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Verizon CEO responds to New York Times? scathing criticism of carriers

Verizon Wireless has taken umbrage to the New York Times' less-than-flattering coverage of wireless carriers, and its CEO has sent a letter to the newspaper's chairman and publisher in response.

In an article published on July 22 titled "The Irksome Cell Phone Industry," David Pogue enumerated a litany of gripes he has with the wireless industry, including rising text-messaging fees, double billing, astronomical charges for international calling and long instructions for leaving a voice-mail that rack up minutes. The article reached the top-10 most-emailed on the New York Times' Web site.

"Right now, the cell carriers spend about $6 billion a year on advertising," Mr. Pogue said in his article. "Why doesn't it occur to them that they'd attract a heck of a lot more customers by making them happy instead of miserable? By being less greedy and obnoxious? By doing what every other industry does: try to please customers instead of entrap and bill them?

"But no," he said. "Apparently, persuading cell carriers to treat their customers decently would take an act of Congress."

Mr. Pogue wonders why all the carriers raised their SMS fees around the same time, and why textmessaging costs so much more than email, when SMS transmits far less data.

One blogger (http://bit.ly/gHkES) calculated that the data in a text-message costs you about 61 million times as much as the same message sent by email.

Mr. Pogue also takes issue with the carriers' practice of billing customers for both incoming and outgoing calls.

"In Europe, you're billed only when you place a cell phone call -- not when you answer one," Mr. Pogue said. "And you're billed only when you send a text message -- not when you get one.

"In this country, that's how it's always been for landlines, too," he said. "Somehow, though, we've let the cell phone industry get into the habit of billing both of us."

Mr. Pogue also claims that the subsidies carriers offer -- the difference between the price of a phone with a contract and without one -- are actually paid out by customers gradually over the course of their contract.

The reporter rails against the 15-second pre-recorded instructions for leaving a voice mail, paging the person you're calling and for checking voice mail messages.

While 15 seconds doesn't sound significant, it translates into hundreds of millions of dollars in revenue for the carriers, according to Mr. Pogue.

In addition, he compares free computer-to-computer international calls via Skype, iChat or Google Voice and low-cost phone-to-phone international calls via Google Voice or Skype Out to carriers' international rates, which he claims range from $1.50 to $5 per minute.

"Surely the zero-cost technology that's available to Skype and Google is also available to the world's cell carriers," Mr. Pogue writes. "In other words, there's no practical reason that cell carriers (ours and the overseas ones) should charge so much -- only a greedy reason."

Verizon Wireless strikes back
That article, arguably a public relations nightmare, led to an open letter to Arthur Sulzberger Jr., chairman and publisher of the New York Times Co., from Lowell C. McAdam, president/CEO of Verizon Wireless:

Dear Mr. Sulzberger:

The wireless sector of the high-tech industry shines as one of the few bright spots in the nation's economy. Competition has driven massive investment, continueous innovation by wireless companies and our many corporate and entrepreneurial partners, and lower consumers prices.

Despite this amazing American success story, a few vocal critics, including your paper, have leveled highly misleading charges at wireless companies.

The 85,000 U.S.-based employees of Verizon Wireless -- an employee-base growing even today -- encourage our elected and appointed officials, as well as the media, to rely on facts, not myths.

Myth #1: Americans pay more for wireless service.
Fact: Americans pay ten cents per minutes less than Europeans.

Among the 26 countries in the Organization for Economic Cooperation and Development, Americans use the most wireless minutes per month, about four times more minutes than the average European consumer. Americans get the lowest cost per minute?an average of 10 cents lower per minute than Europeans pay.

Myth #2: The Wireless sector of the technology industry is not competitive.
Fact: Former Vice President Al Gore has proclaimed U.S. wireless companies the most competitive on the globe.

More than 94 percent of Americans can choose between at least four wireless companies. Four national and hundreds of rural and regional wireless companies offer great consumer choices: pricing plans, post- and pre-pay options, and more than 600 handsets for sale?more than anywhere in the world.

Myth #3: Wireless customers are treated badly.
Fact: 84 percent of American wireless customers are satisfied with their service.

According to a June, 2009 U.S. Government Accountability Office study, 84 percent of American adults are very or somewhat satisfied with their wireless service. One popular report published for consumers says there has been a "surge" in wireless customer satisfaction.

Myth #4: The big wireless companies don't pay attention to rural America's needs.
Fact: The company with the most rural wireless customers? Verizon Wireless.

Verizon Wireless has invested $60 billion to build America's most reliable network -- important whether you are in the city or the country. And our recent merger with Alltel is an even larger investment in providing even better rural service.

Verizon Wireless stands with consumers by:
- aggressively closing down telemarketers and text spammers;
- supporting hands-free driving laws, and alone among wireless companies, supporting bans on texting and emailing while driving; and
- protecting privacy by chasing down identity theft and killing efforts to create a wireless phone directory.

Already we're investing in the benefits of fourth generation wireless broadband networks that will give Americans access to even more information, multimedia and services, including bandwidth and speeds capable of delivering high-definition video.

But 4G is about much more than entertainment: Our new network will play a major role in improving healthcare by carrying medical records securely, mitigating climate change by facilitating mobile telecommuting, advancing energy efficiency with smart grid technologies, fostering education by providing students immense computing capability in their handheld devices, and leading the economy to new prosperity.

Wireless is, indeed, a success story?an amazing American success story that even our critics can be proud of. In global technology leadership, service delivery, contribution to the national economy, solid employment opportunities, and improving productivity, Verizon Wireless is committed to delivering great wireless services and opening the doors of opportunity for our nation.

Sincerely,
Lowell

A marketer's take
One marketer can relate to where the carrier is coming from. As is often pointed out, wireless networks cost a lot to run and the carriers need to monetize their ongoing infrastructure investment.

"Mr. David Pogue's ?gripes' in the New York Times and Verizon's response both seem to be talking at cross-purposes," said Gary Schwartz, president/CEO of Impact Mobile Inc., New York.

"Mr. Pogue's diatribe on the cost of his cell phone bill and Verizon's investment in their rural network are good subjects to discuss, but the central issue of facing the Senate Commerce Committee are by and large skirted in both the article and Verizon's response," he said.

"As my colleague commented to me, ?If Mr. Pogue is upset over the items he mentioned in his article, he must be going to counseling to deal with his cable bill.'"