It looks like billions of dollars in wireless data charges are being added to customers' wireless bills, some causing "overages"; i.e.; when a customer goes over their monthly data usage, known as the 'data cap', they can be charged a fee, or have to buy more expensive data or have a slow down of their service, which is called 'throttling'. Many customers, it appears, purchase additional 'gigs' to avoid this.
Point of fact, Verizon, et al., have made customer ignorance a new profit center. And it is not being done by just one or two or three different ways, but many. We dubbed it "Gig Pumping".
About a month ago, I got a call from the Cleveland Plain Dealer. They had just started on what is now a series of articles about customer overages on wireless service, much of it focusing on Verizon. One woman, for example, had a $9,100.00 Verizon Wireless bill in one month. The paper has since gotten thousands of complaints and the FCC has started an investigation.
In short, Verizon, AT&T, et al., appear to have figured out that a lack of consumer education (customer ignorance) and sneaky billing practices can be a new cash machine for their wireless and even wireline companies. And they are being assisted by the hardware manufacturers, and the apps and their associated services, products and social media.
Is it intentional or are the wireless companies just taking advantage of an out of control marketplace with lax government oversight? Are the other companies doing to it due to some tie with the carriers or again, is it just the wild wireless west?
Thus, if you ever had a problem with overages or you bought a larger package of 'gigs' so you wouldn't go over the allotment, or you noticed large increases in your usage, which you didn't do (or your family members) - you might want to take to check your blood pressure while reading this.
I have divided this into two articles:
- Part I discusses the different ways the companies have figured out how to "pad the bill" so you pay more.
- Part II ties the overages of your bills with the previous discussion about the "special access" networks and wires that carry wireless backhaul traffic. In 2015, Verizon NY, which is the state wired utility showed access services had a 66% profit margin, while Verizon Wireless, a separate company, has about a 50% profit margin--Is the price of wireless service and the issue of these overages reflected in the profits of the special access wires that are being used to carry the wireless data services?
Ignorance Is the New Telco Wireless Cash Machine Bliss
In doing some informal surveys we found that most customers have no clue about the settings on their wireless phone that could control their use, such as shutting off, adjusting or eliminating an application.
And not knowing how to use these different settings just makes more money for the wireless company. For example, not knowing there is a way to switch to use 'WiFi', which is free, vs using up the cell phone data usage, appears to be common. And so, most people don't know that they can set all updates of an application to only do it when the phone is connected using WiFi.
There have been a slew of articles about a few of these issues over the last several years, and even in 2016. USA Today ran an article - "How to keep your cell phone apps from eating up all your data" in April 9, 2016. And C/NET ran a few articles, including one called "5 apps that are quietly killing your data plan" in April 2016.
But these are far and few in educating consumers. Also, most of the other articles are in tech mags or covering a specific phone or even operating system.
The Cleveland Plain Dealer's coverage opened up a larger issue; some stuff doesn't add up and worse, this is out of control.
And it is way worse than even I imagined. There are also billing issues that are generating large amounts of data expenses, such as the previously mentioned, massive nine thousand dollar expense, that just make no sense, but aren't uncommon.
Some Wireless Fun Facts
Worldwide: More Access to Cell Phones than Toilets
According to the ITU, more people have access to cell phones than have access to toilets. Cisco's 5G Vision Series states:
"Since the advent of electrical engineering in the nineteenth century, no single mobile electronic device has surpassed the cell phone in popularity. According to the International Telecommunications Union (ITU), 6.8 billion people had access to cell phones in 2013: more than had access to toilets, according to research by the United Nations. And by 2015, a third of the 7.2 billion people on Earth were using a fourth-generation long-term evolution (4G LTE) network."
Number of US Wireless Connections: Larger than the Population
There were 386 million estimated connections in the US at the end of 2015 according to the FCC's 19th Mobile Wireless Competition report. The US Census claims that in 2015 America had a population of 321,418,820.
Pricing of Broadband Data Wireless Services--Expensive.
This stuff is very expensive. Here is the basic current pricing per gig for Verizon.
This is AT&T's Pricing, as of October 2016.
Slow you down
Notice that AT&T (and Verizon) will essentially push you onto a speed of 128 Kbps if you go over your allotted amount. Though, Verizon is more than happy to let you buy more data. And Verizon will even remind you when you are getting 'low' on data.
And when I say expensive... Below is the Netflix discussion of their service and data caps. According to Netflix, their service uses 1 GB per hour - so just two movies at 1.5-2 hours would eat up the $50.00 plan. You can use slower speeds, but it may not be pretty.
Netflix on Data Consumption: Usage
"Watching movies or TV shows on Netflix uses about 1 GB of data per hour for each stream of standard definition video, and up to 3 GB per hour for each stream of HD video. This can create headaches for Netflix members who have a monthly bandwidth or data cap on their Internet service. Below, you'll find a few ways to reduce the amount of data Netflix uses, without having to resort to drastic measures (like actually watching less Netflix)."
"Adjust your data usage settings
Adjusting the data usage settings for your account is the easiest way to reduce the amount of bandwidth used while watching Netflix. There are four data usage settings to choose from. Each estimate below is per stream:
- Low (0.3 GB per hour)
- Medium (SD: 0.7 GB per hour)
- High (Best video quality, up to 3 GB per hour for HD and 7 GB per hour for Ultra HD)
- Auto (Adjusts automatically to deliver the highest possible quality, based on your current Internet connection speed)
What the...? And one has to ask:
- Why are they selling the data plans as a package with X amount of "Gigs" vs you pay for what you use - and the more you use the cheaper the cost?
- Because they make more money via people purchasing more than they will use--or there is the unused 'leftover' every month from the package.
First and foremost, overages for wireless services have been increasing, especially as the size of streaming and files keeps increasing, and this is not just a local Cleveland problem.
CNN reported in January 2016, that overages on bills was a serious problem, with 28% of AT&T customers claiming that they paid extra and 20% of Verizon Wireless customers paid extra.
"Overage charges, already at record highs, are up yet again, according to a survey conducted by Cowen & Co.
"Nearly one in five cell phone customers reported paying overages during the past six months. But AT&T continued to lead all of its rivals -- 28% of AT&T customers told Cowen & Co. that they were charged for overages, compared to 20% of Verizon customers, 12% of T-Mobile customers and 5% of Sprint customers.
"That's up across the board from Cowen's survey in October -- which then showed overages were at record levels."
Recently, NerdWallet combined some info and believes that wireless overages comes to an additional $600 million in charges. Pew Research found that 37% of smartphone owners maxed out their monthly data allotment.
"Even with the best cell phone plan, many of us exceed our data limit. A 2015 Pew Research Center survey found that 37% of smartphone owners use their maximum amount of monthly data at least occasionally, while 15% do so frequently. Those who did go over during one month or more in a year collectively paid their carriers at least an additional $600 million, according to an analysis by NerdWallet and smartphone app My Data Manager, which helps users keep track of their data consumption.
We think the $600 million is a low number and it is getting worse and will continue to get worse. a) There is no oversight by any government agency on this. b) You can't take wireless companies to court because their 'arbitration' clauses pre-empt class actions suits. c) There are thousands of new application "apps", some of which are data hungry, and d) different phones and models complicate all of this. Moreover, e) the size of the files and streams continue to expand.
Multiple Ways and Flows of Customer Billed Data Services.
We started our own investigation, with experts, because some of the details that the Cleveland Plain Dealer found were not easily explained. On October 06, 2016, the paper uncovered that customers are being charged when they are asleep and not using their phones.
"As the rage over Verizon Wireless' recent unexplained spike in overages and fees continues, one little-known issue really makes customers see red: The company charges for data used in the middle of the night often when customers are asleep and not using their phones. Could this be a sign of a deeper, more-troubling billing issue?"
But besides these mysteries, this is like a whack-a-mole on steroids.
- When you go to a web site and it is playing a video, you are charged for that video, even if it is part of an advertisement, even if you didn't click on it.
- Or, have you turned off or removed all of the apps that are running that you may not want or need?
How it Works
Your phone is really a computer with lots of different things it can do, many of which used to be part of different devices. It can play music, or videos and even replace a separate camera, send a text message, and oh, yeah, it lets you make voice phone calls.
And you may have literally hundreds of apps on your phone now--one that can tell you which way to walk or another is a radio station that is somewhere on the globe, or maybe you have a tablet and want to read a book.
And these computers are connected to networks like a spider dancing on a web. When you are walking, your communications session is going with you but unknown to you it hops from one wireless antenna to another in the cell network.
And every application is screaming - or at least checking to look for updates, cool things to entice you to click on it. Or maybe you want to send the cat video to YouTube and post it to Facebook, then tweet about it. And everyone one of these applications want a 'secure', stable connection, but also the applications may load and play videos, send you pictures.
And they all are racking up data-charges time.
Moreover, the phone itself and the carrier may be sending, updating, and other tasks, which also may be different based on which phone you own (as well as the model and year), or which carrier you have selected.
And always remember that the phone company wants to optimize profits - i.e. squeeze you for more money by having you use the networks more and pay more.
One of the Largest Issues: WiFi Connection vs Cell Connection
Cell data services are expensive, but there are ways to use the service without having the data charges rack up. WiFi doesn't have the same wireless fees as opposed to using the wireless carrier cell networks--which charges you per gig.
- How many customers know there are settings on the phone to control this? Who knows?
- Where are the public announcements from the carriers (he laughed) the manufacturers or even the applications that WiFi should be used?
Our informal survey found most people had no idea there were settings and that there were no charges for using WiFi, or where you could even get access to it. (NOTE: There is equipment to add WiFi to your home broadband connection, for example, and there are hot spots all over most cities to use WiFi.)
On current cell phones like Apple or Android there are 'settings' to control whether you are using the paid cell data or the WiFi --- free data. But, this is compounded quickly by the fact that each phone company and sometimes even the different models, have different settings, names for these things, and even how the phone has been configured.
Macworld discussed overages based on Apple's 'WiFi Assist", in January, 2016. Apple set up WiFi Assist so that it would always use the paid cell network because it gives a "more consistent experience".
"This feature added in iOS 9 is intended to make your Internet experience more consistent. When you're on a Wi-Fi network that has erratic service, such as Internet connection dropouts, Wi-Fi Assist uses the cellular network as a secondary data source.
"Apple notes on its site that Wi-Fi Assist has a lot of options to prevent excessive data use. It only engages for foreground apps, not background tasks; it doesn't kick in for third-party audio and video streaming apps; and email attachments aren't automatically downloaded."
And Apple lists various options it used to help with overages. But, from the point of view of the uneducated user--who knew that the services had "foreground apps", "background apps", "third party audio and video streaming apps", etc.
According to Cleveland Plain Dealer, the Android phone has a different name for its WiFi connection, and it has the phone look for the 'WiFi' connection first (by default).
"On an Android, the button is called "Avoid Bad Wi-Fi" or "Smart Network Switch" or something similar, depending on the phone. Go to Settings, then Wi-Fi, then Menu, then Advanced. You should see some sort of Wi-Fi connection option that you can turn off. Androids tend to come with this setting turned off by default."
However, WiFi use and settings are tied to signal strength, i.e.; does your connection to the network have enough 'bars' to function? In a WiFi location, the distance from the antenna, or even the number of people on the connection and what phones they are using and what applications they are running could shake your connection back to the cell paid networks by diminishing your 'signal strength'.
But Stop: This is not about how the tech works, or even how to find the settings in a convoluted collection of settings and sets.
What we found is that almost no one has a clue about these intricacies, and there are many of them. For example,
- How many reading this have gone through the apps that are on your phone, eliminating the ones you don't want, which may actually be doing updates regularly - all being charged to your account?
- Or how many have examined the details of how many of the apps are generating hefty amounts of usage because of the continuous uploads?
- Have you ever looked for the WiFi setting or your cell phone usage?
And unfortunately, our previous research on consumer behavior and customers' knowledge of the charges they are paying shows customers will just pay their bill and never look at any of the details. We're finding the same thing with informal interviews of wireless customers.
But the problems that are being uncovered by the Cleveland Plain Dealer's investigative reporting appear to have very deep implications into the billing for all wireless services, as well as the phones in use.
"The Plain Dealer's research points to several potential issues driving the data usage phenomenon, which may have spiraled as the months passed:
- A new data-eating setting, Wi-Fi Assist, on iPhones beginning September 2015.
- New settings on apps for both Androids and iPhones this year that caused many to use more data.
- A billing system at Verizon that glitched, multiplying the existing data consumption problems for some.
- Verizon's new LTE-Advanced, which launched in August and can cause consumers to use more data,
We're expecting new investigations into the plethora of problems, some of which we discussed. At the core of this is a lack of customer education while the companies look the other way and minimize the size of the problem as they benefit from the customers' ignorance.
Part II: Is the price of wireless service and the issue of these overages reflected in the profits of the dominant incumbent provider's special access wires, now renamed "Business Data Services" by the FCC, that are being used for backhaul of the wireless data services?