Wireless

If you are considering buying a new BlackBerry, Android phone, or Netbook from Verizon Wireless, you better make sure you won't want to break your contract early, as the penalty for ditching your service before the end of the contract has just gotten a lot steeper.

But what does Verizon's move to increase early-termination fees mean for the rest of the wireless industry? That's a good question.

Verizon Wireless recently doubled its early-termination fee for what it calls 'advanced devices.'

(Credit: Verizon Wireless )

Early-termination fees are not new to the wireless industry. For as long as wireless operators have been selling and subsidizing cell phones, they've required customers to sign contracts. And they've penalized them for canceling their contracts early.

The phone companies say they must charge a fee to recover the cost if a customer quits his or her service early. These fees have angered many customers. Several class action lawsuits have been filed against cell phone carriers and some customers have won. Congress and the Federal Communications Commission have challenged the industry on this practice.

While it's very unlikely these fees will ever go away, as of mid-2008, all four of the major wireless carriers in the U.S. have been prorating their early-termination fees, so that customers near their end of their contracts don't pay the same fee as those just starting their contracts.

But now Verizon Wireless has shocked consumers and the industry by doubling its early-termination fee. Verizon representatives say it only makes sense that Verizon would raise this fee since it is subsidizing far more of the cost of sophisticated devices, such as smartphones.

In an effort to help consumers better understand these changes and to understand how other national wireless operators stack up, CNET has put together this FAQ.

How much is Verizon's new early-termination fee?
The new fee has been increased to $350 from $175.

Does this fee apply to all Verizon phones?
No, it only applies to contracts associated with the purchase of what Verizon calls an advanced device, such as a smartphone or Netbook at a reduced price. This change only applies to new contracts that started on or after November 15. For customers who signed a contract before November 15, the old $175 early-termination fee applies when they choose to end their contract early. This means that new Droid customers who bought their phones the first weekend it launched will not be required to pay the $350 ETF if they terminate service early.

Verizon and the three other major phone companies have been prorating their early-termination fees. Will this fee be prorated?
Yes, Verizon will continue to prorate the early-termination fee over the life of the contract. The rate will decrease by $10 each month of the contract. Verizon's previous prorate rate was $5 per month.

What about for non-smartphones or feature phones that run on Verizon's network? What is the early-termination fee for those devices?
The fee for non-smartphones will remain the same, $175. And the rate will decline by $5 a month during the contract.

Why is Verizon changing its policy now? It seems like it is just being stingy.
The company says that the $175 early-termination fee was set long before people were walking around with expensive, sophisticated, mini-computers in their pockets. The new early-termination fee more fairly reflects higher costs associated with advanced devices due to their more complex chip sets, microprocessors, and licensed software that perform more functions than other phones, the company claims.

Is there any way to avoid an early-termination fee or contract?
Yes. First, early-termination fees only apply if you cancel your service before the contract ends. But you also don't need to sign a contract if you'd rather not. But without a contract, customers will pay full retail price for the devices.

Verizon says it offers the option to purchase all its phones with either a two-year contract, one-year contract, or month to month, which requires people to pay full retail price for the phone. For example, the new BlackBerry Storm 2 is $179 with a two-year contract. But the phone would cost $539 without a contract. The new Motorola Droid is $199 after a rebate with a two-year contract. And it is $559 without a contract at the full retail price.

Verizon also offers prepaid wireless phones and service, which allow customers to buy their phones and add minutes of use in advance.

What about other national wireless operators? Have any of them announced they are following Verizon's lead?
So far neither AT&T, nor Sprint Nextel, nor T-Mobile USA have said they plan to raise the early-termination fees on their smartphone devices. An AT&T spokesman said he couldn't speculate on what the company might do in the future, but for now, the company is sticking with its current fee.

T-Mobile USA's spokesman didn't elaborate, but simply said the company has no plans to raise its rate right now.

Sprint Nextel also said it wouldn't raise its early-termination fees, and it criticized Verizon for doing it.

"We have no intention of matching Verizon's new ETF," said Sprint spokesman John Taylor. "We think the decision to double the early-termination fee just on smartphones doesn't make much sense. Why is Verizon trying to disincentive people from buying smartphones? We want people buying smartphones and using more data."

How much do these other national wireless operators charge for their early-termination fees?
Sprint 's early-termination fee is $200. The company reduces that fee beginning in the fifth month of the contract. Then the fee goes down $10 a month until it reaches $50.

AT&T's early-termination fee is $175 and it decreases by $5 for each month of your contract.

T-Mobile USA's early-termination fee schedule is a little more complicated. As of June 28, customers with a one-year or two-year contract with T-Mobile will see their early-termination fee drop from $200 to $100 if they end their contract with 91 to 180 days remaining on their agreement. If they end a contract with fewer than 91 days left on it, they will pay a termination of fee of $50. For customers who terminate their service in the last 30 days of their contract they will either pay the $50 fee or their standard monthly charge, depending on which one is cheaper.

Do these other carriers offer no-contract options?
Sprint allows some of its phones to be purchased for full retail price without a contract. However, the Palm Pre, which went on sale in June, requires a two-year data plan.

Sprint's prepaid brands Boost Mobile and Virgin Mobile USA also offer customers prepaid options that don't require a contract. And phones are purchased at full retail prices.

AT&T allows some phones to be purchased at full price without a contract, but phones such as the Apple iPhone must be purchased with a two-year contract and a $30 a month data plan. AT&T also offers prepaid phones.

T-Mobile USA also offers customers who don't want a contract different options, including T-Mobile Prepaid phones and plans, FlexPay, and month-to-month services including its new Even More plans.

Its Even More Plus plan allows customers to purchase any phone in T-Mobile's device lineup and sign up for a month-to-month rate plan without signing a contract. Customers pay full retail price for the phones, but have the option to purchase their phones using an Equipment Installment Plan over time until the phone is paid off.

For example, a customer purchasing the Google Android myTouch smartphone would pay $150 for the phone with a two-year contract. But with the Even More Plus plan, the customer would pay $400 for the phone with no contract. If the customer wanted to use the Equipment Installment Plan, he or she would pay $20 a month for the phone over 20 months.

When you've lost the first round in your case against Verizon's persistent and persuasive mockery, who do you turn to?

Luke Wilson, that's who. After all, he starred in "Legally Blonde" and, well, "Jackass Number Two."

Actually, Wilson is lovable. Truly lovable. Perhaps if he'd dressed down a little and Justin Long had suffered an interminable hiatus hernia, Wilson might have got the part of Mac, the Microsoft Mocker.

Instead, he has the slightly more difficult task of persuading the folks who adored him in "Old School" that AT&T's 3G will serve them well on the 3.10 to Yuma.

The creators didn't give him much of a script, as I suspect they wrote it a couple of lattes and a shot of bourbon before this opus was filmed in what looks like the empty space above Victoria's Secret in Santa Monica, Calif.

Luke is forced to stand before a board and prove that AT&T has the fastest 3G network, lets you talk and surf at the same time, and offers you more apps that feature people making strange noises, half-clothed women, and animals that smile when you touch the screen. (Disclosure: slight exaggeration)

Sadly, it all looks a little analog. Luke looks as if he'd prefer to be surfing, as he really doesn't have the tools to make you believe what he's being paid to say.

His hair looks as if it's been hurriedly greased with Czech lard and his face offers a certain hemorrhoidal mien as it offers a little jape at the end of the spot. Yes, a jape about Verizon beginning with "V" and AT&T not beginning with "V." That rumbling you can hear is the collective guffaw from Verizon Central.

Verizon is hurting AT&T with its clinical, delighted unpleasantness. And I fear that before "Legally Blonde 2: AT&T's Revenge" can possibly be effective, the iPhone carrier needs to dramatize its argument rather better than the gospel according to Luke.

AT&T has lost the first battle in a legal war against Verizon Wireless to force the company to stop showing advertisements that compare its 3G wireless network coverage with Verizon's coverage.

A federal judge in Atlanta on Wednesday declined to grant AT&T a temporary restraining order that would force Verizon to stop showing the ads.

(Credit: Verizon Wireless)

AT&T filed a lawsuit in federal district court in Atlanta earlier this month asserting that Verizon Wireless' advertisements mislead customers by suggesting that AT&T subscribers cannot access wireless Internet services throughout its network. AT&T has called the ads blatantly false and has said that the commercials have caused irreparable harm to the company.

AT&T had asked the court to keep Verizon from running the advertisements until the matter is settled in court. But the judge on Wednesday declined this request.

The advertisements that Verizon is running show two maps that each indicate 3G wireless coverage. One map shows coverage for Verizon and the other depicts AT&T's coverage.

AT&T doesn't argue that the maps are incorrect in terms of showing its 3G coverage. But it says that Verizon is misleading customers by implying that they cannot use their phones or access the mobile Web when they aren't in 3G coverage areas. The reality is that customers can make phone calls and access the Internet from their phones using the company's slower EDGE or GPR networks.

Verizon argues its advertisements are simply pointing out the fact that AT&T has not invested enough in upgrading its network to handle increased traffic from smartphone devices, such as the Apple iPhone.

Verizon has modified its ads slightly to indicate that the map applies only to 3G coverage and not regular 2.5G service, which is adequate for making voice calls and connecting to the wireless Internet at slower speeds.

Verizon said in its 53-page rebuttal to the court earlier this week that AT&T is not suing Verizon because the claims are false, but because it doesn't want to face the truth about its network.

AT&T said it plans to press on with its case despite the fact that it lost the latest legal battle.

"While we are disappointed with the court's decision on our request for a temporary restraining order, we still feel strongly that Verizon's ads mislead consumers into thinking that AT&T doesn't offer wireless service in large portions of the country, which is clearly not the case," Mark Siegel, a spokesman for AT&T, said in an e-mail. "We look forward to presenting our case to the court in the near future."

More mobile carriers are offering Netbooks as a way to lure new customers--a trend that's likely to surge and encompass notebooks as well.

Hewlett-Packard Mini 1151NR via Verizon Wireless.

Credit: Verizon Wireless

By 2013, more than 60 percent of all mobile devices, including Netbooks and notebooks, are expected to be sold directly by wireless carriers, according to research released Wednesday by In-Stat. Almost 31 percent of notebooks alone will be sold through carriers, In-Stat predicts.

Bundling an inexpensive Netbook or notebook is a small price to pay for a carrier, which can then charge customers for a monthly data plan.

"In the U.S., carriers are charging up to $60 per month for a two-year contract with the subsidized purchase of a Netbook," In-Stat analyst Jim McGregor said in a statement. "While the subsidy costs the carrier $50 to $100, it generates $1,440 or more in service fees over the life of the contract."

Carriers such as Verizon Wireless, AT&T, and Sprint have already been dangling Netbooks as carrots to attract more mobile customers. Verizon is selling Netbooks from Hewlett-Packard and Gateway. AT&T is selling Dell, Acer, and Lenovo Netbooks, as well as a Nokia Booklet 3G. Sprint is also selling a Dell Netbook.

Thanks to the success of low-cost Netbooks, U.S. carriers are further testing the waters by bundling full-size notebooks along with a two-year contract. The strategy isn't just limited to the United States, noted In-Stat. Carriers in Europe and Asia are giving out Netbooks with a data plan, but often at lower prices than in the U.S. Asian carriers have also been offering the kissing cousins of Netbooks: mobile Internet devices and ultramobile PCs.

This trend will intensify as carriers boost the number of services offered and cut prices on those services due to higher competition and better bandwidth, In-Stat said. The mobile market itself is also expected to become more attractive, with richer content and increased bandwidth.

Verizon Wireless said AT&T is suing the wireless operator not because its recent ads are untrue, but because the truth hurts.

AT&T earlier this month filed a lawsuit claiming that Verizon is misleading customers by suggesting that AT&T subscribers cannot access wireless Internet services throughout its network. In the opening paragraph of its legal rebuttal to the suit, Verizon very plainly surmised its argument: "AT&T did not file this lawsuit because Verizon's 'There's A Map For That' advertisements are untrue; AT&T sued because Verizon's ads are true and the truth hurts."

The rebuttal filed on Monday in a Georgia district court was in response to two complaints AT&T filed with the court asking that the Verizon advertisements be pulled from the airwaves. AT&T has called the claims in the advertisement "false" and "misleading." And the company claims it has caused "irreparable harm" to AT&T's wireless business.

Verizon representatives have responded to the press on these claims. But now the company has filed its official response to the court in a 53-page document that lays out the company's defense.

Verizon argues its advertisements are simply pointing out the fact that AT&T has not invested enough in upgrading its network to handle the tidal wave of data traffic experienced by the release of the Apple iPhone, which AT&T sells exclusively in the U.S. Verizon says that it is simply highlighting what many AT&T iPhone customers have already recognized.

"In the final analysis," Verizon said in its filing. "AT&T seeks emergency relief because Verizon's side-by-side, apples-to-apples comparison of its own 3G coverage with AT&T's confirms what the marketplace has been saying for months: AT&T failed to invest adequately in the necessary infrastructure to expand its 3G coverage to support its growth in smartphone business, and the usefulness of its service to smartphone users has suffered accordingly. AT&T may not like the message that the ads send, but this Court should reject its efforts to silence the messenger."

Verizon's initial advertisement, which began airing on TV November 3, shows two maps with red and white splotches indicating 3G wireless coverage. The white area indicates no 3G coverage, and the red indicates areas where 3G service is available. In the ad, Verizon shows an AT&T map that has lots of white spaces, whereas the Verizon map is almost covered in red.

AT&T claims the ad is misleading because it implies that AT&T customers can't use their phones and cannot access the mobile Internet in areas where the carrier does not offer 3G wireless coverage. The truth is that AT&T customers can use their phones and they are able to access the wireless Net using the company's slower EDGE network.

Verizon has modified its ad slightly to indicate that the map applies only to 3G coverage and not regular 2.5G service, which is adequate for making voice calls and connecting to the wireless Internet at slower speeds.

In its filing, Verizon argues that its ads refer explicitly and solely to AT&T's 3G network coverage. And therefore the advertisements should be evaluated on that basis. Verizon claims that it is a fact that its 3G wireless network covers five times more geographic area than AT&T's 3G network. And because this is an undisputable fact, the company should be able to use this in its advertisements.

Verizon pointed to AT&T's own advertisement claims that it operates the nation's fastest 3G wireless network.

"Despite the far smaller size of its 3G network, AT&T has spent tens of millions of dollars making its 3G network, which it dubs the "Nation's Fastest 3G Network," the centerpiece of its national advertising since at least the summer of 2008," Verizon argued. "AT&T now is attempting to silence Verizon's ads that include maps graphically depicting the geographic reach of AT&T's 3G network as compared to Verizon's own 3G network because AT&T does not like the truthful picture painted by that comparison."

But AT&T still asserts that the advertisements Verizon is running are misleading.

"We filed the lawsuit because Verizon's ads mislead customers into thinking that AT&T does not offer wireless service in the vast majority of the country," said Mark Siegel, a spokesman for AT&T. "We look forward to presenting our case."

Acer Aspire One

(Credit: AT&T)

AT&T is hoping for happy holidays with the launch of two new Netbooks offering Windows 7 and mobile broadband.

The company announced Monday its new Netbook lineup--the Samsung Go and Acer Aspire One--both with built-in access to its 3G network. Available later this month in stores and online, both portables will cost gift buyers $199 after a mail-in rebate and two-year data plan contract.

The required DataConnect plan will offer 200MB of data for a new lower price of $35 per month, or 5GB for $60 per month, said AT&T. The plan will let consumers hop online via AT&T's 3G mobile network or any of the company's 20,000 Wi-Fi hot spots across the U.S.

"Demand for Netbooks remains strong among consumers, small business customers, and those who desire constant access to the Internet while on the go," said David Haight, vice president of product development for AT&T emerging devices, in a statement. "Paired with the nation's fastest 3G network, AT&T Wi-Fi service, and now the value and ease of use of Windows 7, these devices will make very attractive and affordable gifts this holiday season."

Samsung Go

(Credit: CNET)

Weighing less than three pounds, the Samsung Go is equipped with a 10-inch screen, 160GB hard drive, 1 GB of RAM, and a 1.3 megapixel Webcam. A bit skinnier at 2.2 pounds, the Acer Aspire One also includes a 10-inch screen, 160GB hard drive, 1GB of RAM, and built-in Webcam.

Both Netbooks also come with AT&T's Communication Manager software, which tries to help Internet users better manage their connections by automatically tapping into AT&T hot spots.

The Samsung and Acer machines have one potential limitation, however. Like most Netbooks, they come with Windows 7 Starter Edition, a stripped down version of Windows 7 that lacks certain key features of its beefier brethren.

AT&T has unveiled its latest cloud-based offering, which lets businesses grab more computing capacity when they need it.

The company announced on Monday its Synaptic Compute as a Service, designed to let IT staffers store and maintain internal applications and data via AT&T's cloud. Capacity and availability can be ramped up when needed, especially if a company's own data center resources become taxed, AT&T said.

The service is designed is to help businesses save money by not having to maintain full network capacity year-round if demand only shoots up during certain times of the year. AT&T said that businesses can seamlessly access the software and content they need, whether stored internally or out on AT&T's network cloud.

Synaptic Compute "provides a much-needed choice for IT executives who worry about over-building or under-investing in the capacity needed to handle their users' traffic demands," Roman Pacewicz, senior vice president of strategy and application services for AT&T Business Solutions, said in a statement.

AT&T plans to introduce the service before year's end. Initially, it will be available only in the U.S.

Though cloud computing has grown in popularity among enterprise customers, concerns exist about both security and reliability. AT&T said that it has built security on top of its cloud layer, so that it is fully integrated. The company also expressed confidence in its track record of reliability, both in its own data centers and in its hosting and network businesses.

Since last year, AT&T has focused more on the industry push toward cloud computing for its customers. In May, the company announced its first Synaptic Services feature--Synaptic Storage as a Service--which lets customers access data on AT&T's cloud as needed, paying only for the storage they use.

AT&T wants to set the record straight about its 3G wireless coverage.

The company has placed a statement on its Web site defending itself against critical advertisements Verizon Wireless has been running that highlight areas of the country where AT&T lacks 3G coverage.

"We typically don't respond to competitors' advertising," AT&T said in its statement. "However, some recent ads from Verizon are so blatantly false and misleading that we want to set the record straight about AT&T's wireless-data coverage."

Verizon's initial advertisement, which began airing on TV a couple of weeks ago, mocks Apple's "there's an app for that" slogan. Instead, Verizon's advertisement says "there's a map for that."

The ad campaign shows two maps with red-and-white splotches. The white area indicates no 3G coverage, and the red indicates areas where 3G service is available. In the ad, Verizon shows an AT&T map that has lots of white spaces, whereas the Verizon map is almost covered in red.

AT&T has filed a lawsuit claiming that the ad is misleading because it implies that AT&T customers can't use their phones in areas where the carrier does not offer 3G wireless coverage.

Verizon has modified its ad slightly to indicate that the map applies only to 3G coverage and not regular 2.5G service, which is adequate for making voice calls and connecting to the wireless Internet at slower speeds.

But AT&T is still not happy with the adjustment, and the company wants Verizon to stop running the ads or to alter them further.

What's more, AT&T has added a complaint about a newer Verizon commercial, which characterizes the iPhone as a new arrival to the Isles of Misfit Toys, to the lawsuit. The Isles of Misfit Toys refers to an island where broken toys and misfits would go in the popular Rudolph the Red Nosed Reindeer Christmas special.

In the ad, a toy elephant asks the iPhone what it's doing with the misfits, since it has so many cool apps. The iPhone doesn't really answer, instead flashing the AT&T map, which indicates the spotty 3G coverage. All the toys seem to understand.

AT&T hasn't launched ads of its own to combat the Verizon commercials. But the company's statement on its Web site is its attempt to refute many of Verizon's claims. For example, AT&T points out that its data coverage reaches 303 million people, or 97 percent of the U.S. population, using a mix of wireless technologies. Of course, AT&T admits that not all of these customers are able to access the faster 3G network; only 75 percent of the U.S. population can get access to AT&T's 3G wireless network.

AT&T also emphasizes in its statement that it has twice as many smartphone customers as Verizon. And it says it offers the most popular smarpthone in the industry, the Apple iPhone. AT&T says it offers more mobile applications than its competitors. And finally, it points out that it has the fastest 3G wireless network in the nation, a claim some customers who use the service may question.

There's no question that Verizon's ads are hard-hitting. But it's difficult to say whether they have affected consumers' purchase decisions. Anecdotally, it looks like the ads might have helped Verizon win a few customers. One Motorola Droid customer I interviewed at a Verizon store in New York this week said he decided not to buy the iPhone because of the Verizon ads he saw on TV.

"I was considering the iPhone," said Henry Goodison, of the Bronx borough. "But I saw a commercial about AT&T's 3G coverage. It said, 'Here is AT&T's 3G coverage, and here is ours.' And I thought it would be better to have Verizon, if I travel to another state, where AT&T doesn't have 3G coverage."

In the battle between LTE and WiMax for wireless broadband, LTE may have just gotten another boost.

A group of leading telecom service and equipment providers, including AT&T, Verizon, Nokia, and Samsung, announced a new standard Thursday for delivering compatible voice and messaging services using Long Term Evolution (LTE) networks.

The standard, dubbed the One Voice initiative, offers a set of technical functionalities that telecommunication companies can use in their LTE services and products to provide both voice and Short Message Services (SMS).

The group of companies setting up One Voice (which also includes LTE proponents Orange, Telefonica, TeliaSonera, Vodafone, Alcatel-Lucent, Ericsson, Nokia Siemens Networks, and Sony Ericsson), see the standard as a way to provide interoperability for broadband voice and SMS services. The goal is to give telecom providers and manufacturers a convenient technical profile for working with each other and save customers from wrestling with different and conflicting LTE technologies.

LTE has been fine at supporting data, which uses IP-based packet switching. But it's faced challenges trying to incorporate traditional circuit-based switching voice and SMS services onto IP-based networks. One Voice is the group's attempt to resolve that issue.

The new specification will use existing functionality known as IP Multimedia Subsystem (IMS), which already defines how to provide data, voice, and other content over an IP-based network. IMS was established by the 3rd Generation Partnership Project (3GPP), a group comprised of telecom industry associations trying to set standards for 3G mobile networks.

"Open collaborative discussions have concluded that the IP Multimedia Subsystem-based solution as defined by 3GPP, is the most applicable approach to meeting the consumers' expectations," said One Group in a statement.

In recent years, LTE has been duking it out with WiMax to be crowned the upcoming broadband wireless standard. In one corner has been telecom giants like AT&T and Verizon, both of which have announced plans to deploy 4G wireless networks using LTE.

In the other corner has been Sprint, which is eyeing a rollout of its own 4G network using WiMax. Sprint owns a majority stake in WiMax provider Clearwire, a wholesale distributor of 4G services. Clearwire recently unveiled a huge WiMax testing sandbox in Silicon Valley where developers could play with the technology.

However, Clearwire has been waffling on the choice between LTE and WiMax. In a recent interview with Dow Jones Newswires, Clearwire CEO Bill Morrow said he would be willing to switch to LTE if helped the company.