pipe dream

It wasn't that long ago that 4G was a pipe dream. As mobile exploded, Verizon began building and testing 4G LTE as early as 2008 with the creation of a 10-cell network sandbox around Boston. The first LTE data call was made in August 2009, and Verizon commercially launched the nation's first 4G LTE network in December 2010 with 39 major metropolitan areas and more than 60 major airports covered.

Today, Verizon says more than 98% of the U.S. population has access to 4G LTE and 87% of Verizon Wireless data traffic is carried over the network.

"Even as Verizon begins the work to make 5G a reality, we continue to grow 4G LTE," Gurnani said. "In addition to significant multi-billion-dollar investments in the network, we continue to work with a growing list of partners to launch new products and services on the nation's largest and most reliable 4G LTE network."

It's Verizon and Sprint's turn to pay refunds and penalties for illegally "cramming" their mobile customers. The Consumer Financial Protection Bureau says the companies will pay $120 million in redress to wireless customers who were illegally billed hundreds of millions of dollars in unauthorized third-party charges and will pay $38 million in fines.

AT&T and T-Mobile reached similar settlements earlier, paying $105 million and $90 million respectively. 

Verizon customers can submit claims for refunds at http://www.CFPBSettlementVerizon.com or can learn more information about the Verizon settlement by calling 888-726-7063. Sprint customers can submit claims for refunds at www.SprintRefundPSMS.com or can learn more information about the Sprint settlement by calling 877-389-8787.

“Sprint and Verizon had flawed billing systems that allowed merchants to add unauthorized charges to wireless customer bills,” said CFPB Director Richard Cordray. “Consumers bore the brunt of those charges and ended up paying millions of dollars while the companies reaped profits. Today’s actions will put $120 million back into the pockets of harmed consumers and require these companies to improve their billing practices going forward.”

Unauthorized charges

The CFPB alleges that the companies operated billing systems that allowed third parties to “cram” unauthorized charges on customers’ mobile-phone accounts and ignored complaints about the charges.

Today’s actions are being taken in coordination with the state attorneys general and the Federal Communications Commission (FCC). Under the proposed terms, the CFPB will oversee $120 million in consumer refunds. The companies will also pay $38 million in federal and state fines.

The charges were such things as apps, games, books, movies, and music. The purchases appeared as charges on consumers’ phone bills even though many consumers had not actually ordered the products.

Wireless carriers collect and process payments for these purchases and control the networks connecting merchants and customers. From about 2004 through 2013, nearly all wireless carriers’ third-party billing involved products called “premium text messages” or “premium short messaging services” because they were frequently delivered by text messages.

Sprint and Verizon outsourced payment processing for these digital purchases to vendors, but failed to properly monitor them, allowing the third-party vendors nearly unfettered access to consumers’ wireless accounts.

The Federal Communications Commission and the attorneys general of 50 states and the District of Columbia joined in the action.

“To boost their profits, Sprint and Verizon deceived consumers and added unauthorized charges to their monthly bills,” California Attorney General Kamala Harris said. “This settlement holds Sprint and Verizonaccountable for their actions, ends these bad business practices and refunds consumers.”

Targeted online

Most consumers were targeted online. Consumers clicked on ads that brought them to websites asking them to enter their cellphone numbers.

Some merchants tricked consumers into providing their cellphone numbers to receive “free” digital content and then charged for it. Many others simply placed fabricated charges on bills without delivering any goods or communicating with consumers.

Just days after it stumbled badly in its handling of a series of 4G LTE network failures, Verizon Wireless has hastily abandoned an ill-conceived "convenience" fee of $2 for some customers paying their bill online or over the phone.

The holiday period around the end of the year -- when consumers are not paying attention to the news -- is when companies and politicians often try to sneak through new policies they hope will manage to flit under the radar.

It didn't work this time.  Verizon Wireless ran into the same wall of consumer outrage that Bank of American encountered just a few months ago with its $5 debit card fee, also quickly abandoned.  

Speed of light

Verizon's landline division likes to talk about its FiOS fiber-optic service operating at the speed of light, and that's just the speed at which consumers landed on Verizon Wireless. They lit up the Internet in no time with denunciations of grinchlike behavior befouling their holidays.

"I am unhappy with the fee for paying my bill online," said Victor of Lutz, Fla., in a complaint to ConsumerAffairs.com.  

"I think this is terrible," said Ria of Glendale, Ariz. "I will be looking for a different cell phone company that does not charge to make a payment over the phone."

A ConsumerAffairs.com survey of comments made on Twitter, Facebook and other social media wasn't much better.  In fact, it might have been a little worse.

Verizon kept a stiff upper lip and managed to mouth platitudinous assurances that it had had its customers' best interests at heart at all times.

"Improve efficiency"

"The company made the decision in response to customer feedback about the plan, which was designed to improve the efficiency of those transactions," a spokesman said. "The company continues to encourage customers to take advantage of the numerous simple and convenient payment methods it provides."

Even more solicitous was Dan Mead, Verizon Wireless CEO.  “At Verizon, we take great care to listen to our customers. Based on their input, we believe the best path forward is to encourage customers to take advantage of the best and most efficient options, eliminating the need to institute the fee at this time," he purred.

One might reasonably expect there were harsher words behind the scenes as Mead and his lieutenants sought someone to take the fall for the blunder.

The $2 fee would have applied to customers making one-time payments via the Web or over the phone. Besides attracting 100,000 angry consumers who signed an online petition, the affair drew the attention of the Federal Communications Commission, which isn't easy to do over the holidays.

The commission said Friday it was "concerned about Verizon's actions" and was looking into the matter, the Wall Street Journal reported.

Verizon Wireless is blaming "growing pains" for the three recent outages that left many of its 4G LTE customers without the high-speed wireless service they're paying for.

"Being a pioneer comes with growing pains," Verizon said in a prepared statement. "The recent issues that affected our customers’ 4GLTE service were unforeseen despite careful, diligent planning, deployment and ongoing upgrade programs."

"Nonetheless, we estimate that 4GLTE connectivity has been available approximately 99 percent of the time this year," the statement continued.

Be that as it may, the repeated outages and the delayed, vague explanations are giving Verizon a black eye with at least some of its customers, who are paying a premium for fast, reliable service.

Verizon and other telecoms lose no time texting, calling and emailing when customers fail to pay 100 percent of their bill.  4G customers might reasonably expect the company to notify them when the service they're paying for is unavailable, even if it is only one percent of the time.

99% nothing to brag about

Ninety-nine percent, by the way, is not as great as it sounds.  U.S. airlines are finishing 2011 with only one fatality for every 7.1 million passengers, which is about as close to 100 percent as you can get. A 99 percent record would mean that one of every 100 airline flights crashed.

In its statement, Verizon attributed the problems to multiple, unspecified issues: "Each incident has been different from a technical standpoint. Our engineers have successfully diagnosed those past triggering events, and they have not re-occurred. We also work diligently to rectify technical problems in the Network before they affect any customers."

Whatever the problems might have been, Verizon says it's working to prevent them from happening again.

"We are taking a number of steps, working closely with our network suppliers, to ensure the integrity of our 4GLTE Network. We continue to fortify and improve its performance, and our goal is that our 4GLTE Network meets the same high standards that our 3G Network has set for performance and reliability," the company said.

It's the network

Verizon has spent millions of dollars advertising the supposed superiority of its network, often at the expense of AT&T, which has been struggling with network congestion in major cities for years.

While the latest incidents will most likely not be catastrophic for Verizon, as more serious failures were for rival Blackberry, a ConsumerAffairs.com sentiment analysis of about 4.4 million comments posted on Facebook, Twitter and other social media sites and blogs finds less than negligible dissatisfaction with Verizon's network.

Many companies facing a similar situation would try to nip disaffection in the bud by issuing at least a token refund and a sincere apology to customers, rather than Verizon's boastful and defensive bromide, which includes this rather unseemly bit of chest-thumping:

"The Verizon Wireless 4GLTE Network is BY FAR the largest and the most advanced 4GLTE wireless network in the world. It is available in 190 US markets and covers more than 200 million people, providing the fastest 4G Network in the US."

Well, most of the time, anyway.

Verizon Wireless is shelling out $3.6 billion for a huge swath of wireless spectrum space that covers about 259 million potential customers.

Dan Mead, President and CEO of Verizon Wireless, said the additional spectrum "will enable us to bring even better 4G LTE products and services to our customers."

In a world where spectrum space is to wireless operators as oil reserves are to energy companies, the deal gives Verizon a huge leg up on its competitors, most notably AT&T, stymied in its attempt to make off with T-Mobile's spectrum.

It not only assures Verizon of continued network dominace but takes a big stack of resources off the table and out of the reach of its competitors.

Verizon is buying the space from SpectrumCo, a consortium made up of major cable companies Comcast and Time Warner as well as Bright House Networks.

Spectrum drought

With consumers increasingly wedded to their smartphones, tablets and laptops, spectrum space is getting to be like water in the desert -- there's just not enough of it to go around and nearly every little bit and byte is already spoken for.

The Federal Communications Commission (FCC) would like to open up more spectrums pace but the only way to do that is to take it away from existing licensees, including broadcasters and other well-organized groups who tend to circle their wagons and aggressively fight off intruders.

There was a time when the cable operators thought they might get into the cell phone business and they bought up as many spectrum licenses as they could.  Today's deal marks the end of that era but it doesn't mean you won't be seeing Comcast and Time Warner competing in the wireless world.

"These agreements, together with our Wi-Fi plans, enable us to execute a comprehensive, long-term wireless strategy and expand our focus on providing mobility to our Xfinity services," said Neil Smit, President of Comcast Cable. 

Resale plans

That's because, in addition to the spectrum sale, the companies have entered into several agreements, providing for the sale of various products and services.  Through these agreements, the cable companies, on the one hand, and Verizon Wireless, on the other, will become agents to sell one another's products and, over time, the cable companies will have the option of selling Verizon Wireless' service on a wholesale basis. 

In other words, Verizon Wireless will be able to sell Comcast and Time Warner cable services in areas where Verizon doesn't offer its FiOS service and, presumably, Comcast and Time Warner will be selling rebranded wireless service from Verizon.  This is an additional blow to AT&T, which currently offers broadband in areas not served by FiOS and, therefore, likely to be targeted by Verizon.

Or as Time Warner Cable PresidentRob Marcus said, "We're excited to be able to offer the nation's best wireless services to our customers and to have Verizon Wireless as a sales channel for our superb wireline services."

Additionally, the cable companies and Verizon Wireless say they have formed an innovation technology joint venture for the development of technology to better integrate wireline and wireless products and services.

The deal requires regulatory approval from the FCC and other agencies.

Last week Verizon Wireless said it filed a lawsuit against companies that it said were engaged in sending text spam that results in unwanted charges on consumers' bills.

This week one of the companies named by Verizon, JAWA, of Scottsdale, Ariz., issued a press release, saying the federal judge in the case denied a motion that would have prevented the company from doing business with Verizon customers.

Texas Attorney General Greg Abbott had also filed a similar complaint in Texas. JAWA says that complaint, too, was dismissed by a judge in Austin last week.

TRO granted in Texas

However, Lauri Saathoff, in the Texas Attorney General's Office, told ConsumerAffairs.com that the Texas judge signed a Temporary Restraining Order Against JAWA and other defendants Tuesday, once language issues were resolved.

"This was a big victory for our company" said JAWA Founder and CEO Jason Hope, referring to the Verizon case. "Verizon Wireless is trying to use its dominant position in the wireless market to put third party content providers like JAWA out of business and we are going to fight them every step of the way."

Verizon had sought a temporary restraining order to stop JAWA, Eye Level Holdings, and other interconnected companies, from doing business with Verzon Wireless customers. U.S. District Judge David G. Campbell denied the motion, even though he said Verizon had "submitted specific evidence that Defendants are doing business through shell corporations, using false business addresses, using websites that do not comply with industry standards and that trick consumers, and using diversionary software to prevent Plaintiff from discovering these activities."

Charges of ‘cramming’

Verizon claimed the Defendants baited consumers into providing their cell phone numbers, then charged them for monthly subscriptions to various content, a practice known as “cramming.”

But Campbell denied the motion for a TRO, saying the language in the proposed restraining order "is too general, and too focused on disputed factual matters, to give Defendants meaningful guidance as to precisely what actions would be enjoined."

At the same time, the judge denied JAWA's motion to enjoin Verizon from taking action against it, saying the Defendants had not shown their claims had a "fair chance of success on the merits." Even so, Hope sees the legal stalemate as a victory.

It’s on

"We're not going to take this lying down," Hope said. "Our 240 employees have mortgages to pay and families to feed. I am not about to stand by and allow this corporate giant to put people out of work so it can make a few more million."

Meanwhile, Verizon clearly believes it will prevail in court, once the language in the restraining order is resolved.

"This case is about the fraud committed against us and against our customers, as we outlined in the initial complaint," Debra Lewis, a spokeswoman for Verizon Wireless, told ConsumerAffairs.com. "There will be many hearings and decisions along the way."

The spectrum, known as white spaces, is the first to be made available for unlicensed use in more than 20 years.

TV white space spectrum is considered prime real estate because its signals travel well, making it ideally suited for mobile wireless devices.

Unlocking this valuable spectrum will open the doors for new industries to arise, create American jobs, and fuel new investment and innovation, the agency said in a statement.

The National Broadband Plan noted the importance of unlicensed spectrum in creating opportunities for new technologies to blossom and recommended that the Commission complete the TV white spaces proceeding as expeditiously as possible.

The FCC began this project more than two years ago, investigating arguments that the use of the spectrum might interfere with existing wireless devices and television broadcast industries.

The National Association of Broadcasters (NAB) was a staunch opponent of the "white spaces" project.

Supporting the use of white spaces is an array of tech titans including Google and Microsoft, as well as consumer advocacy groups such as Consumers' Union, the U.S. Public Interest Research Group (PIRG), and Free Press.

Cheap wireless broadband

Among its uses, the spectrum could be used to deliver low-cost wireless broadband to rural and poor areas, transmit traffic videos, build electric-utility smart grids, create faster home networks, and create services not yet imagined.

MediaG3, Inc. a wireless technology venture, said the company is planning to exploit white spaces airwaves that exists in all U.S. cities.

MediaG3 last week introduced WiFiBridges technology, a multi-channel, multi-mode network which was designed in part to work in these white spaces. It's chairman, Val Westergard, hailed the FCC decision.

"This new spectrum allows signals to penetrate through buildings and walls much better, delivering superfast Internet connections in places other frequencies didn't," said Westergard. "We call this 'Next Generation,' WiFi3 or WiFiCubed. This will bring a whole new level of Internet mobile device usage.

"As more channels and frequencies are added and made available, more and more ways to use them will be developed. This is a very exciting day for all of us in wireless technology. The door to innovation has just been cracked open a little more."

When word got out that Verizon was increasing its contract early termination fees (ETFs) to as high as $350 for its high-end phones, the Federal Communications Commission (FCC) wanted answers. And now that it's finally gotten a response, at least one Commissioner isn't happy with what they received.

Verizon's senior vice-president for regulatory affairs, Kathleen Grillo, said that the increased termination fees were necessary due to the higher costs of marketing and advertising smartphones, in addition to the actual costs of subsidizing the handsets themselves.

"Verizon Wireless incurs additional costs to sign up customers, such as advertising costs, commissions for sales personnel, and store costs," she wrote. "These costs are higher for Advanced Devices: for example, it takes more time (and hence increases the cost to Verizon Wireless) for sales and customer care representatives to handle customer inquiries regarding the complex advanced features and functionalities of Advanced Devices."

That answer didn't make new Commissioner Mignon Clyburn very happy. In her response, she said that Verizon had a "shifting and tenuous rationale" for its actions.

"Consumers already pay high monthly fees for voice and data designed to cover the costs of doing business," she said. "So when they are assessed excessive penalties, especially when they are near the end of their contract term, it is hard for me to believe that the public interest is being well served."

Clyburn also had questions about Verizon's Mobile Web service. Consumers and tech reporters had noted that the service's usage plan kicked in the moment you accessed the service, even if done accidentally or only for a moment, and the resultant $1.99 charge was a hidden fee for Verizon.

In the telecom's response, Grillo said that "In order to protect customers from minimal, accidental usage charges, Verizon Wireless does not charge users when the browser is launched, and opens to the Verizon Wireless Mobile Web homepage. If the browsing session ends there without the customer navigating to another webpage, the customer will not incur charges for Mobile Web browsing."

Clyburn was unconvinced, saying that "recent press reports and consumer complaints strongly suggest otherwise."

Verizon's ETF hike has put the issue back in the hot seat in recent weeks. For many years, wireless companies have claimed that ETFs were necessary to subsidize the costs of handsets, while critics claimed they were a tactic designed to lock consumers into long-term contracts while companies reaped profits.

A recent report by the Government Accountability Office (GAO) found that 42 percent of wireless customers surveyed would not switch from their current carrier to another for fear of incurring a termination fee. The GAO also criticized the FCC for not doing enough to investigate complaints about wireless service by customers.

Advocacy groups such as Consumer Action have been pushing consumers to pay attention to contract changes and new additions to their terms of service, which can often be used to escape a cell phone contract without penalty -- but only with savvy negotiation.

A memo leaked from Verizon Wireless confirms that the company is increasing its early contract cancellation fees to as high as $350 for what it calls its "advanced devices."

The memo, obtained by tech blog The Boy Genius Report, states that an "advanced device"'s cancellation fee will drop by $10 for each month completed under contract.

Though the company did not specify what it meant by "advanced devices," Boy Genius Report's Andrew Munchbach speculated it was targeted at high-end smartphones like the recently announced DROID, which runs the open-source Android platform and was built by Motorola, and is scheduled to debut November 15.

"Anyone considering abandoning plans to buy the DROID after hearing this news, or are you just going to get yours before November 15th?" Munchbach asked. "Or will you actually be an honest person and actually honor the contract you sign?"

Wireless termination fees are not only a bane for customers, but a frequent target of criticism from Congress and policy advocates. The telecom industry claims the fees are necessary to recoup the costs of producing, selling, and marketing the handsets.

Critics say the fees are designed to keep customers from shopping around for the best provider, by locking them into a contract with steep charges.

Free Press' Josh Levy said the move was "outrageous." "Early termination fees are universal across the industry, and they're universally detested by consumers," Levy said.

"In fact, the average subsidy of a wireless handset in 2008 was $14.33," he said, "so a $175 fee is already more than 10 times the average subsidy. So what justification could there be for doubling the fee?"

Under threat of increased regulation from Congress, all four of the major wireless carriers in America voluntarily began prorating their termination fees over the life of an average two-year contract.

Numerous state courts have also ruled that the fees are "unconscionable" under state law, and carriers have settled many other lawsuits to avoid a ruling against them, preferring to lobby Washington for weaker federal laws that would usurp the state consumer protections.

Verizon Wireless recently announced that it would end its exclusivity agreement on its handsets, enabling smaller carriers to sell them six months after release.

The move was largely considered symbolic, as it only applied to carriers with 500,000 customers or less -- and 90 percent of the market is controlled by the same four carriers, including AT&T, Sprint, T-Mobile, and Verizon Wireless itself.

A California Superior Court judge has issued a preliminary ruling against Sprint Nextel for charging "termination fees" to customers who want to cancel their contracts early. Under the terms of the judgment, Sprint must pay $18.25 million to customers who sued the company for being charged termination fees, as well as an additional $54.75 million in credits to those who were charged but never paid the fees.

Alameda County Superior Court Judge Bonnie Sabraw ruled that the penalties were illegal under California state law. Sprint had argued that the termination fees should be counted as monthly rates rather than special charges, and that federal law governing telecommunication service rate charges should supersede California law. Sabraw found that Sprint did not sufficiently prove that the termination fees were rates, and rejected their argument.

"Sprint's term contracts gave customers lower handset costs and lower monthly charges in exchange for the term commitment," Sabraw wrote. "It is, however, not clear whether the ETF was a part of Sprint's 'rates' given that they were imposed at the termination of service and not for services provided."

Sprint has two weeks to issue a rebuttal to the preliminary ruling before it becomes permanent, and is expected to appeal, so customers shouldn't expect any refunds right away. But the decision is another nail in the coffin of the industry's usage of termination fees due to the precedent it sets.

Verizon Wireless earlier this month agreed to pay $21 million to settle its own class-action lawsuit over termination fees in California. Verizon agreed to the settlement less than a month into the trial, as industry observers speculated that the judge would rule against them.

An earlier class action in California, this time against T-Mobile, was cleared to proceed last year.

Change in the weather

Termination fees have become a symbol of customer frustration with wireless companies. The companies claim they charge the fees to subsidize lower costs of handsets in order to attract customers. Critics of the fees claim they are designed to lock a customer into a contract and prevent them from shopping for better service.

Mounting criticism of the fees has led members of Congress and the Federal Communications Commission (FCC) to consider legislation limiting or governing termination fees for cellphone, cable, and landline telephone contracts.

In an effort to avoid new regulation, all four of the major wireless providers--Sprint, T-Mobile, Verizon, and AT&T--began prorating their termination fees and altering their contracts so customers could make changes to their plans without incurring new fees.

Verizon Wireless later partnered with the FCC to craft a national policy governing termination fees. Under the FCC-Verizon plan, termination fees would be further prorated and customers would have more freedom to change plans without incurring new charges. In exchange, the federal policy would preempt state regulators' ability to govern the fees, and any existing class-action lawsuits against the wireless companies would be thrown out.

The FCC-Verizon plan was criticized by consumer advocates as a giveaway to the wireless companies that weakened state authority.

Verizon Wireless says it will pay $21 million to settle a class-action lawsuit over early termination fees, which can often cost customers anywhere from $175 to $225 when they ditch their cellular contract early.

The settlement came less than a month into trial proceedings for the suit, filed in 2006 in California by plaintiffs who claimed the fees were a violation of California's state law.

The turn of events is thought to bode ill for Sprint, which faces a similar lawsuit before the same court and judge in Alameda County Superior Court. Sprint representatives declined to comment on the settlement, saying they were focused on their own legal proceedings.

California's Supreme Court has already cleared lawsuits against carriers such as T-Mobile to proceed, saying that the nature of the contracts and the punitive fees were "unconscionable" under California consumer protection law.

T-Mobile suffered another defeat when the U.S. Supreme Court refused to hear its appeal for a separate lawsuit dealing with the wireless carrier's usage of mandatory binding arbitration in its contracts, a decision which could set precedent for lawsuits against the other carriers.

All four of the major wireless carriers -- Verizon, AT&T, Sprint, and T-Mobile -- have faced increasing pressure from consumers and the media over the fees. The wireless companies say the fees are a necessary cost of providing inexpensive phones to customers, while critics say the fees lock customers into a multi-year contract and prevent them from shopping for better alternatives.

Congress considers

The outcry against termination fees led to calls for investigation and new legislation from Congress that would mandate prorating termination fees over the life of a contract, and would restrict the levying of new fees as well as requiring disclosure of a potential fee charge when customers upgrade a handset or change a plan.

In response to the criticism and attempts to preempt new regulation from Washington, all four carriers recently agreed to modify their contract policies to prorate termination fees, and limit or remove fees for contract changes.

Verizon Wireless then partnered with the FCC to introduce plans for federal regulation of the fees, which would include a nationwide standard for the fees and how they can be prorated, and would give consumers a window to try a phone and cancel the service without incurring a penalty.

In exchange, the FCC would block the ongoing lawsuits over the fees, and would restrict the ability of state lawmakers to control the fees in favor of the federal laws.

The proposal was heavily criticized by consumer advocates and even members of the FCC itself, who saw it as a power grab by the major telecom companies and Washington at the expense of state regulators and consumers.

The proposal was also seen as a strategic thrust by Verizon Wireless, as industry insiders claimed a reduction in termination fees would enable it to pick up customers from struggling rivals such as Sprint.

Federal Communications Commission (FCC) chairman Kevin Martin laid out his plan for reforming wireless companies' termination fees at the commissioners' monthly meeting today, even as consumer advocates and wireless industry representatives sparred over whether the fees are a necessity to subsidize cheap handsets, or a punitive measure designed to keep customers locked into their contracts.

"I am concerned that early termination fees are being used not as a means of recovering legitimate costs but as a means of locking consumers into a service provider," Martin said. "Early termination fees shouldn't function as a hindrance to consumers' ability to choose, or switch to, the service or provider they want."

Martin's plan strongly resembles the Verizon-sponsored termination fee plan proposed last month.

Under Martin's plan, termination fees would be prorated over the life of the contract, and more expensive phones would carry higher fees. Contracts would be for a "reasonable" length of time under Martin's plan, though Martin did not specify what that length of time would be.

Customers would have the ability to renew contracts without incurring fees, as long as they did not order new equipment.

In exchange, however, the many class-action lawsuits filed in several states over early termination fees would be blocked, and state regulators would lose the ability to govern wireless fees.

Martin indicated that he supported the industry position on the issue, and that he favored using central federal regulation to usurp powers traditionally reserved to the states. The telecom industry routinely presses for federal regulation, favoring one-stop lobbying in Washington over trying to satisfy regulators in 50 states.

"I do not believe a patchwork of 50 different sets of regulations with widely varying protections benefits consumers or the industry," Martin said.

"Recouping our investment"

Under pressure from consumer groups and disgruntled customers, the four major wireless carriers -- Verizon, AT&T, Sprint, and T-Mobile -- have begun either prorating their fees or have announced plans to do so.

Tom Tauke, Verizon's executive vice-president for public policy, argued that "[t]his gives consumers the flexibility they said they want, while helping Verizon Wireless recoup its investment in the consumer."

Tauke said that such changes were evidence that the market was working and that no further regulation was needed, on the federal or state level: "Faced with the prospect of multiple state policies on this issue, Verizon believes that appropriate federal action to establish a national policy is preferable."

Some of Martin's fellow commissioners argued that state regulatory oversight was needed due to the difficulties of addressing consumer complaints at the federal level.

Commissioner Michael Copps referenced a recent report from the Government Accountability Office (GAO) that found the FCC's complaint tracking and response procedures were antiquated and flawed.

"Why then should we preempt state and local enforcement authorities with a federal process that has so little credibility?" Copps said.

"Consumers won't stand for that"

Senator Amy Klobuchar (D-MN), who cosponsored legislation designed to restrict termination fees, testified that she opposed a Washington power grab that would jettison state regulatory power over termination fees.

"[C]onsumers also need the protection of state regulators, who have proven themselves good watchdogs on this industry, and strong federal legislation to level the playing field with the big cell phone companies," Klobuchar said. "The current negotiations seem designed to protect America's big cell phone companies, not to protect America's consumers. Consumers won't stand for that, and I won't either."

Chris Kenney, senior counsel for Consumers' Union, told the commission that "[we would be deeply disappointed if the FCC were to use the wireless industry's petition to eliminate state oversight of these contract provisions as the vehicle for 'reform' in this case...While we are sure that the FCC wouldn't eliminate state oversight without providing any corresponding consumer benefit, we question whether companies who have been charging potentially illegal fees should receive any relief whatsoever."

Molly White, an executive consultant from Portland, Oregon, provided the perspective of the average consumer. White testified that when she accepted a job at Nike, she canceled her Verizon service in favor of Nike's own wireless phone service, and was hit with a $175 termination fee on her last bill.

"I knew that when I signed up for cellular service with Verizon that I was obligated to agree to the early termination fee, and since every wireless carrier included the early termination clause and fee in their contract, it was clear to me that I didn't have a choice in the matter," White said. "I, like every other cellular customer I know, feel these fees are unreasonable and unjustified."

Alltel's 13.2 million cell phone subscribers are about to become Verizon Wireless customers. Verizon Wireless has agreed to buy its competitor for more than $28 billion, creating the U.S.' largest mobile phone company.

The new combined company will have more than 80 million customers, placing it slightly ahead of AT&T, currently the nation's largest cell phone provider.

Alltel currently operates its own network in 34 states, focusing mostly on serving small to medium sized U.S. cities. Verizon is purchasing Alltel from a unit of Goldman Sachs Group Inc., which acquired it late last year.

The deal still must be approved, not only by shareholders, but also by the Federal Communications Commission and the Justice Department. Analysts say Verizon will most likely have to sell off some of its regional assets in places where both companies currently complete.

Even so, executives at Verizon express confidence the deal can close by the end of 2008. Under the proposed terms, Verizon Wireless would aquire Alltel's assets for $5.9 billion and assume more than $22 billion in debt.

The Federal Communications Commission (FCC) is considering a new proposal submitted by Verizon Wireless that would let consumers cancel wireless contracts without incurring punitive "early termination fees,"and to further prorate fees over the course of a contract.

In exchange, Verizon wants the FCC to block lawsuits against the companies over the fees, and prevent state lawmakers from seeking greater regulation over wireless fees as well.

While Verizon has used the proposal to paint itself as pro-consumer, telecom insiders noted that Verizon and AT&T would both be likely to sign new customers from struggling Sprint, which lost 1.2 million subscribers last year, if termination fees were eliminated or reduced.

"You have to watch both hands when you're dealing with the big telcos," said a longtime Washington hand. "While they're stroking you, they're stabbing someone else."

"As the clock runs out on the Bush Administration, business interests are grabbing all they can before a new crew takes over the cookie jar," this person said. "This is your basic get-it-while-we-can maneuver."

The Associated Press first reported yesterday that the FCC was considering the proposal, which if adopted would enable wireless customers to cancel their contracts for up to 30 days after they sign a cellphone contract or 10 days after they receive their first bill without penalty.

Termination fees would be lowered each month of a customer's contract, but some reports say the fees would not go below $60.

Nullify lawsuits

In exchange, Verizon wants the government to block numerous class-action lawsuits filed in various states over the termination fees. The proposal would also preempt state regulators' authority to regulate wireless fees, making federal authorities the primary source of redress for consumer complaints.

Other details of the Verizon plan remain scarce and the FCC itself has yet to publicly comment, but consumer advocates are already criticizing the proposal as too favorable to industry. Ed Mierzwinski, head of U.S. PIRG, called the proposal an "October Surprise in May."

"If Verizon wins, Martin would slip a bad excuse of a federal early termination fee regulation into FCC rules, so that Verizon can avoid existing lawsuits under state law arguing that early termination fees are unfair and deceptive efforts to prevent cell phone customers from shopping around," Mierzwinski said. "The companies would be required to slightly lower and pro-rate the fees, but not enough to matter."

Targeted for Termination--And Preemption

Termination fees have become a touchpoint for criticism of the wireless industry, with customers, consumer advocates, state regulators, and members of Congress criticizing them as a method to keep consumers locked into wireless contracts.

The wireless industry has claimed that the fees are a necessity in order to sell handsets at lower prices and recoup costs, and that consumers would not buy the phones at their higher, non-subsidized prices.

In addition to the multiple class-action lawsuits over the fees, Senators Jay Rockefeller (D-WV) and Amy Klobuchar (D-MI) introduced the "Cell Phone Consumer Empowerment Act" in 2007, which would mandate that termination fees be prorated by 50 percent after the first year of a two-year contract, and would limit the circumstances where other fees could be imposed.

The combination of class-action lawsuits and the threat of new laws prompted the four major telecom companies in America -- Verizon, AT&T, Sprint, & T-Mobile -- to voluntarily begin prorating their termination fees. Kevin Martin, the FCC chairman, also said his agency would investigate the fees, possibly leading to the discussions surrounding the new proposal.

The usage of federal regulation to block state laws, a tactic called "preemption," is often favored by large industries with strong presences in Washington, and has been added to proposed legislation dealing with everything from identity theft to federal gas mileage standards. Critics of preemption say the tactic enables powerful interest groups with easy access to Congress to get weaker federal laws passed that override stronger state laws.

"The big telecom companies have always preferred 'one-stop lobbying.' It's a lot cheaper and they don't have to deal with all those bothersome states and their pesky citizens," said a Washington strategist who formerly worked with major telecommunications carriers.

The $19.6 billion auction of a chunk of wireless spectrum frequencies is over, and Verizon Wireless is the clear winner. But its victory came at a cost--it will have to open any new networks it develops using the spectrum to any phone or device.

The Federal Communications Commission (FCC) announced that Verizon made the largest bid for the spectrum at $9.4 billion, followed by AT&T at $6.6 billion.

Google, which had put up a bid of $4.6 billion in the auction, was not among the winners. But by placing its bid, it triggered the "open access" requirement of the auction, mandating that any company which bought the spectrum enable any phone or device from any network to use it.

FCC chairman Kevin Martin hailed the auction as a success for competition. "A bidder other than a nationwide incumbent won a license in every market," Martin said. "As a result of the 700 MHz auction, there is the potential for an additional wireless 'third-pipe" in every market across the nation."

Others disagreed with Martin's assessment. Ben Scott, policy director of Free Press, said that "Since Verizon is already a dominant provider of DSL, the prospect of a genuine third pipe competitor in the wireless world is now slim to none. However, consumers will benefit from the emergence of some welcome competition within the wireless market."

"As a result of the auction, consumers whose devices use the C-block of spectrum soon will be able to use any wireless device they wish, and download to their devices any applications and content they wish," said Google's telecom counsel Richard Whitt. "Consumers soon should begin enjoying new, Internet-like freedom to get the most out of their mobile phones and other wireless devices."

The auction was also criticized due to bidders' failure to buy up another chunk of spectrum for building a "first response" wireless network. Only one bidder, who remains anonymous due to the rules of the auction, placed an insufficient minimum bid, forcing the FCC to re-auction the spectrum at a later date.

"I believe that any new auction for the 'D-block' should be consistent with an overarching policy goal of advancing public safety objectives and ultimately achieving a state-of-the-art, broadband infrastructure for first responders," said Congressman Ed Markey (D-MA). "In developing a plan for a re-auction of the [spectrum] the FCC should also take into account the auction results to gauge the level of new competition achieved."

Both Markey and Martin promised to investigate why the auction to buy the spectrum for the "first response" network failed.

What's next?

The auction was conceived by the FCC to raise money for the U.S. Treasury, and to make use of spectrum that would go unused as a result of the nationwide switch from analog to digital television signals, taking place on February 17, 2009.

Originally seen as a playground for the largest telecom companies to buy up chunks of the spectrum to expand their markets, the auction went to a different level when consumer activist groups pressured Google to join the auction, in the hopes of creating a legitimate "third pipe" wireless Internet network to compete with existing cable and telecom companies.

Google agreed to put up its bid if the FCC would mandate that the spectrum be used according to Google's four principles of open platforms, but the FCC made a compromise ruling that only supported the usage of open devices and applications on the network. Although both Verizon Wireless and AT&T threatened to withdraw from the auction--and Verizon even briefly sued the FCC over the adoption of the "open access" rules---both telecoms went ahead with their bids in the end.

Since then, Verizon has shifted its stance on enabling non-Verizon phones and devices to connect to its network, proclaiming that it would open its formerly "walled garden" to all users beginning in 2008. However, its recently published technical standards indicate that Verizon would be operating a "two-tier" system, one for customers on the Verizon network, and one on the new "open" network.

Devices to be used on the open network may take between 4-8 weeks to get approved for use by Verizon, and may cost considerably more than regular Verizon handsets, which are subsidized in part due to multi-year contracts and "termination fees."

And iPhone users hoping to switch to Verizon and take their prize with them are still out of luck--the iPhone works on the GSM network, while Verizon's network is powered by the rival CDMA standard, making iPhones incompatible.

Even without winning the auction, Google also stands to gain considerably from the new open network--it has spearheaded the Open Handset Alliance, a coalition of wireless companies and device makers who agree to develop and support Android, Google's mobile phone operating system, designed to work on multiple platforms.

With Verizon's rivals Sprint and T-Mobile backing the alliance, wireless users may see a variety of "Googlephones" coming their way in the near future.

Google has committed to bidding in the upcoming FCC auction of 700mhz of the wireless spectrum, the company said today. "It's important to put our money where our principles are," Google CEO and chairman Eric Schmidt said.

"Consumers deserve more competition and innovation than they have in today's wireless world," Schmidt said. "No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet."

As part of the shift from analog television to digital TV signals taking place in 2009, the FCC is auctioning off the 700mhz block to interested bidders.

Google agreed to put up $4.6 billion for the auction if bidders agreed to adhere to its proposed principles for use of the spectrum, including enabling any device to connect to any network using the spectrum.

Telecoms such as AT&T and Verizon, also interested in the spectrum, opposed Google's open access principles, and the FCC passed compromise rules that did not fully adopt Google's proposals, but did include the "open device" standard.

The Wireless Chess Game

Google's official commitment to bid in the auction comes several days after Verizon Wireless announced it would open its network to enable compatible devices and software to work with Verizon Wireless, even if the applications came from other providers or manufacturers.

Verizon, which had been one of the most ardent proponents of the "walled garden" approach to its network, had tried to sue the FCC in order to lift the "open device" requirement of the auction, but later withdrew the suit. Its reversal of policy in adopting an open network was hailed as an innovative move, but a closer look revealed that Verizon may not be changing its stance completely.

Verizon's network runs on the CDMA standard, as opposed to the more widely used GSM standard, meaning that only CDMA-enabled phones can work on the Verizon network. Although Sprint also uses the CDMA network, Verizon's biggest rival AT&T uses GSM, meaning the dream of an iPhone on Verizon is still far off.

TechCrunch's Erick Schonfeld also reported that third-party applications developed for new phones compatible with the Verizon network would not be available to existing customers who bought phones through Verizon.

"Unless it figures that out, Verizon is not really building an open network," Schonfeld wrote. "It is building a two-tiered network: One for its preferred customers who play by its rules...and one for the rabble not satisfied with its choice of phones and apps."

The Next Move?

Insiders speculate that Verizon may have made the commitment to open networks chiefly to prevent the FCC auction from instituting tougher rules regarding open usage of devices, much as it led the wireless industry in committing to cutting termination fees to prevent Congress from passing laws outlawing the practice.

Google, meanwhile, has already raised the stakes with its Open Handset Alliance, a coalition of wireless and technology providers who are working together to support Android, Google's open mobile platform. Partners in the Open Handset Alliance include mobile players such as Sprint and T-Mobile and handset manufacturers such as Motorola, Samsung, and LG.

Given the dizzying twists and turns in the chess game over the wireless spectrum, the next moves are becoming increasingly difficult to predict--but they promise to be interesting.

Bowing to pressure from consumers and competition from rival telecoms, Sprint and T-Mobile say they'll lighten up on their contract terms.

Sprint announced yesterday that it would implement changes to its contract policies such as prorating early termination fees (ETFs) over the life of a customer contract. Sprint customers will also be able to make changes to their rate plans without having to renew existing contracts, the company said.

"Giving our customers a superior experience is our first priority," said Sprint executive Bob Johnson. "We are introducing programs to reward our customers and show our appreciation for their business. Rewarding their loyalty is a first step in gaining their trust."

The very same day, T-Mobile announced that it too would revise its contract policies to prorate ETFs. T-Mobile provided few details about its policy, beyond a rollout date sometime in the first half of 2008.

T-Mobile is widely recognized as the undisputed service leader in wireless. We want to do everything possible to create a great experience so customers want to stay with us for years, said T-Mobile senior vice-president Susan Nokes.

All four major wireless carriers in the United States now have policies that lower contract cancellation fees over the life of the contract. Early termination fees have been a longstanding bone of contention in the wireless market, with customers and consumer advocates arguing that the steep fees discourage subscribers from switching plans and lock them into a service they may not be happy with.

Verizon takes the lead

Perhaps sensing a rise in consumer dissatisfaction, Verizon Wireless was the first carrier to announce that it would prorate ETFs in June 2006, but customers would have to renew their agreements to take advantage of the new terms.

It was not until over a year later that Verizon changed its contract policy to enable customers to change their plans without renewing contracts.

The other wireless carriers continued to impose full termination fees, but the tide began to turn when both the FCC and Congress announced they would be looking into limiting termination fees and restricting carriers from forcing customers to renew contracts in order to change service plans.

California's Supreme Court ruled in October 2007 that a class action lawsuit against T-Mobile over the steep cost of the termination fees could proceed. T-Mobile may have changed its policies to preempt the suit and prevent other disgruntled customers from filing claims in other states.

And Sprint, already struggling with customer losses and the resignation of its CEO, most likely made the change just to stay in the game.

Following the trail blazed, however reluctantly, by Verizon Wireless, AT&T Wireless says it will no longer charge customers a flat termination fee if they cancel their service before their contract is up.

Instead the company will pro rate the fee depending on how many months the customer has left on their contract. Also, AT&T will no longer require customers to renew contracts when making changes to their wireless service plans. The new policy goes into effect in early 2008.

"Customers have told us they do not like one-size-fits-all approaches," said Paul Roth, president of AT&T's wireless sales and marketing division. "They are right, and that is why we have made these important changes."

Contract termination fees and upgrade fees have long been a sore point with wireless customers, who often pay anywhere from $175 to $250 to cancel a contract before its expiration date.

Although industry representatives claim the fees are necessary to subsidize the costs of handsets, the fees are largely viewed by consumers as measures designed to retain customers and prevent them from seeking better deals elsewhere.

First move

Verizon Wireless became the first cellular carrier to pro rate its termination fees over the life of the contract in March 2006.

The popularity of the Apple iPhone, which could only be purchased with an exclusive contract from AT&T, led to hearings in Congress where critics said the termination fees hamper consumer choice. The House hearings singled out AT&T's fee as especially steep, given that Apple covered all the costs of creating the iPhone.

The hearings led two Senators to introduce legislation in September 2007 that would require the prorating of termination fees for contracts and restrict any fees charged consumers to those mandated by law, as well as giving customers 30 days notice to cancel their contracts.

FCC chairman Kevin Martin, who normally takes a hands-off approach to telecom regulation, announced that the Commission would investigate termination fees not only from wireless carriers, but from Internet service providers and the cable industry as well.

And the California Supreme Court recently permitted a class action lawsuit against T-Mobile over its contract and termination fees to go forward, signaling a major shift toward consumers in the debate over the fees.

Verizon's plan

Verizon, Perhaps feeling the heat from growing consumer and Congressional discontent with burdensome contracts, announced similar changes Oct. 2, changing its policy so that its customers can make changes to their service plan without extending their contracts.

New and existing customers will have the option to change their voice and data calling plans -- selecting current plans with different minute allowances or text messaging and data use options -- without changing the end date of their contract.

Verizon says the new policy is part of the Verizon Wireless "Worry Free Guarantee."

Last year, Verizon Wireless became the first major carrier to pro-rate its termination fees.

Two Senators have introduced a bill that would require that carriers prorate termination fees, to be reduced by 50 percent after the first year of a two-year contract.

The bill would also prevent wireless carriers from charging fees for service beyond those expressly required by local, state, or federal law, and to expressly notify customers if any service request or upgrade would trigger a contract renewal, as well as giving customers 30 days' notice to cancel the contract.

Google has accused Verizon Wireless of violating Federal Communications Commission rules in its lobbying efforts to roll back the FCC's recent rulingon the wireless spectrum auction.

The search giant sent a letter to the FCC alleging that representatives from Verizon Wireless, in a Sept. 17th meeting with FCC chairman Kevin Martin, heavily lobbied to reverse the "open access" requirement of the auction, which would enable wireless subscribers to use any handset to connect to any network they wish.

The actual content of the meeting was not disclosed until several days after it took place, and Martin is alleged to be reversing his stance on the open access rules in the wake of the meeting--a stance he had previously supported.

"This only undermines the ability of interested parties to assess and respond meaningfully to important legal and policy arguments, as intended under the FCCs ex parte rules," wrote Google's telecom counsel Richard Whitt.

"That some interested parties have managed to piece together something of the substance of the undisclosed discussions between Verizon and the FCC does not cure the improprieties."

Verizon's lobbying efforts followed the company's filing a lawsuit to overturn the "open access" rules, which the telecom called "arbitrary, capricious, unsupported by substantial evidence, and otherwise contrary to law."

The upcoming wireless spectrum auction could raise billions of dollars for the federal government, as well as provide the auction winners new avenues to develop wireless broadband services.

While incumbent telecoms such as AT&T and Verizon have pushed for the auction to have no strings attached, Google, tech policy advocates and startups such as Frontline Wireless wanted the auction to forge the foundation of new third-party wireless Internet service, offering a "third pipe" alternative to existing cable and telecom Internet services.

Google agreed to put up $4.6 billion for its bid in the auction if the rules satisfied its four requirements for complete open access. The FCC compromise rules only met two of those requirements, and Google has not publicly committed to bidding in the auction as of yet.

Too friendly to Ma Bell's kids?

Google's charges have renewed criticism of the FCC for being too friendly to incumbent telecom companies and supporting their needs at the expense of consumers.

Critics say FCC chair Martin has regularly gone out of his way to push legislation that would benefit the major telecoms, such as national video franchising rights and the megamerger of AT&T with BellSouth.

The telecom companies argue that they are investing billions of dollars in network upgrades and must have clear rules that make the risk tolerable.

A recent investigation by the Government Accountability Office (GAO) found that not only did the FCC grant telecoms and businesses more access to its rulings than consumers and consumer groups, but that the FCC rulings were often solely based on data provided by the very same telecoms and industry groups.

According to the GAO report, several stakeholders in FCC rulings "knew when proposed rules were scheduled for an upcoming vote well before FCC released the agenda to the public because they hear this information from FCC bureau staff and commissioner staff. This advance information is not supposed to be disclosed outside of FCC."

"FCC officials said that they do not usually conduct their own studies in support of rulemaking issues," the report continued. "Instead, they rely mostly on external stakeholders to submit this information into the public record, and FCC staff analyze the information."

It's hardly a secret that lobbyists enjoy special access to the government officials they wheel and deal in hopes of getting laws passed, and government officials often exchange public service careers for lucrative lobbying jobs with the same companies.

FCC commissioners were grilled by a House Committee in March 2007 about allegations the commission has not done enough to protect consumers.

Richard Whitt reiterated Google's call for the FCC to support the open access requirements in the auction and not bend to backdoor lobbying efforts.

"[O]nly with consumer-driven devices on an open network can this significant, decades-long imbalance of interests have any chance of being righted," he wrote. "American consumers deserve an environment where independent companies and entrepreneurs for the first time can bring their innovative applications and mobile devices to an open marketplace."

Perhaps feeling the heat from growing consumer and Congressional discontent with burdensome contracts that can trigger early termination fees of several hundred dollars, Verizon Wireless says its changing its policy so that its customers can make changes to their service plan without extending their contracts.

Starting October 7, new and existing customers will have the option to change their voice and data calling plans -- selecting current plans with different minute allowances or text messaging and data use options -- without changing the end date of their contract.

Verizon says the new policy is part of the Verizon Wireless "Worry Free Guarantee."

Both the FCC and members of Congress have announced intentions to limit the termination fees wireless carriers charge subscribers who want out of their contracts early. In addition, FCC chairman Kevin Martin says he wants the commission to investigate similar fees for cable, Internet and landline contracts.

Last year, Verizon Wireless became the first major carrier to pro-rate its termination fees.

Two Senators have introduced a bill that would require that carriers prorate termination fees, to be reduced by 50 percent after the first year of a two-year contract.

The bill would also prevent wireless carriers from charging fees for service beyond those expressly required by local, state, or federal law, and to expressly notify customers if any service request or upgrade would trigger a contract renewal, as well as giving customers 30 days' notice to cancel the contract.

Test Drive

Verizon says the new policy is part of the company's Test Drive offer, which allows new customers to try the Verizon Wireless network for 30 days with the ability to cancel if they dont want to continue.

In touting its customer friendly marketing position, Verizon also reminded customers that it parted company with the industry by refusing to participate in a wireless directory when customers said they didn't want one. Verizon says its unwillingness to go along effectively killed that project.

Our commitment to our customers is why we lead the industry in customer loyalty and why more customers use the Verizon Wireless brand than any other, said Jack Plating, executive vice president and chief operating officer of Verizon Wireless.

Verizon Wireless has gone to court to overturn the rules for the Federal Communications Commission's upcoming auction of wireless spectrum.

The telecom giant opposes the FCC's "open access" rules, which mandate that any suscriber can use any wireless handset with any network, and that consumers should be free to download any software they want from the network.

In a filing with the U.S. District Court of Appeals in Washington, D.C., Verizon charged that the rules adopted by the FCC exceeded the commission's authority, and were "arbitrary, capricious, unsupported by substantial evidence, and otherwise contrary to law."

The sparse filing did not detail Verizon's claims, and Verizon representatives did not provide further comment.

The "open access" conditions were part of a deal offered by Google, which promised to bid $4.6 billion in the spectrum auction if the FCC agreed to support principles for four types of open platforms to be used with the new spectrum.

When the FCC agreed to support only two of the four principles as rules for the auction, Google praised the decision and indicated it might bid in the auction nonetheless.

Google's Chris Sacca criticized Verizon's move on his company's public policy blog, saying that it was "regrettable that Verizon has decided to use the court system to try to prevent consumers from having any choice of innovative services."

"The nation's spectrum airwaves are not the birthright of any one company," said Sacca. "They are a unique and valuable public resource that belong to all Americans."

Net neutrality

The wireless spectrum auction represents a key front in the continuing battle over net neutrality, the principle that consumers should be free to access all content equally on the Internet without interference.

Major telecoms such as Verizon and AT&T wanted the auction to be held without any conditions, in the hopes that they would be the preeminent bidders and be free to buy up the spectrum for new services.

Consumer groups wanted the spectrum made available for entreprenurial companies to develop wireless broadband Internet networks--a fabled "third pipe" that would compete with existing cable and telecom Internet services.

Although the FCC's compromise rules fell short of the "third pipe" goal, they were still a significant step to challenging the wireless market's strict control over what software and systems consumers can use on their phone. Although both AT&T and Verizon staunchly opposed Google's "open access" platform, the tide turned when AT&T agreed to support the compromise rules championed by FCC chairman Kevin Martin.

Early termination

The FCC has also promised to investigate punitive "early termination fees" levied by wireless, cable, and Internet companies against subscribers who cancel their contracts early.

The move was spurred by legislation introduced in the Senate that would put an end to the fees and mandate clear disclosure of what fees companies can charge to consumers.

Up next: a heavyweight showdown between the reincarnated Ma Bell and Silicon Valley's biggest player, with America's wireless future at stake.

Google has promised to front $4.6 billion dollars to bid in the upcoming FCC wireless spectrum auction, if the FCC agrees to commit to principles supporting open access and connectivity for all Americans, regardless of what device they use.

It may be the first time a U.S. company has put its money where its mouth is and actually supported open markets instead of just pretending to do so.

"Guaranteeing open services and open networks would ensure that entrepreneurs starting new networks and services will have a fair shot at success, in turn giving consumers a wider choice of broadband providers," wrote Google's Chris Sacca on the company's public policy blog. "This is one of the best opportunities we will have to bring the Internet to all Americans. Let's seize that opportunity."

Google's move prompted a furious rebuke from AT&T, which also plans to be a major bidder in the auction.

AT&T senior executive vice-president Jim Cicconi, in a statement to technology blog GigaOm, said that "Google is demanding the government stack the deck in its favor, limit competing bids, and effectively force wireless carriers to alter their business models to Googles liking."

AT&T has a long and storied history, of course. It was AT&T that, for years, prohibited consumers from connecting such outlandish devices as fax machines to its circuits. It defines consumer choice as consumers doing as AT&T chooses.

Google outlined its policy in a July 9th ex parte filing with the FCC. Google promised to front the money for the auction if the FCC's standards met the following conditions:

• Open applications: Consumers should be able to download and utilize any software applications, content, or services they desire;

• Open devices: Consumers should be able to utilize their handheld communications device with whatever wireless network they prefer;

• Open services: Third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and

• Open networks:Third parties (like Internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee's wireless network.

Google telecom counsel Richard Whitt said that its move was specifically designed to facilitate consumer choice and greater competition through creating a true third-party broadband platform.

"[Incumbent] carriers, quite rationally, seek to extend and protect their legacy business models, and in particular not take any actions that would jeopardize existing and future revenue streams," he wrote in the filing. "For this reason, the appropriate public policy stance is not simply to facilitate an additional spectrum-based broadband platform, but rather to facilitate independent broadband platforms."

Network Neutrality

The FCC auction has prompted renewed sparring between telecom companies and grassroots advocates over the principle of "net neutrality."

Supporters of net neutrality, such as the "Save The Internet" coalition, want the spectrum opened up to enable new companies to create awireless broadband network, while the telecoms were expected to outbid other contenders and hoard the spectrum for their own offerings.

Consumers who like having to get their cell phones from Verizon, AT&T or Sprint will love having AT&T control how, when or at what cost they tap into the wireless broadband network.

FCC chairman Kevin Martin, a staunch supporter of telecom interests and apparent foe of net neutrality, surprised many players by seeming to endorse a version of the "open access" principle. But analysis by experts such as Media Access Project's Harold Feld found that Martin's proposal seemed chiefly designed to satisfy the demand to make changes without actually making any changes.

"On a practical level, the proposed 'fix' really doesn't do much," he wrote. "Certainly it does absolutely zero for creating a 'third pipe.' But even taken on its surface as just addressing the restrictions on edge devices in the wireless world, it doesn't help."

AT&T and Verizon have threatened to withdraw from the auction if open access was mandated, leaving the government unable to raise enough cash from the sale of the spectrum.

But Google's move has shaken up the competition and made the auction a watershed in America's broadband development. In the words of OpenLeft's Matt Stoller, "AT&T said to Google, put up or shut up. And Google just put up."

There's a quiet war being waged in political and technology circles, and its outcome could provide consumers with a vast new resource for public communication -- or ensure major telecom companies have even more revenue lining their pockets.

As part of the nationwide conversion from analog to digital television signals scheduled to take place in 2009, the Federal Communications Commission (FCC) is planning to auction off large swaths of the newly-available signal spectrum.

The spectrum, near the 700mhz range, has been used to broadcast traditional UHF television programming to millions of families, and could conceivably be used as the backbone of a new wireless broadband Internet service. The question then becomes -- who should control it, and how should it be used?

Roughly 24 mhz of the spectrum is already earmarked for reclamation by the federal government, which plans to use it for public safety and emergency communication. The remaining spectrum is up for grabs, and the potential revenue from the auction could run as high as $30 billion.

The FCC is currently taking comments from the public regarding the rules by which the spectrum can be auctioned and used, with the deadline for comments closing tomorrow, June 4.

Consumer groups and technology advocates are pushing to open up the spectrum auction and create avenues for new wireless broadband networks. The potental reach of the spectrum could far exceed current municipal Wi-Fi networks, creating a new "third way" for Internet access, particularly in rural and smaller communities.

Columbia University professor and net neutrality advocate Timothy Wu wrote in Forbes magazine that the spectrum auction winner abide by legal precedent and permit users to attach devices to any system that utilizes the new spectrum, much as the wired phone network was mandated to support devices such as answering machines, faxes, and eventually computer connections.

"Attachment rights can break open markets that might otherwise be controlled by dominant gatekeepers," Wu wrote. "Longshot companies like Ebay or YouTube might never have been born had they first needed the approval of a risk-averse company like AT&T."

AT&T and its fellow gatekeeper Verizon are ramping up to bid on the available spectrum as well, and supporters of net neutrality fear that the major telecoms will use their financial muscle to outbid any competition for the wireless real estate. Free Press campaign director Timothy Karr warned that the Baby Bells would "horde this valuable public asset and stifle competitive and cheaper alternatives to their established networks."

"[T]he United States has fallen to 16th in the world in high-speed Internet rankings, with few choices and some of the highest prices for the slowest speeds in the world. We will continue this decline as long as we let AT&T, Verizon and Comcast dictate the terms of Internet access for the majority of Americans," Karr wrote in a solicitation to members of the "Save The Internet" coalition.

As of June 1st, the coalition had gathered over 230,000 signatures to send to the FCC in support of using the spectrum for public wireless broadband.

Silicon Valley startup company Frontline Wireless has already put in a bid to be the company that builds the broadband network for the wireless spectrum. The company is backed by former Google investors, and the search engine heavyweight itself recently petitioned the FCC to enable an open auction of the spectrum.

Even presidential candidates are taking notice of the issue.

Democratic contender John Edwards recently wrote an open letter to the FCC urging it to set the auction rules equitably in order to "unleash the potential of smaller new entrants," ensuring that rural communities could make use of the potential wireless alternative to cable and DSL.

"The upcoming 700 megahertz spectrum auction presents a once-in-a-lifetime opportunity to shape the next generation of American technology," Edwards wrote. "I urge you to seize this chance to transform the Internet and the future."

The Federal Communications Commission should use its upcoming auction of the valuable 700 MHz spectrum to create high-speed Internet service that will be a true competitor to broadband services offered by telephone and cable companies, according to a group of public interest and consumer groups.

In a series of three filings with the FCC, the six-member Save Our Spectrum coalition said the Commission should structure the auction of the spectrum, and the service offered over it, so that the service will be operated in a non-discriminatory manner, under an open access structure following auction rules that will allow for greater participation than simply the incumbents.

The members of the coalition are: Public Knowledge, Media Access Project, Consumers Union, Consumer Federation of America, New America Foundation and Free Press.

In the filing on non-discrimination issues coordinated by Public Knowledge and New America Foundation, the coalition said the Commission should "establish a service rule for broadband services operating in the 700 MHz band that protects the consumer's right to use any equipment, content, application or service on a non-discriminatory basis without interference from the network provider."

This recommendation would make certain the landmark 1968 Carterfone decision allowing consumers to attach devices ranging from fax machines to computers to the telephone network, and would implement Net Neutrality principles of non-discrimination.

The open-access filing, coordinated by Consumers Union, argued that broadband deployment has advanced in other countries that allow competitors access to telephone-company networks.

"It is imperative that we learn the lessons of the wireline market and make the appropriate policy corrections in the launch of the most promising wireless broadband markets," the filing said. "Wireless broadband has not been a useful 'third pipe' and will not be in the near future if this spectrum is auctioned to the very same vertically integrated telephone and cable incumbents that dominate the wireline market."

In the proposed auction rules, a filing coordinated by the Media Access Project, the coalition recommended the Commission offer the new spectrum at the wholesale level, and should "either prohibit wireline and large wireless incumbents from bidding, or require them to bid through structurally separate affiliates."

The Commission should also guard against the possibility that winners of the spectrum auction not keep the spectrum from being used by not constructing new services, the groups said.

January 18, 2007
Verizon is planning to say good-bye to Northern New England, selling off its 1.6 million phone lines in those states to FairPoint Communications, a Charlotte, N.C., company that currently has about 252,000 customers in rural areas of 18 states.

Verizon says the deal would enable it to concentrate on developing its wireless networks, shedding its "plain old telephone service" -- or POTS, as it's known in the telephone business -- and the billing, regulatory and maintenance headaches that accompany it.

Critics said the company was washing its hands of rural areas and noted that only 62 percent of Verizon's customers in the three states had access to DSL service.

In fact, FairPoint has a better record than Verizon in deploying DSL in rural areas. The company said that more than 80% of its customers have access to DSL, and 23% of those use the service.

Verizon is spending about $18 billion to build the nation's fastest fiber optics network in urban sectors of the Northeast and Mid-Atlantic regions and, with its British partner VodaFone, spending heavily to keep Verizon Wireless competitive.

Shortly after the FairPoint deal was announced, Verizon Wireless issued a press release touring its latest 29 new cell sites across Maine's Hancock, Knox, Oxford, Sagadahoc, Waldo, and York counties. In 2006 the company built and activated 100 new cell sites across the Pine Tree State.

In 2006, the company invested nearly $318 million in New England to stay ahead of growing demand for Verizon Wireless voice and data services, the company said.

"Reliable networks are not built overnight," commented Ken Dixon, New England president of Verizon Wireless. "Building 100 sites in one year, in one state, illustrates our strong focus and commitment to make the nation's most reliable wireless network even better."

The FairPoint deal would allow Verizon to transfer $1.7 billion worth of debt to the new company, a so-called "spin merger" that helps reduce the tax consequences of the sale.

FairPoint pledged that it would add about 600 jobs to the Verizon workforce, which currently totals about 3,000 in the three states.

Both Verizon and AT&T are trying to move away from land-line telephone service in favor of wireless, Internet broadband and cable-style video. They have also been unloading their directories businesses and shedding overseas holdings.

The satirical Web site The Onion recently published a tongue-in-cheek article "reporting" that Verizon was introducing the new "Charge-You-At-Whim" plan.

Now it seems that life does indeed imitate art, as the telecom giant announced yesterday that it would be tacking on a new surcharge for customers using Verizon's "standalone" DSL service.

The new fee comes just as Verizon stops paying into the Universal Service Fund (USF), which would have saved its subscribers $1 to $3 a month on average.

Verizon had successfully petitioned the FCC for relief from paying the USF, which was ostensibly designed to fund telecommunications initiatives for in low-income and rural areas. The monthly USF fee for consumers ran from $1.25 to $2.83 a month, depending on their type of DSL service.

The new surcharge almost exactly mirrors the old USF fee, ranging from $1.20 to $2.70 a month.

Verizon spokesperson Bobby Henson claimed the new fee was due to "costs" incurred from the development of standalone DSL service, as opposed to service bundled to Verizon's phone offerings or other services.

Industry observers, tech pundits, and Verizon customers greeted the explanation with skepticism. Techdirt noted that Verizon had resisted deploying a standalone DSL service for some time, and the oddity of new costs for the service appearing out of nowhere.

"What the quote is really saying is that Verizon is still upset that its traditional voice line business is in trouble, but Verizon can't admit it publicly as it would cause investors to beat down the stock," it said. )

Critics have for years complained that the USF was mostly a "slush fund" for companies, funding little in the way of new infrastructure.

A recent study conducted by the Government Accountability Office (GAO) found that telecom companies opposed expansion of the USF for new infrastructure development, saying that they would have to incur more costs from "program development."

In order to recoup losses to the USF from telecoms not paying into the fund, the FCC recently ruled that Voice over Internet Protocol (VoIP) providers must start paying into the fund.

VoIP services, which have marketed themselves as being low-cost alternatives to traditional phone lines, faced an average of $1.75 extra in monthly charges for users as a result.

Verizon's practice of charging extra fees without providing any additional service is not a new complaint. The company came under fire in May for its "limited unlimited" EV-DO wireless network, when users who pay upwards of $80 a month for the service found their accounts terminated for any usage heavier than casual Web surfing.

Readers at tech forum Broadband Reports theorized that the new surcharge was needed to fund the rollout of Verizon's new high-speed FiOS broadband service. "Come on Verizon DSL Folks," said one reader. "The FiOS program needs funding and investors are getting worried! Now they got their extra funding."

Verizon Wireless says it is lightening up on the termination charges it slaps on customers who cancel their contracts early.

Starting this fall, customers who cancel early will pay a pro rate cancellation penalty based on how many months remain on their contract instead of a fixed fee of several hundred dollars.

Verizon Wireless is the first major U.S. carrier to commit to a national policy of pro rating early termination fees. The change will take effect this fall for new customers. Existing customers will have to -- you guessed it -- renew their agreement to take advantage of the change.

Denny Strigl, president and chief executive officer of Verizon Wireless said the change is being made to adapt policies to customers' needs.

"We believe dissatisfaction with flat early termination fees is tarnishing the entire industry," he said.

Speaking at an industry conference, Strigl said the wireless industry has the ability to transform itself in the years ahead by continuing to add value for customers through technology and responsiveness.

He said Verizon Wireless has the most loyal customer base, as well as the highest ratio of local number portability (LNP) port-ins. Strigl said Verizon Wireless has a track record of listening to its customers and making policy decisions based on customer needs.

Verizon Wireless parted with the industry by refusing to participate in a wireless directory when customers said they didn't want one. The company also broke from other wireless companies to support local number portability because customers wanted the freedom to take their numbers with them if they switched service providers.

Strigl said Verizon Wireless is taking similar action with early termination fees, as it is an issue that increasingly is irking customers industry-wide.

Verizon Builds Market Share

Meanwhile, analysts at Merrill Lynch say Verizon Wireless continues to take market share across the board. Cingular is executing well. Alltel appears to have gained momentum. However, the analysts said T-Mobile is likely to come up short on net additions during the quarter.

Merrill Lynch found that Verizon still has an edge with regard to customer perception of network quality, and it is using that advantage to gain market share.

Verizon stores are extremely busy, particularly in markets where a competitor's service is not up to par. Indeed, so busy are the stores, that it was commented that a number of stores the analysts visited could use additional sales reps in order to help meet the customer demand.

The analysts report that Sprint continues to struggle with its marketing message and many customers and some sales reps still do not understand the supposed benefits of the Sprint-Nextel merger.

Cingular's record has improved, the analysts said. There are still some areas where customers remain unhappy with Cingular's network coverage, but in general customers are seeing an improvement.

T-Mobile USA moved primarily to 2-year contracts in April, becoming the last national carrier to switch to two-year service plans.

Verizon says it will phase in a policy of allowing customers to buy stand-alone high-speed Internet service. Qwest is currently the only major local telephone company that will sell DSL service to customers who do not have a local telephone number at the same location.

Verizon said current customers in 13 Northeastern states will be allowed to drop telephone service but continue to receive DSL service. However, the company said customers would have to transfer their number to a wireless carrier, to a VOIP provider like Vonage or to a cable company -- not to a competing local phone company that uses Verizon's lines.

Verizon said it will expand the stand-alone option to all of the states in which it operates. Eventually, the company said, it will offer stand-alone DSL to new customers as well as exissting customers but said a timetable has not been established.

Not everyone was pleased. Gene Kimmelman of Consumers Union said Verizon's new policy was "less than what consumeres need to have a vibrant, competitive marketplace."

With the growing popularity of Internet telephone service, many consumers would be expected to get rid of their regular telephone service and rely solely on VOIP, which is not only cheaper in most instances but also offers many features not available with regular telephone service.

Verizon's move leaves SBC and BellSouth as the hold-outs. Neither company currently provides DSL-only service.