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Faster cellphones to bring a wave of new services and charges

By Cecilia Kang
Washington Post Staff Writer
Tuesday, November 30, 2010; 12:22 AM

If you think cellphone bills are complicated now, just wait.

Within weeks, some of the biggest wireless companies will offer super-fast Internet connections for cellphones that rival the speeds delivered to desktop computers. As competitors follow suit with their own juiced-up networks geared for the Web, consumers can expect a cornucopia of new services - along with new charges.

For now, consumers can buy flat-rate monthly data plans from most carriers. But Verizon Wireless and T-Mobile are moving toward tiered pricing packages based on how much data a customer uses. All-you-can-eat plans are no longer available to AT&T's new customers, who must choose from a menu of data services.

"There are a variety of things you can do and a lot is on the table," said Peter Thonis, a spokesman for Verizon Communications. "You could be charged based on useage or by speed difference, or you could do both. There are no definitive answers here."

The Federal Communications Commission is trying to keep up, launching an effort to prevent mystery fees and confusing increases from appearing on cellphone bills. But the wave of changes is only beginning.

Cisco, which provides routers for wireless networks, is working with corporate clients such as Verizon to create even more options for consumers. Users could opt for "turbo charging" streaming video feeds to their smartphone for an extra fee. Just pay a little more for "gold service" compared with "bronze service" for data packages and speeds, said a Cisco official, who wasn't authorized to be identified speaking for the company.

Imagine bundles of television channels such as ESPN and Fox delivered on your iPad or other tablet for a few dollars extra. Add a few more dollars and get parental controls to block R-rated movies and World of Warcraft on your teen's Droid.

Heavy users of Facebook may be able to buy priority service for that application or spend a bit more to keep Twitter's Web site from failing during peak hours.

None of this is offered today, but Cisco says its partners are far along in implementing such new features.

All this, according to consumer groups and analysts, will lead to a labyrinth of fees and charges on cellphone bills that could make an accountant's head spin.

Consumer advocates say confusion is to the advantage of carriers.

"You have a population without true knowledge of how much they are consuming compared to carriers who have true knowledge of demand on their networks, and that assymetry leads to things like bill shock," said Sascha Meinrath, a director of the open technology initiative at the New America Foundation.

The FCC is considering rules that require carriers to text or call users when they approach their voice and data limits. The regulation is aimed at avoiding "bill shock."

FCC Chairman Julius Genachowski said that even though carriers say they let users know how many minutes of talking and megabytes of data they use, mystery fees continue to confound consumers. Verizon Wireless recently agreed to pay $25 million in a settlement with the FCC on false data charges for 15 million subscribers. The federal agency estimates about 30 million cellphone users have experienced bill shock from sudden increases.

And Genachowski doubts that most people know how much data is consumed by watching an episode of "Mad Men," a recipe for even more confusion in the new world of ever-more-powerful smartphones and tablets that act like computers.

"Most people still don't know what a megabyte is," Genachowski said in a speech introducing the regulatory proposal. "So it's hard to expect them to know when they have reached their limits."

In a recent survey, the research arm of investment house Sanford C. Bernstein found that consumers were not happy with the idea of usage-based pricing plans.

"They're generally ill-equipped for any estimation of their usage and they are ill-equipped to judge its implications," Bernstein analyst Craig Moffett wrote. "Given the option, the vast majority of respondents would stay with their unlimited plans."

Sprint Nextel was the first to offer mobile broadband services, known as fourth-generation wireless. It is offered in 62 markets and only in unlimited plans, though chief executive Dan Hesse said he is watching competitors with tiered data plans.

The nation's largest carriers say they need to manage traffic with various offerings to prevent congestion. They tout more options for users and say tiered prices are more fair to those who don't use their phones for Internet access as much as others.

For now, Verizon Wireless and T-Mobile offer tiers of data packages and flat-rate plans. AT&T's customers can maintain their unlimited voice and data packages until the end of their contracts. Those customers will then have to choose from a menu of data plans.

"What we're trying to do is offer choice, and there will always be those that then say choices are too many. So you're darned if you do and darned if you don't," said John Walls, a spokesman for wireless industry trade group CTIA.

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