Last week it was discussed at length how the investment community would like the public to believe that the shift to low cap and high overage broadband pricing is “inevitable.” We also discussed how cable industry lobbyists would like the public to believe that such a shift isn’t about making more money, it’s about helping the poor. Not only is the metered billing push absolutely about making money, it’s about artificially constricting the pipe to protect uncompetitive carriers and TV revenues from Internet video. But instead, there’s a very concerted effort afoot to portray this shift as necessary, inevitable, and even altruistic.

Most consumers prefer the simplicity of flat rate pricing, and understand that ISPs are perfectly profitable under the flat-rate pricing model. They also understand that this is a pipe dream forged by never-satisfied investors, and once implemented ends with ever soaring per gig fees and ever shrinking usage caps.

The PR campaign continues this week, with Hewlett-Packard’s Joe Weinman claiming at GigaOM that not only is such a pricing shift “inevitable,” but that it’s a shift that actually originates with consumers, not investors or ISP executives. Weinman starts out on the wrong foot immediately, by confusing “pay per use” with low cap and high overage pricing models:

For the record, I like unlimited Internet access just as much as anyone else. However, such plans appear to be on their way out, and here s why. As explored in “The Market for Melons”, pay-per-use is not an evil plot by greedy robber barons, but a natural outcome of independent, rational consumer choice. Consider a town with an all-you-can-eat (flat rate) buffet and an a la carte (pay-per-use) restaurant. Smart shoppers on diets will save money by patronizing the a la carte restaurant, whereas heavy eaters will save money by visiting the buffet…. Bottom line: it is not the proprietors driving this dynamic, but the customers themselves acting out of pure, rational self-interest

Except for the thousandth time, ISP’s are not interested in real pay per use plans because the majority of their users (who simply check e-mail a few times a day) would downgrade to $5 tiers and cost carriers billions. What ISPs are proposing is flat-rate pricing with costly per gigabyte overages (completely detached from any real-world costs, which for ISPs are fixed or dropping) layered on top. Meanwhile, the suggestion this is a consumer driven push is absurd. This is an investor driven push for obvious reasons, and you have to wonder if Weinman saw the consumer reaction when Time Warner Cable proposed charging consumers up to $5 per gigabyte then insisted such pricing was for their own good.

Weinmen offers up a second post in which he hallucinates a laundry list of supposed benefits that will occur from this change in pricing paradigm. Most of them revolve around technology platforms designed to aid this monitoring and metering of usage and billing, which we’ll go out on a crazy limb and guess is precisely what Weinman is selling at HP. Unfortunately, Weinman begins his sales pitch just like the cable industry traditionally has by pretending this is an inevitability consumers want, and that such a pricing shift is financially necessary. Neither are true.

Link to the original article…

Buoyed by the recent ITU declaration that nobody is technically deploying a 4G network here in the States, T-Mobile recently kicked off a new marketing campaign proclaiming that the carrier has the “largest 4G network.”

One cornerstone of the new campaign is apparently making fun of AT&T’s network, which has seen more than its fair share of criticism the last few years due to performance issues in markets like New York and San Francisco. Recent commercials portray AT&T as a balding, middle aged man weighing down the iPhone 4, and the latest ad in the series airing this week certainly isn’t flattering. AT&T got into a feud with Verizon last year about ads mocking AT&T 3G coverage (they even filed suit), but so far hasn’t had anything to say about T-Mobile’s campaign.

Link to the original article…

As noted the other day, Charter Communications has decided to add a new $1 “Broadcast TV Surcharge” to user bills, in order to offset the cost of network affiliates demanding higher carriage rates. Despite being simply the cost of doing business, the company is tacking the fee below the line to keep the advertised rate the same.

Worse perhaps, Charter tells Stop The Cap that “Charter Price Guarantee” and contract customers (who are supposed to have their rates locked) will also see the hike:

A Charter representative we contacted claimed the company will impose the fee on all customers, including those on contract, because of a clause in the terms and conditions which says, “The guaranteed price does not include the cost of installation and equipment, any applicable franchise fees, taxes or late fees, or costs for other ancillary services that you may order.”

Except one user e-mails us their latest bill with a notification of the new fee, and it claims contract customers and price guarantee customers won’t be impacted at least until their contract is up. We’ve reached out to Charter to clear this up but have a feeling Charter misspoke, given that promising customers a fixed rate then imposing a rate hike disguised as a below the line fee would be valuable fodder for class action attorneys.

Burying the cost of business in below the line fees so they can jack up consumer bills (but leave advertised rates the same) is bad enough.

Link to the original article…

Last week AT&T posted their second quarter earnings, and while wireless connectivity was hot, the company noted they lost a whopping 347,000 traditional DSL customers on the quarter. Some of those customers upgraded to AT&T U-Verse, but many of them were users in un-upgraded AT&T markets who migrated to cable, either lured by faster broadband speeds or the cable triple play. To try and fight back in legacy areas, AT&T’s again tinkering with their DSL pricing, their website indicating that they’ve brought back the $14.95 per month price point for their Basic (768/384 kbps), Express (1.5 Mbps/ 384 kbps) and Pro (3 Mbps/ 512 kbps) DSL tiers, which are all starting to look very long in the tooth, especially upstream. The company’s Elite (6 Mbps / 512 kbps) tier is now $19.95. All of these deals are for new customers, and the pricing is for twelve months before you need to negotiate a better deal.

Link to the original article…

Chevrolet finally announced the pricing for the highly anticipated Chevrolet Volt. And guess what, it’s nowhere near half as bad as some folks were guessing. The pricing details are:

• Manufacturer’s Suggested Retail Price starts at $41,000 ($33,500 net of full federal income tax credit, which ranges from $0 to $7,500); Lease payment on a 36-month lease at MSRP as low as $350 per month with $2,500 due at lease signing including security deposit
• OnStar provides unprecedented connectivity through Volt mobile app; five years of OnStar (Directions and Connections) service standard
• Volt’s eight-year/100,000-mile battery pack warranty provides added peace of mind
• Volt can be your primary car; approximately 340 miles of total range provides freedom to drive wherever, whenever

Starting today, participating Chevrolet dealers in launch markets will begin taking customer orders for the 2011 Chevrolet Volt, the industry’s first electric vehicle with extended-range capability. List this under my DOWANT category.

[ Links: Chevrolet Volt, Chevrolet Volt Pricing ]

An insider recently told Engadget that the company would be ditching unlimited wireless data pricing to shift to a billing model more like AT&T’s as soon as next week. While that wouldn’t be surprising given Verizon’s repeated hints at their interest in such a model, Verizon has also repeatedly said such a change would likely come with the launch of LTE service.

To hear Verizon CFO John Killian tell it, Verizon’s not making any data plan price changes anytime soon. Said Killian on Verizon’s recent conference call:

Our business is continuing to perform extremely well. You have not seen us rush out to make any kind of a change. We will continue to monitor the situation, of course, and look at opportunities that will say what is the best equation for us to drive long-term shareholder value, and we will be very focused on that. I cannot say enough, though, about the opportunity we see ahead given where we are today with smart phone penetration.

Killian then goes on to talk about 4G and note that tiered pricing will, as they’ve consistently said, likely arrive with LTE:

We have indicated in the past, as we move to an LTE world and LTE pricing, we will probably look very hard at tiered pricing, and that continues to be our thinking right now. So more to come on that. By the way, I should say that all of our efforts, all of our plans on getting LTE launched in the fourth quarter are on schedule.

The original Engadget rumor pegged July 29 as the date for the change, so we don’t have long to wait. Verizon LTE isn’t expected to launch anywhere until November 15.

Link to the original article…

After years of hinting at looming wireless data pricing changes, AT&T has finally buckled to recommendations by stock jocks like Sanford Bernstein’s Craig Moffett and killed their unlimited 3G iPhone pricing plan. In an announcement that insists they’re introducing “new lower-priced wireless data plans,” the company says the unlimited data plan will be replaced by two new data plans for new users: “DataPlus” and “DataPro.”

•DataPlus: Provides 200 megabytes (MB) of data for per month. If customers exceed 200 MB in a monthly billing cycle, they will receive an additional 200 MB of data usage for for use in the cycle. AT&T insists that 65 percent of AT&T smartphone customers use less than 200 MB of data per month on average.

•DataPro: Provides 2 gigabytes (GB) of data for per month. If a customer exceed 2 GB during a billing cycle, they will receive an additional 1 GB of data for for use in the cycle. AT&T insists that 98 percent of their smartphone customers use less than 2 GB of data a month on average.

AT&T says they’ll send text messages to users as they reach 65 percent, 90 percent and 100 percent of their monthly cap. AT&T also says they’re finally going to allow tethering for the iPhone, allowing users who subscribe to the DataPro data package to tether for an additional a month.

The pricing changes of course arrive ahead of the announcement of a new, more HD video-centric iPhone next week. While most users currently use far less than 2 GB of data – AT&T knows that’s going to change quickly. The company has long wanted to impose more expensive caps that would please investors by placing a premium on mobile data in the face of declining voice revenues.

Most iPhone users will very soon use considerably more than 200 MB a month, and will naturally trend toward the more expensive tier. But now, instead of unlimited data for , they pay for 2GB and for each additional gigabyte. As we’ve long noted – AT&T’s dream pricing model isn’t about fairness or usage-based pricing – it’s about shoving most of their users toward a higher monthly wireless data bill.

Update: It looks like existing iPhone customers will be able to upgrade to the new iPhone next week and grandfather their unlimited pricing plan, but they won’t be able to add tethering if they do.

Link to the original article…

While Verizon’s LTE plans have gotten a lot of press, specific details (especially pricing) on the service have been limited – outside of the fact the service will launch in 25-30 markets sometime this year, at speeds somewhere between 5-12 Mbps downstream. But like AT&T – Verizon does continue to hint at new pricing that moves beyond the concept of unlimited bytes. Speaking at an investor’s conference this week, Verizon Wireless CEO Lowell McAdam suggested that the company would offer one plan (or one bucket of bytes) that would connect multiple devices. “I think this concern over unlimited megabytes on a smartphone will go away as we bring new devices and new applications onboard,” insists McAdam.

Link to the original article…

It seems like roughly once a week now that AT&T executives inform everyone that there needs to be a change in wireless broadband pricing – and by change they really mean you’ll soon be paying more money for wireless data. Carrier executives and investors want all users paying more for data as smartphones and open networks erode VoIP and voice minute revenues, though the carrier likes to pretend the changes are necessary because current (very profitable) pricing isn’t sustainable. Speaking on the company’s earnings conference call yesterday, CFO Richard Lidner again hinted at the looming change:

…you’re dealing with a situation where when you look at your customer base, even customers that are using similar devices, there s huge disparity in the amount of data that they use and the amount of capacity they consume. And so when you look at all of those things as an industry I think it will influence how in the future the pricing models develop.

And as an industry what the industry has to do is develop models that are understandable by customers, that customers you know can understand and live with, and at the same time is fair to customers in terms of the amount of a somewhat limited resource that they’re consuming. And so that’s kind of the whole thing on data pricing and it will I suspect evolve as we go forward in the industry and it ll evolve as applications and devices continue to evolve and data traffic continues to grow.

Again, while AT&T continues to hint at the fact they’d like some kind of pure per-byte billing model (which many people would be fine with), what carriers actually wind up implementing are pricing models where all users are funneled toward higher prices. If AT&T introduced pricing that really was based on usage – the vast majority of their subscribers would wind up with lower bills, which of course they don’t want. At this point we wish AT&T would stop talking about it and introduce their dream pricing model so we can see exactly what the hell they keep hinting at (and prepare to take out that second mortgage if necessary).

Link to the original article…

AT&T is once again dropping hints that the carrier wants to change (read: increase) wireless data pricing. Many investors have been pressuring the company to ditch the $30 unlimited iPhone data plan and instead replace it with some kind of metered billing model. That’s largely because as carriers begin to open their networks to push IM clients and mobile VoIP, they’ll be losing a lot of money on voice and SMS. The only way to counter those losses will be to charge more money for mobile data. Enter AT&T CEO Randall Stephenson, who this week tells Reuters the changes will be coming soon:

Stephenson expects changes in how the wireless industry prices its mobile data services going forward, with heavy data users being charged more. Smartphone users currently pay a monthly fee of about $30 for unlimited data. “For the industry, we’ll progressively move toward more of what I call variable pricing so the heavy (use) consumers will pay more than the lower consumers,” Stephenson said.

What Stephenson calls “variable pricing” is confused by many to mean per-byte billing. While the idea of only paying for what you use sounds great to those not paying attention, the plans AT&T and Verizon actually wind up implementing are very carefully crafted to drive most user bills ever higher. Verizon for instance now offers users the option of paying either $9.95 for a phone data plan with a 25MB cap (20 cents per additional MB, 125 MB maximum), or $30 for “unlimited” (which actually means 5 GB a month) service. This is in addition to SMS, voice, and other monthly fees.

These plans really aren’t about making “heavy users” pay more, they’re about getting everybody to pay more. Since most users consume much more than 25 MB per month, they’ll all wind up upgrading to the more expensive plan in the belief it offers a better consumer value. But suddenly, here you are paying more than $100 a month for voice, data and SMS plan when you’re really not a particularly heavy user. Most users are somewhere around 200 MB a month, though you’ll note the absence of a $20, 300 MB plan.

Meanwhile, you’ve got AT&T and Verizon also now requiring that everybody have an SMS and data plan on their phone — whether they actually use data or not. What’s designed to look like value and choice is in most cases the exact opposite. When thinking of 3G pricing, picture a giant invisible funnel that propels users toward one inevitable outcome: paying more money.

Whatever pricing emerges, eventually users will realize they want to connect multiple devices to these 3G and 4G networks without having to pay a subscription fee for each and every device. While some people think the $15 for 250 MB a month or $30 for “unlimited” 3G pricing of the iPad is a “great” deal, most people simply aren’t going to want to pay yet another monthly fee just for iPad bandwidth after shelling out for both home and wireless connections. Amazingly enough AT&T agrees, Stephenson saying he sees the iPad as a largely Wi-Fi device as a result

“My expectation is that there’s not going to be a lot of people out there looking for another subscription,” he said during a webcast of an investor conference, adding that the device would be a mainly “Wi-Fi driven product.”

Even the company that’s providing the iPad’s 3G functionality doesn’t think you’re willing to pony up the extra cash, which is saying something. Whatever changes AT&T has in store for their bandwidth pricing, make absolutely no mistake that the end result is going to be you paying more money for mobile bandwidth, regardless of whether you use 100 MB a month, or four gigabytes a month. It’s absolutely essential to carrier execs and investors eager to compensate for lost voice and SMS revenues. Anybody claiming otherwise is either selling you something or not reading the fine print.

Link to the original article…

The new Google phone, the Nexus One, has received lots and lots of hype, most of it focusing on how the device was supposed to revolutionize the US subsidized handset pricing model. Instead, it landed with kind of a semi-interesting thud – and users complained of high fees, no phone support, and the fact that the phone was only available via T-Mobile. Google has tackled the first two of those problems, and now it appears the phone is poised to arrive on other carrier networks. Vaguely-sourced rumors indicate that the Nexus One is set to arrive on Verizon’s network on March 23 – which sounds about right, given that’s the first day of CTIA. FCC documents indicate an AT&T version is also in the pipeline. <

Link to the original article…

Fierce Wireless asks a number of vendors who make a living off of billing systems their thoughts on metered billing in the wireless space, and unsurprisingly is told by each one that a shift to metered billing is “inevitable” in wireless.

The article is full of the kind of talking points we’re used to from an industry that desperately wants to foist higher per megabyte fees on consumers. All major talking points are represented, from the “inevitability” of higher prices and the idea that consumers using your product is a bad thing, to the idea that heavy users “subsidize” lighter users:

“I think that it is inevitable for the industry to move toward this, otherwise the business model is not sustainable,” said Rafi Kretchmer product marketing manager for revenue management at billing systems vendor Amdocs. He noted that low-volume data users are essentially subsidizing heavy data customers. “In order to address this conflict, they realize that to not leave money on the table, they must differentiate the pricing.”

Ignoring for a moment that the wireless sector is already metered (which the article tries to) this idea that a shift from flat-rate to metered billing is inevitable because of either capacity or financial reasons is one of the broadband industry’s favorite, repeated mantras. Unfortunately, it’s also not true. Harold Feld found himself annoyed by the Fierce Wireless report and offered up a counterpoint of his own, with points usually not brought up in trade magazine reports that are frequently busy telling carriers what they want to hear, but not necessarily telling the truth:

The cost structure of building and maintaining the network is marked by high fixed cost and low marginal cost. That is to say, the vast majority of cost comes from building the network itself, regardless of how many customers use it. Once the network is built, the actual marginal cost of each customer is fairly low. Even an intense user does not consume very much of the network resources (the supposed bandwidth hog is a problem only because network capacity is ridiculously oversold). The argument that the majority of subscribers subsidizes the few bandwidth hogs is simply rubbish. The question is simply how obscenely high a rate of return can the network operator squeeze out of each customer.

And in wireless, the rate of return is rather obscene, when you figure Verizon recently decided that caps as low as 25 MB make sense in 2010. Of course all the talk about protecting the poor, “subsidizing” light users in nonsense. If you examine Verizon Wireless’s plan the ideal carrier pricing model isn’t about pure pay-per-use, it’s all about relentlessly pushing all users toward higher prices no matter how much they use. Not too surprisingly, ISPs, ISP investors, and the billing and support companies who’ll make a killing off of these reality-challenged pricing models think that’s just a peachy idea…

Link to the original article…