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December 30, 2011

It appears that Verizon Wireless isn't making enough money from its mobile subscribers, and is now trying to find new ways to ask for more cash from its customers. Unbelievable you say? Read on.

For the past two years now, Verizon Wireless has been adding an average of about 2 to 2.2 million net new subscribers almost every quarter.

But now the wireless carrier will soon make some customers pay for the "privilege" of paying their bills.

The U.S.' largest wireless services provider is instituting a $2 "convenience charge" for those customers who make one-time bill payments using a debit or credit card, either online or by telephone. Like it or not, the new extra fee will go into effect on January 15, 2012.

There are now three ways for customers to avoid the charge: Customers can make a one-time payment using an electronic check, they can pay their bill using their home banking accounts, or they can use a Verizon gift card or rebate card.

Otherwise, single telephone and even online payments will incur a $2 extra fee. "The charge will help allow us to continue to support these single bill payment options and is designed to address costs incurred by us for only those customers who choose to make single bill payments," the company said in a statement.

Verizon customers can still enroll in a service that will debit their bank accounts or charge their credit cards on a recurring basis for free. They can also show up at a Verizon store to pay without incurring the fee, and they can mail checks to the company.

But it's still not clear how many of Verizon's 91 million mobile customers will be affected by the new charge. As of this morning, a company spokesman from Verizon didn't reply to a request for comment we've sent them yesterday.

The news came one day after Verizon Wireless' 4G network suffered its third service outage across all of the United States in as many weeks.

Elsewhere in the wireless industry, a Sprint spokesman said the company doesn't have similar fees, though according to Sprint's website, certain mobile customers who have accounts with spending limits are subject to a $5 monthly fee if they're not enrolled in automatic payments.

Over at T-Mobile USA, the mobile operator charges its customers $5 if they make payments over the phone with a company representative, a spokeswoman said. AT&T Mobility didn't return our requests for comment as of this morning.

Verizon's so-called convenience charge was announced at the end of a year in which banks were heavily criticized for charging customers a fee for using their debit cards. The banks claimed that the fees were necessary because new regulations would limit how much revenue stream they could make on the cards. However, new rules went into effect in September that capped the fees banks could charge retailers when customers swipe their debit cards.

Verizon's new $2 added fee is also akin to TicketMaster, which famously bills a "convenience charge" and "processing fee" on top of the price of every ticket.

It will be interesting to see if and how the other mobile operators in the U.S. and elsewhere will react to this soon, if they do. The wireless industry is rapidly getting more and more competitive everyday, so Verizon's decision surprised more than one industry analyst yesterday.

In other mobile industry news

On a daily basis for the past year, wireless carriers have been scrambling to increase their network capacity in order to provide faster mobile services for their subscribers. However, that's easier said than done, and this represents a major challenge for them, since wireless spectrum is controlled by the Federal Communications Commission, and is becoming extremely rare.

But now, the FCC is making an effort at using the small existing spectrum segment between some TV channels. Sounds like easy to do, but it really isn't.

The FCC said a few days ago that it opened up the light spectrum that sits between individual television channels numbered 1 through 51. Wireless communications in that so-called white segment will be permitted as of January 26, 2012 in a testbed location and will be opened up across the U.S. in the following months.

Broadcasting in that white segment means that a company like AT&T Mobility could deliver mobile services say between channels 5 and 6, for instance, and Verizon Wireless between channels 6 and 7, and so on and so forth for the other companies.

The problem is that this gives them just a little extra capacity boost to give their customers faster service, but it still won't be enough for the current explosion in smartphones and tablets which should continue well into 2015.

The FCC announcement comes as mobile service providers are facing a spectrum crunch crisis that has already begun to reshape the wireless industry in more ways than one.

As tablet and smartphones sales have soared over the past several years, consumers' demand for data and voice services has grown exponentially. All that data is taking up a growing amount of wireless spectrum, and carriers are now simply running out of airwaves to place all that data into.

The FCC has repeatedly said that a current spectrum surplus of 225 MHz will become a deficit of 275 MHz (or more) by 2014.

That's why the agency is committing to freeing up 500 Megahertz of additional wireless spectrum over the next ten years. But there's the catch-- that process also includes voluntary auctions by a patchwork of television stations across the U.S. that currently hold but aren't using their spectrum.

And the problem is that most of them aren't willing to let it go, not for free that is. And some wireless industry observers are expecting that the spectrum is now a very valuable commodity, and that prices could soar very fast.

Still, the FCC is trying to get enough of it to just get by, at least for now. And those so-called television white spaces are a part of that effort.

"Unused wireless spectrum between television stations represents a valuable opportunity for provision of broadband data services in our changing wireless landscape," said FCC Chairman Julius Genachowski in a statement.

But it's far from being a perfect solution. The white space spectrum will actually be unlicensed, which means that wireless carriers can't use it exclusively. But like Wi-Fi, which also operates in unlicensed spectrum bands, wireless providers will eventually be able to provide their customers access to a white spaces network hotspot in order to offload some traffic from their own networks.

For now, the idea is just a concept and still needs to be tested. Some in the wireless industry aren't still sure that this will work however, since there could be some technical issues and other considerations that could complicate things.

Additionally, new mobile phones and tablets will need newer chipsets, and the FCC will only open up white spaces for the time being in Wilmington, N.C., as it tries to repair a bug that could result in some interference with wireless microphones, which also use white space to send signals to speakers.

And while all of this is happening, wireless carriers aren't just sitting on their hands either. They've attempted to limit customers' use of their mobile networks by introducing tiered rates, which charge more by the gigabyte. That has effectively made mobile phone bills go up for many heavy users.

The good news for consumers is that the FCC is aware of the issues and is trying to work out a solution to free up more bandwidth for mobile communications.

"There are big scarcity issues with wireless spectrum," said Rod Dir, CEO of Spectrum Bridge, the company approved by the FCC to manage the registry of devices that operate in white spaces. "This provides additional bandwidth in the market, not just for cellular carriers, but also for other wireless providers."

In other mobile news

After the news of Carrier IQ's numerous security and privacy issues that were recently discovered, it's now getting clearer than ever that most mobile phone users don't have a clue of what's going on inside their smartphones. Some anti-virus firms have already begun releasing Carrier IQ's detection apps for the Android operating system, but only after the controversial software became a talking point on Capitol Hill.

Additionally, more than a month after a security researcher first discovered it while working on a HTC EVO smartphone, it now looks like this issue won't go away anytime soon.

For its part, BitDefender has released Carrier IQ Finder, an app that identifies the presence of the controversial mobile diagnostic tool, following Lookout's earlier release of a similar tool called Carrier IQ Detector.

And it gets worse. Users don't have any control over the situation and are totally at the mercy of Carrier IQ.

Carrier IQ's sudden jump into the national spotlight ignited widespread confusion and anger. On Dec. 2nd, the U.S. Senate and former late-night funnyman Al Franken has called on Carrier IQ to explain why its diagnostic software, buried in the bowels of 141 million smartphones, isn't a massive violation of U.S. wiretap laws.

An Android mobile application developer has wrote about what he thinks could be a conclusive proof that millions of smartphones all over the globe are secretly monitoring key presses, geographic locations, and received messages of its users. If true, this is a serious security risk, and one that needs to be rapidly addressed and corrected by all phone makers.

The whole thing started on November 30 after Android developer Trevor Eckhart released a 17-minute YouTube video indicating that the little-known application was sending everything you do on your phone back to your carrier, including what websites you visited, what your texts say and what keys you press at any time.

Making matters worse, Carrier IQ and the various wireless operators that are involved actually increased the anxiety level by staying very quiet about the whole issue. They refuted the charges that they logged or tracked keystrokes, but couldn't immediately explain everything the software --intended to help carriers troubleshoot network problems-- was actually doing.

"We're as surprised as anybody to see all that information flowing," said Andrew Coward, Carrier IQ's director of marketing, soon after Eckhart posted his YouTube video. Three weeks later, Carrier IQ and its customers have finally finished dissecting their products. We now mostly know how Carrier IQ works, how it got there, and what its purpose is. Well kinda, sorta that is.

It turns out that those initial statements were mostly right (!) Carrier IQ sends innocuous data from your phone back to your wireless carrier like when and where you sent a text message, when and where a call is dropped, and what apps are draining your battery. That information helps carriers find problems. But 'what' problems, exactly?

Here's what it doesn't do: It doesn't send your keystrokes, the content of your text messages or what websites you visit to your carrier. Huh?

The log exposed on Eckhart's video, captured on an HTC EVO 3D from Sprint, turned out to be a specific, one-off issue.

Carrier IQ and a security consultant, Dan Rosenberg of Virtual Security Research, determined that HTC had turned on a debug logger that should have been left off by default. As a result, the Carrier IQ app was temporarily storing everything a user did on the phone. The software maker said it is working with HTC to fix the issue.

At any rate, Carrier IQ is installed on an estimated 155 million or more mobile devices, but the specific problem Eckhart uncovered appears to be limited to a small handful of devices, although he still can't be 100 percent sure of that for now.

So was all the mayhem over nothing? Not really. "I want to make it clear that just because I do not see any evidence of evil intentions does not mean that what's happening here is necessarily right," said Rosenberg.

"Consumers still need to be able to opt out of any sort of data collection," he said. "There needs to be more transparency here. Right now, there's almost none."

One option would be to require government or third-party oversight. Even Carrier IQ suggested that some regulation would be necessary and the company hinted that it is all for it.

Each wireless carrier it works with chooses to gather different information from their customers' phones, and the scope varies a lot, further compounding the problem. But cell phone owners have been largely left in the dark about what carriers are collecting, and that's another issue as well.

"The way I see it, Carrier IQ raises a lot of questions for the whole wireless industry and not only just for itself," said Andrew Coward, Carrier IQ's director of marketing. "It puts in doubt the trusted relationship between a consumer and his wireless carrier, among other things."

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Source: Verizon Wireless.

    This article was featured on Business 5.0 and on Tech Blog.