Scam alert: Dirty trick artists are hard at work.

States across the USA report an uptick in complaints about a range of consumer abuses, including pitches for extended auto warranties that offer little or no value to consumers. People on do-not-call lists are getting swamped with offers for all manner of bogus products, from swine-flu cures to debt-settlement plans.

Scammers especially target the most vulnerable consumers – the elderly and the poor, Indiana Attorney General Greg Zoeller says.

“Violations go up in a down economy,” Zoeller notes. During the first three months of the year, the Federal Trade Commission, the top U.S. troubleshooter for consumers, received 450,000 complaints about calls to people whose phone numbers are registered on the National Do Not Call Registry, spokeswoman Claudia Bourne Farrell says. At that rate, complaints this year will easily top last year’s 1.8 million.

Scammers are becoming more creative, Zoeller says. This week, he filed a lawsuit accusing two companies and one individual of violating Indiana’s do-not-call laws.

Zoeller says the accused were illegally placing automated, or robo, calls mainly to cellphones. Those blast calls, sent out thousands at a time, were aimed at getting people to sign up for extensions on expired dealer or manufacturer warranties.

Michelle Corey, president of the St. Louis Better Business Bureau, says scare tactics are common.

In some cases, telemarketers remind consumers that they need a car and play on fears of possible job loss to coax them into signing up for useless extended auto warranty plans.

“In this economy, every dollar counts,” she says.

Financial scams are also raging. New York Attorney General Andrew Cuomo on Thursday announced a probe of a “rogue industry” of debt-settlement firms that advertise plans to renegotiate debts and pay off credit cards. Fourteen companies and one law firm in locations across the nation were subpoenaed.

Cuomo says many plans are flawed or misleading and leave consumers worse off financially.

Not even swine flu is off-limits for scammers. Zoeller’s office issued a statewide alert after telemarketers started calling consumers and urging them to buy “mandatory swine-flu kits” they said were required by the government. Such claims are false.

Zoeller asks consumers who receive such calls to hold on to the numbers “so our office can investigate.”

Verizon and Apple are discussing the possible development of an iPhone for Verizon, with the goal of introducing it next year, people familiar with the situation say.

It would mark the first time Apple has produced a version of the iPhone for a CDMA wireless network, which is different from AT&T’s GSM technology. Vodafone, co-owner of Verizon Wireless, already sells the iPhone in Europe.

The New York-based telecom entered into “high-level” discussions with Apple management a few months ago, when CEO Steve Jobs was overseeing day-to-day business, these sources say. They declined to be named because they aren’t authorized to speak publicly.

Jobs is on medical leave until June, but the conversations are continuing, they say. Apple declined to comment.

AT&T has exclusive U.S. distribution rights to the iPhone into 2010, though specifics aren’t known. The deal was struck in 2006, when the iPhone was still on the drawing board. Many telecom analysts expect AT&T to try to persuade Apple to extend the contract for another year, at least.

Should Verizon succeed, it would be a big loss for AT&T, says Roger Entner, head of telecom research for Nielsen. “Breaking the (iPhone) exclusivity with AT&T is a huge thing,” he says. “That would send shivers into AT&T’s stock and senior leadership.”

The power of the iPhone was on full display last week, when AT&T reported stellar wireless results. AT&T signed up 1.6 million iPhone customers during the quarter – 40 percent of them new to AT&T. Revenue from mobile data was up almost 40 percent. Verizon reports results today.

By linking arms with Verizon, Entner says, Apple would gain access to its 80 million customers. While a few may already have an iPhone (some people have more than one carrier), the bulk don’t.

Regardless, Entner says, Apple would likely maintain ties with AT&T. The biggest winners, by far, would be consumers, he says.

“They could pick the network they wanted to use: AT&T’s or Verizon’s,” he says. “It would finally give consumers choice, and choice is a good thing.”

Entner says Verizon would fare well in that fight. While AT&T’s 3G network is “somewhat faster,” he says, Verizon’s network “is generally perceived to be better in terms of reliability.”

The biggest loser? “AT&T,” Entner says. “It would be a reversal of fortune, because a lot of people who have been disappointed in AT&T’s network but love the iPhone would probably” jump to Verizon.

Apple would also benefit, he adds, “because that means they’d have to buy a new iPhone.”

The new Google phone, dubbed the G1, has been touted as a working man’s smartphone — a cheap, Web-friendly wireless device that can make life easier for millions of consumers.

The G1, as it turns out, also stands to make life a whole lot easier for Google — by making it a snap to track your movements on the mobile Web and send you ads as it does on the desktop. The device, sold exclusively by T-Mobile, gives Google access to your e-mail, instant messages, contact lists, Web-search history and geographic location. By keeping tabs on your mobile life, Google can quickly figure out what sort of ads to send your way, and when.

“It’s like a walking surveillance device,” says Jeffrey Chester, executive director of the Center for Digital Democracy, a consumer watchdog group.

It’s never been easier to get information on the run. Smart devices such as the G1 and Apple iPhone let you put the Internet in your pocket and go — down the block or across the country. But this convenience could cost plenty in lost privacy, consumer advocates and tech analysts say. Once data have been collected and warehoused, you lose control of it forever.

“The Big Brother aspect of it is troubling,” says Rep. Edward Markey, D-Mass., former chairman of the powerful House Subcommittee on Telecommunications and the Internet.

Mobile consumers are especially vulnerable, Markey says. Unlike PCs, cell phones tend to be used by one person exclusively. The information they telegraph — on Web browsing, lifestyle and more — tends to be “highly personalized.”

That’s the main reason mobile data are so prized: The information is incredibly accurate. It’s also why Markey and other privacy advocates say the debate about online privacy will become even more intense as advertising migrates to the mobile Web.

Mobile advertising is still relatively new — G1 users, for now, get ads only through search results, for instance — but it’s clearly a hot spot. The market is expected to reach $2.2 billion by 2012, from about $800 million now, according to JupiterResearch. Ultimately, it could surpass the traditional Web, now a $20 billion ad market.

Yahoo, Microsoft and other ad-supported search engines collect information as Google does. But the sheer size and scope of Google’s data-mining operation — the Web giant performs more than 80 percent of all desktop searches worldwide — makes it a uniquely pervasive presence, says Chester.

Google and Yahoo, the two biggest players in search advertising, say their self-imposed privacy policies are sufficient to protect consumers, noting that they do not collect or store information in a way that can be directly tracked to an individual.

Peter Fleischer, global privacy counsel for Google, says Google tries to make privacy language as “transparent” as possible. Anne Toth, head of privacy for Yahoo, says, “Trust is a fundamental part of our business.”

Privacy policy smorgasbord

Both companies have one master privacy policy and individual ones for each product. Google currently has more than two dozen, including a separate one for the G1.

To help people make sense of it all, Google devotes a video channel to privacy at its YouTube subsidiary. The videos, just three to five minutes each, feature Google employees talking about the sorts of information that Google collects and why. Generic safeguards, such as how to manage cookies, are also discussed.

Fleischer says the videos are Google’s attempt to make privacy policies more accessible. “The average consumer is not going to read them,” he says. “We might as well face that fact as an industry.”

Joseph Turow, professor of communications at the University of Pennsylvania’s Annenberg School for Communication, says privacy policies, in general, are nearly impenetrable for average consumers.

“It’s crazy,” Turow says. “I don’t think anybody could possibly go through these multiple layers and understand” them.

The new Congress might pass an electronic bill of rights this year, which would likely include tough, new privacy rules for Internet companies, Markey says. Now, Internet companies must abide by certain privacy rules — regarding children, for example — but their privacy policies are largely voluntary.

“We cannot make a national privacy policy based on the current pledge of the current CEO of a company,” Markey says.

Markey wrote the landmark 1999 law that requires phone and cable TV companies to give consumers an “opt-in” choice for deciding whether their personal data can be used for commercial purposes. He says Google, Yahoo and other companies should be held to the same standard.

With mobile becoming an integral part of day-to-day life, he also thinks other changes are in order, such as: An individual should have the right to see the data a company has amassed on him or her and be able to have that record expunged. And, he says, a company should not be allowed to deny a service — say, mobile search — just because a consumer doesn’t want personal data collected.

One thing everybody agrees on: The mobile Web is exploding.

According to Forrester Research, about 54.4 million people — consumers and business users — surf the mobile Web. By 2013, that number is expected to more than double to 110.7 million, Forrester estimates. Total number of wireless devices worldwide: about 3 billion.

The desktop Web, in comparison, took more than a decade to take root. There are about 66 million broadband households in the United States; one household can have more than one user.

Once a clunky, hard-to-reach cyberbackwater, the mobile Web is now a destination spot. Thanks to the arrival of Facebook, YouTube and other popular Web sites, it’s quickly becoming a parallel universe to the desktop Web — only better, because it’s 100 percent mobile.

Falling prices on cool new devices have helped. The G1, sold by T-Mobile with a two-year service contract, costs $199. The 3G iPhone — sold by AT&T with a two-year contract — starts at $199. That’s less than half the $500 sticker price of Web-enabled mobile devices a few years ago.

Another factor: Consumers are dumping land lines by the millions, creating a new generation of wireless-only homes and users. According to the government, about 16 percent of U.S. homes are mobile-only — up from 6 percent in 2004 — and thousands of wireless converts are snipping the cord daily.

The combination — cool devices, cheap prices, a friendly mobile Web and the rise of wireless-only users — is redefining the broadband game, says Forrester analyst Doug Williams. “Now, there are plenty of consumer-friendly applications that provide for a unique consumer experience when you connect to the mobile Web,” he says.

The G1, in many ways, embodies the best and the worst of the mobile Web. The device is based on the new Android operating system, whose development was overseen by Google. More than 30 companies participated in the development of Android, but Google had decision-making authority over design, engineering and more.

The G1 is high-performance and incredibly easy to use. It comes preloaded with familiar Google applications, allowing users to reach, with one click, some of its most popular services — Google Maps (MyLocation, satellite, traffic and Street View), Gmail (e-mail), YouTube, Google Calendar and Google Talk (IM service).

It also has a touch-screen, traditional qwerty keyboard and a 3.2-megapixel camera. Music player? Of course. You can also add and subtract applications.

On the downside, once you fire up the G1, you’re on Google’s radar — whether you like it or not.

To use the device, users must set up a Google account. The registration process creates a “personal identifier” — basically, a number that Google uses to store information about you, which Google does not consider to be personal information.

It enables Google to field your search queries quickly when you’re on the run. It also gives Google access to your contact lists, IMs, e-mails, personal calendar, social networking and video downloading — the videos you’d fess up to publicly, as well as the ones you might not. As for all those “personal photos” swapped with pals on Facebook, MySpace and Twitter: Google can grab those, too.

Everything gets crammed into your personal “file,” so to speak, along with a lot of other stuff — such as where you bank, shop and cruise on the Web when you’re lonely, bored or just in the mood for a little fun.

You can’t see what information is collected

Once your information has been collected and stored, there’s no way to get rid of it. You can’t see what’s been collected or have it expunged. It’s Google’s for as long as it wants to hold onto it.

Cole Brodman, T-Mobile’s chief technology officer, says some of the privacy concerns around the G1 highlight the challenge of trying to “blend the Web world with the mobile world in a way that doesn’t violate” consumer privacy, particular in the area of mobile advertising.

Carriers for years shied away from mobile advertising, in part because they were limited by law and in part because they didn’t want to risk offending customers. But the world is changing, he says.

Brodman says the mobile world is in flux right now, noting that ad-based companies like Google didn’t exist until fairly recently. Neither did the concept of “contextual” advertising — Google’s mantra — which is the idea of providing users with advertisements that are relevant to their day-to-day lives.

How to determine what’s relevant? By keeping close tabs on your online life, of course. Figuring out what’s helpful, and what’s just plain intrusive, is the real trick, Brodman says.

“There are a lot of new business models out there,” he says. “Some of them are exciting, and some will probably be a little scary, just like the Internet.”

———

HOW IT WORKS

How a user’s actions help Google phone build a data profile

The new G1 smartphone offers a variety of consumer-friendly features, such as unfettered Web browsing. But at what cost to privacy? You decide:

— Turn on G1 phone

What Google does: Requires creation of Google account at start-up. (If you don’t already have one.) Process creates a unique “identifier” for that user. (1)

— Search the Internet with built-in Google search box

What Google does: Captures and records search queries. Interactions with Google-supported Web sites also logged.

— Arrange an event with G1′s Calendar and Contacts function

What Google does: Stores all e-mail contacts and saved phone numbers.

— Send mail to friends through Gmail

What Google does: Copies and stores contents on Gmail servers. Mail also scanned for viruses.

— View documents

What Google does: Stores viewed documents/attachments on Google servers. Also scanned for viruses.

— Find a restaurant with Maps and get directions with Street View and MyLocation

What Google does: Search results, including your location information, are recorded and stored on Google servers.

— Watch a friend’s video on YouTube, also owned by Google

What Google does: Keeps list of videos.

1 — Information Google collects is associated with the user’s unique registration information and can be cross-referenced with non-G1 data that may become available.

—

Sources: Google/USA TODAY research

Motorola inched closer to the financial edge on Tuesday, reporting a staggering fourth-quarter loss of $3.6 billion and deep deterioration of its once-storied cell phone business.

The company recorded a string of charges to write down the cost of its cell phone business, which was in the process of being spun off when the economy soured. The spinoff was put on hold last fall. The company offered no time frame for when, or even if, the cell phone business might become an independent company.

The Schaumburg, Ill.-based equipment maker on Tuesday also suspended its dividend and announced the departure of its chief financial officer, Paul Liska, who was appointed a year ago.

“We’re witnessing an American technology icon imploding,” says Roger Entner, head of telecom research for Nielsen.

Motorola invented wireless as a class of service more than 30 years ago; its engineers also created the world’s first cell phone.

Unless CEO Greg Brown can turn things around quickly, Entner says he doesn’t expect Motorola to be around two years from now. “It’s getting grimmer by the day.”

Motorola said it sold 19.2 million cell phones in the quarter, less than half what it sold in the same 2007 period. Revenue declined 26 percent year-over-year.

Trying to conserve cash, Motorola recently announced plans to cut 4,000 jobs — on top of the 3,000 reductions it announced last fall. Suspension of the dividend, a hallmark of Motorola for decades, is another cash-saving move.

One of Motorola’s biggest problems, Entner says, is its aging product line. The company scored a major hit a few years ago with the Razr, but never had a follow-up. Motorola was also slow to jump on the smartphone craze, leaving it flat-footed when the Apple iPhone stormed the market. Then the economic slowdown hit, sending ripples throughout the global wireless markets.

Other parts of Motorola were profitable. Earnings in the networks division, which makes cable TV gear, rose 34 percent. Enterprise mobility, which makes communications equipment for emergency personnel, rose 3 percent. The two units, together, account for about two-thirds of Motorola’s annual sales.

Motorola shares fell 11 percent, closing at $4.04.

The government’s $1.34 billion coupon program for digital converter boxes ran out of money on Sunday.

Anybody requesting a $40 coupon to offset the cost of buying a converter box for digital TV will now be placed on a waiting list, says Meredith Baker, acting head of the Commerce Department’s National Telecommunications and Information Administration.

How long will people have to wait? “I don’t know,” Baker told reporters on a conference call Monday. Already, 103,000 people are on the list. Baker attributed the cash shortfall, in part, to a late surge in coupon requests.

In December, consumers requested 7.2 million coupons, more than double the level in October.

Rep. Edward Markey, D-Mass., chairman of the House Telecommunications and the Internet subcommittee, which oversees NTIA, says the problem was created, in part, by NTIA’s own mismanagement. “There’s no excuse for this.”

Markey says he’s pressed NTIA for months about whether it needed more money. Markey says Baker finally sent him a letter while Congress was out of session — on Dec. 24 — warning of the funding shortfall. “DTV now stands for ‘Don’t Tell Viewers’ that they’re going to have a problem,” he says.

The senior lawmaker says he’s working on a plan that would allow NTIA to start re-issuing coupons that have been sent to consumers but not redeemed. NTIA currently waits for coupons to expire — that takes 90 days — before reissuing them. The average redemption rate is just 52 percent now, so such a change could free up millions of dollars.

The United States is set to become an all-digital TV market on Feb. 17. When the switch happens more than 70 million TVs that use an antenna to receive over-the-air signals will need help. To maintain TV reception, consumers must install a converter box that turns digital signals into analog. Cable and satellite TV customers aren’t affected. As of Dec. 31, almost 45 million coupons had been requested, about 18 million redeemed.

Baker says consumers can still request a coupon — it just might not show up before Feb. 17. Another option is to buy a box without a coupon. Converter boxes cost $40-$70 on average.

Gene Kimmelman of Consumers Union, says consumers shouldn’t be penalized for NTIA’s mistakes: “This is a mess.”

———

On the Web

www.dtv2009.gov/CheckStatus.aspx, to check on status of your coupon request.

So far, the picture is clear: Wilmington, N.C., on Monday became the nation’s first all-digital TV market. Early next year, the rest of the country will follow.

The Federal Communications Commission, overseeing the nationwide conversion, says it will take a few days, at least, to gauge success. But early signs are good, says FCC Chairman Kevin Martin. “Technically, the conversion we did today occurred successfully,” says Martin, who flipped a symbolic “switch” in Wilmington to mark the occasion.

You’ll get no argument from Sabrina Vigliotti, one of 180,000 residents affected. She says she used to get about five channels on her 10-year-old TV, “and three of them were snowy.” Now, “The picture is so much brighter, and there are so many more channels,” about 10 in all. “I’m elated.”

Digital TV, or DTV, is an advanced broadcast technology that offers consumers better picture and sound quality, as well as interactive and multicasting options.

The rest of the country will follow Wilmington at midnight on Feb. 17. Once the conversion is complete, TVs that use “rabbit ears” to receive over-the-air broadcasts won’t work unless they’re equipped with digital-to-analog converter boxes. Boxes cost $40 to $80, on average.

The government is offering $40 coupons — two per household — to offset costs. (For more information, go to www.dtv2009.gov.) Cable and satellite service won’t be affected.

That’s not to say that analog dies entirely. Several thousand “low-power” TV stations are exempt from the switch. Even so, some of those TV stations are voluntarily making the jump to digital, the FCC says.

Eager to learn from Wilmington, the FCC has set up a consumer hotline. It also is paying local fire departments $15 per converter box to help residents who have difficulty installing digital gear.

By late Monday, the hotline had received a few hundred calls. Problem areas included general TV setup — TVs must be on channel 3 or 4 to work, depending on the converter box. Antenna questions were common. With a few exceptions, all digital channels are UHF (ultra high frequency), not VHF (very high frequency), so if a consumer has an antenna that won’t get UHF, that’s a problem.

The FCC says its outreach efforts are focused on those who might need more assistance, including seniors.

The conversion was ordered by Congress, which wanted to reclaim the airwaves used by broadcasters — given to them for free decades ago — so that the spectrum could be auctioned off and used for other things, such as public safety and mobile data transmission. That auction, which occurred earlier this year, raised more than $20 billion.

AT&T, taking aim at Best Buy’s Geek Squad and other tech services, has launched a 50-state in-home support service for computers, TVs, broadband, wireless and more.

Prices start at just $69 — and you don’t have to be an AT&T customer to use the service. Called ConnecTech, the new service is not available to businesses.

The service, about nine months in development, grew out of a recognition that life for tech consumers is becoming increasingly complicated as new, even more sophisticated devices and services are introduced, says Carmen Nava, AT&T’s senior vice president of consumer marketing operations.

“The home has become a very complex place,” she says.

ConnecTech services run the gamut from hanging flat-screen TVs and installing wall-mounted speakers to setting up home computer networks. It also offers remote PC and phone support for digital products, including digital cameras and MP3 players.

Matt Davis, a research director at IDC, says AT&T’s timing is good. “This wave of complexity is occurring” as new, converged services hit the market, he says. Many consumers, he says, “are not prepared to handle that.” As a result, he says, AT&T “has got to take care of them.”

AT&T’s decision to offer the service in all 50 states will force the carrier to work with a vast network of outside contractors. Managing those relationships, while making sure customers get AT&T-quality support, could prove challenging, Davis says.

Still, Davis thinks ConnecTech is a smart move that could yield a bounty of payback in the form of consumer loyalty.

Profit is a motivator, but not as much as you might think, he says. The tech-support market currently generates several billion dollars a year in revenue: impressive, Davis says, but hardly a make-or-break number for AT&T, which rakes in about $120 billion annually.

“At its core, (ConnecTech) is a play to cement their relationship with customers and … up-sell” other products and services, Davis says.

Nava doesn’t disagree. “Up until now, our (customer support) only went so far,” she says.

As for the possibility of driving profits, Nava says that’s a given. “Yes, we think we can make money. We wouldn’t be doing it if we couldn’t.”

WASHINGTON — High-speed Internet access is so important to the welfare of U.S. consumers that America can’t afford not to offer it — free of charge — to anybody who wants it, Federal Communications Commission Chairman Kevin Martin says.

“There’s a social obligation in making sure everybody can participate in the next generation of broadband services because, increasingly, that’s what people want,” he says.

Martin hopes to use a chunk of wireless airwaves due to hit the auction block next year to help turn his vision into reality. Some cell phone operators are objecting.

As FCC chairman, Martin is responsible for protecting the interests of U.S. consumers. The FCC has regulatory sway over a broad swath of U.S. business, including cable and broadcast TV, radio, telecommunications and wireless. Martin sat down with USA TODAY to talk about some of the biggest consumer issues facing America. Broadband Internet access is at the top of his list.

“More and more people expect and demand to have access to the Internet and new wireless technologies,” Martin says. “It is important that the (FCC) try to find new ways to address” those needs.

The way Martin sees it, broadband is quickly becoming what copper phone lines were for decades: the main means of communication for millions of Americans.

As people turn to the Internet for work, play, telemedicine, education and more, Martin says, it’s incumbent on U.S. regulators to make sure no one gets left behind. Ditto for cutting-edge wireless technologies, which have the ability to deliver a circus of advanced new services, including the mobile Web.

The slow lane

Consumers living in rural areas are one of Martin’s biggest concerns. In these areas, he says, dial-up and satellite-based Internet still rule. Owing to technical limitations, they don’t offer enough speed to handle advanced, interactive services.

People who live in densely populated areas, on the other hand, can pick from an array of high-speed options, including DSL and cable modem services.

No matter where, Martin says he worries about availability and cost of high-speed services. Broadband runs about $40 a month, on average, though you’ll pay a lot more for faster speeds.

Only 38 percent of rural households are broadband customers, according to a Communications Workers of America report. For urban and suburban areas, the numbers are much higher: 57 percent and 60 percent, respectively.

Cost is a big factor, according to the report. Among households with incomes of $100,000 or more, 85 percent subscribe. The figure drops to 25 percent for households with incomes of less than $20,000.

Martin wants to use a block of wireless spectrum to help bridge the gap. By attaching a “free broadband” condition to the sale of the spectrum, known as AWS-3 (for advanced wireless services-3), Martin thinks he can help drive broadband adoption in rural areas in particular. Only 25 percent of network capacity would have to be reserved for free broadband. The rest could be used to provide premium broadband services.

Some cell phone providers are howling, none louder than T-Mobile. The company paid $4 billion two years ago to buy AWS-1 spectrum, which abuts the AWS-3 spectrum.

While the FCC’s goal of providing broadband alternatives for rural customers is “noble,” the approach would cause service disruptions for T-Mobile’s data customers, says Cole Brodman, T-Mobile’s chief technology officer.

“The FCC has an obligation to make sure that their spectrum policy allows for people who bought spectrum to be protected,” he says.

Milo Medin, founder and chairman of M2Z, a start-up that first proposed the “free broadband” idea and plans to bid for the spectrum, says T-Mobile’s problem is self-inflicted. He says T-Mobile is using handset “filters” and antennas that “read” signals in the adjoining AWS-3 zone, which could result in interference problems.

Brodman counters that the issue isn’t that simple. If T-Mobile doesn’t prevail, he says, the company would have to “work it out” with the AWS-3 winner or perhaps bid on the spectrum itself.

Martin says FCC engineers are studying the interference issue.

Affordable broadband

As for the high cost of broadband generally, Martin says he’d like to find a way to use a very old federal subsidy — the universal service fund — to ease costs for lower-income people. The fund, currently about $6 billion a year, is used to help keep basic phone service cheap. Rural phone companies, which use that money to help offset their costs, would likely resist such a plan.

Martin says it’s just common sense. With so many cutting the cord and going wireless, it’s far more important “to make sure we’re spending that money … in a way that better reflects the actual usage habits of Americans today.”

———

Broadband by the numbers

The U.S. ranks 15th among other industrialized nations in average Internet speed, says a study by the Communications Workers of America. Time to download a movie in Japan: About 2 minutes. In the U.S. it can take two hours. Yet, people in Japan pay about the same as U.S. consumers, the report notes.

World rank … Download speed (megabits per second)

1. Japan … 63.60

2. South Korea … 49.50

3. Finland … 21.70

4. France … 17.60

8. Canada … 7.60

15. United States … 2.35

Source: “Speed Matters” report released by CWA in August 2008.

If you’re having problems with dropped calls on your new 3G Apple iPhone, you’re not alone.

From New York to Stockholm, 3G iPhone owners are complaining loudly about connection failures — sometimes repeatedly — during calls.

The problem typically occurs when the device attempts to move from 3G to another network.

According to people familiar with the matter, the culprit appears to be the 3G chipset provided by Infineon Technologies, a German chipmaker. Sources declined to be identified because they are not authorized to talk about the problem publicly.

According to these sources, AT&T and Apple are working on a software fix. The fix, which will be available remotely via iTunes, could be ready as early as next week, they said.

Infineon “chipsets” — a group of chips designed to work together — allow the iPhone to jump from one network to another. The handoff is supposed to be seamless.

The dropped-call problem is global, says Roger Entner, senior vice president at Nielsen IAG.

“Apple has had the same problem in every market where the (3G) iPhone is sold,” he says.

Translation: AT&T’s 3G network isn’t to blame.

“It’s probably the device,” Entner says.

The iPhone is sold in more than 20 countries, including Italy, France and Finland. New markets are added constantly.

Apple declined to comment.

Infineon did not respond to e-mail and phone inquiries seeking comment.

AT&T spokesman Mark Siegel declined to say whether the chipset was a problem, saying only that the 3G device “overall is working great.”

Siegel says AT&T, as a matter of routine, urges iPhone users to sync often to ensure that they have the latest software.

Francis Sideco, a senior wireless chip analyst at semiconductor researcher iSuppli, says the problem could be in the Infineon chip or it could be something else.

Given the complexity of the iPhone — it’s basically a miniature computer — the possibilities are endless. “It could be something as simple as a solder joint,” he says.

Cell phones use many components to turn a person’s voice into a digital computer signal and transmit it over a network.

These components are typically manufactured by different suppliers, then cobbled together on a circuit board in a factory.

Chipsets are usually subjected to rigorous testing prior to shipping. But Sideco says chips can get damaged in the manufacturing process or in transit.

The good news, he says, is that big carriers like AT&T have testing equipment that can identify dropped calls and pinpoint the manufacturer of the failed part.

The bad news: If a simple software fix isn’t feasible, Apple could be forced to issue a worldwide recall. Such a step would be costly and time-consuming.

It would also leave Apple, inevitably, with a prominent black eye, Entner says.

That said, Entner doesn’t think it will come to that.

“In all likelihood, they won’t have to do a product recall,” he says, adding, “It depends how big the problem is.”

By Leslie Cauley, Michelle Kessler

Sprint Nextel and Verizon are rolling out new, more consumer-friendly calling plans, reflecting the hyper-competitive state of wireless.

Starting Monday, Sprint will begin offering a new “share” plan that offers 3,000 voice minutes and a bounty of add-ons for $169.99 a month for two lines. Additional lines cost $19.99 each.

In addition to the 50 hours of calling time, subscribers will receive: unlimited messaging and e-mail, unlimited access to the mobile Web, 50 streaming music channels, 25-plus live TV channels, on-demand TV – clips as well as full-length TV shows – and unlimited GPS navigation. For sports fans, there’s also unlimited access to NFL Mobile and NASCAR Sprint Cup Mobile. BlackBerry users also qualify for this plan.

Cheaper plans with fewer services start at $69.99 a month. Depending on the plan, lines can be added for as little as $9.99 a month.

For a family of three, the $169.99 plan represents a $45 savings off Sprint’s prior plans, says Walter Piecyk, a telecom analyst with Pali Research. The savings is $60 compared with Verizon and $45 compared with AT&T wireless. The latter don’t offer GPS navigation or BlackBerry options, he notes.

With prices for gas, food and other necessities rising, Piecyk says Sprint’s approach is pitch-perfect.

“If you can save somebody $50-$60 on a rate plan, they’re going to switch,” he predicts.

Sprint has been struggling with a string of operational problems related to the Nextel merger. Piecyk says most consumers don’t care about that – but they do care an awful lot about saving money.

“If you cut the price enough, that moves customers,” he says.

Verizon, on the cusp of becoming the USA’s No. 1 wireless carrier, thanks to its proposed acquisition of Alltel, is also turning up the marketing heat.

Next week, Verizon plans to start offering discounts of $8-$21 a month to people who buy wireless services plus any other service, such as advanced cable TV, marketed as FiOS – short for Fiber-Optic Services – or high-speed broadband. Previously, consumers had to buy a traditional “landline” service to qualify for a discount. The more services you buy, the bigger the discount.

AT&T, currently the No. 1 wireless carrier, already offers such discounts. No. 3 Sprint sold its landline business when it merged with Nextel.

Piecyk says carriers with big landline businesses – like Verizon and AT&T – are basically stuck. If they make it easy and financially attractive to dump landlines, they help speed up erosion of that 100-year-old business. “But if they don’t, they just lose customers,” he says.

Despite its old-fashioned profile, the landline business is still a moneymaker that generates billions of dollars in cash each year. But the business is shrinking rapidly, thanks to the fast rise of wireless, which is quickly becoming a replacement for landline service.

Verizon concedes as much, noting that a recent Harris Interactive poll showed that 89 percent of U.S. adults have a cellphone. Of that number, 14 percent “report using only their cellphones for voice service,” Verizon says. And that number is rising every year.

In anticipation of the shift, AT&T and Verizon have been spending billions to construct advanced video networks and shore up wireless across the USA.

NEW YORK – Verizon is in advanced talks to buy Alltel, the USA’s No. 5 wireless carrier, for about $28 billion, according to a person with direct knowledge of the situation.

Such a transaction, if completed, would leave Verizon Wireless with more than 80 million customers, easily eclipsing AT&T to take the No. 1 spot. AT&T has around 71 million subscribers. No. 2 Verizon has 67 million; Alltel has 13 million, many of them in small, rural markets.

Discussions were expected to continue well into Wednesday night, said the source, who declined to be cited by name or affiliation because the proposed transaction is still being negotiated.

Verizon Wireless spokesman Jim Gerace declined comment. Alltel spokesman Andrew Moreau, via an e-mail sent to USA TODAY, also declined to comment.

Founded in Little Rock, Ark., in 1943, Alltel today is a $9 billion wireless company with customers in 34 states. Its customer service is considered top-notch, putting it on par with Verizon Wireless, which also ranks high consistently for its customer service.

The two companies also share a common technology: “CDMA.” AT&T’s wireless services are built around the more common “GSM” standard that is used by 85 percent of the global wireless users.

A Verizon-Alltel merger would have little impact on consumers, says Jane Zweig, CEO of The Shosteck Group, which tracks the wireless market.

“It’s just going to make Verizon a little bigger,” she says. Still, such a deal would give Verizon a bigger presence in smaller markets across the U.S.

Alltel “has a very good network,” Zweig says, enabling it to offer an array of advanced technology wireless services, including mobile Web access.

Chasing the mobile Web has become a blood sport among the big carriers. As Web-enabled devices such as AT&T’s Apple iPhone continue to grow in popularity, so, too, does pressure from consumers for better and faster Web access.

Verizon recently agreed to pay almost $10 billion to acquire a coveted cache of 700 megahertz wireless licenses, formerly owned by TV operators, that can enable super-fast mobile data services. AT&T paid more than $6 billion.

Sprint, the No. 3 wireless carrier, has teamed with Clearwire and wireless visionary Craig McCaw to build an advanced wireless data network across the U.S. The network is based on “Wimax” technology, a direct competitor of the next-generation wireless technology favored by Verizon.

Alltel, a merger machine for more than a dozen years, was acquired in November by TPG Capital and GS Capital Partners of Goldman Sachs for $27.5 billion. The purchase price represented a 23 percent premium over Alltel’s then-trading price of $71.50 a share.

Alltel, no longer traded publicly, is a well-run company with a reputation for innovation, Zweig says. “It’s one of those sleepers that people never paid much attention to.” Now they presumably will, she says.

NEW YORK – Sprint and Clearwire are forming a new company to build a nationwide “WiMax” wireless network, with the goal of offering advanced wireless Internet services to millions beginning next year, people with direct knowledge of the situation say.

Google, Intel, Comcast and Time Warner also are major investors. Under terms of the $3.2 billion collaboration, Sprint and Clearwire will form a separate, publicly traded company – called Clearwire – to oversee the nationwide buildout. Sources declined to be identified because the deal has yet to be formally announced. That could happen as early as today.

WiMax is akin to Wi-Fi in that it offers speedy surfing. But WiMax covers a much larger area. Sprint and its partners plan to blanket the USA with WiMax, turning the core of North America into one, big hot spot.

WiMax is one of several technologies vying to be the next way to connect to the Internet on the go. A WiMax transmitter, typically located on a cellphone tower, can provide a relatively fast Internet connection over more than a square mile.

Sprint and Clearwire will contribute WiMax spectrum, the others cash. Comcast will contribute $1.05 billion; Intel, $1 billion; Time Warner Cable, $550 million; Google, $500 million. Two other investors, Bright House Networks and Trilogy Equity Partners, will contribute $100 million and $10 million, respectively, these same people said.

The advent of a nationwide WiMax network is sure to rattle the status quo in the U.S. wireless industry, now dominated by AT&T and Verizon Wireless. According to people with direct knowledge of the plans, “open access” – meaning you can use any compatible device – will be a bedrock of the new network. Likewise, all Web applications – from e-mail to video streaming and gaming – also will be supported.

As envisioned by the companies, WiMax construction will be fast. By 2010, the group hopes to have WiMax services available to about half the U.S. population.

For Sprint, which has struggled with customer losses, the deal underscores its commitment to WiMax. CEO Dan Hesse spearheaded the effort for this industrywide collaboration.

WiMax raises the game of Comcast and Time Warner Cable. Neither has had a credible wireless strategy. Under the terms of the deal, they will buy WiMax services wholesale from Sprint.

Intel, the No. 1 chipmaker, is a big backer of WiMax. It previously invested $600 million in Clearwire. Google is pushing hard into wireless via its new wireless operating system, Android.

Contributing: Michelle Kessler in San Francisco

NEW YORK — A U.S. appeals court on Monday overturned the inside-trading case of former Qwest CEO Joe Nacchio, ordering a new trial in front of a new judge.

The court’s move is a major victory for Nacchio, who in April was convicted on 19 out of 42 counts of inside trading involving $52 million in Qwest stock. He was sentenced to six years in prison, but remained free on bail pending the outcome of his appeal.

Reached moments after the verdict was issued yesterday, Herb Stern, Nacchio’s lead lawyer, said he was “delighted” by the turn in the case. “It seems clear that we will have the opportunity to clear Mr. Nacchio’s” name and reputation, Stern told USA TODAY.

Prosecutors spent years piecing together their case against Nacchio, ultimately accusing him of dumping millions of dollars’ worth of Qwest shares because he believed the company was faltering, even as he continued to talk bullishly about its financial prospects.

Nacchio, Qwest’s CEO from 1997 to 2002, has maintained his innocence. After he left, Qwest went into a financial free fall and had to restate $2.2 billion of revenue.

In overturning the case, the appeals court sharply criticized U.S. District Judge Edward Nottingham, who oversaw Nacchio’s trial, for not permitting the introduction of expert testimony that his lawyers considered critical.

Making matters worse for the prosecution, perhaps, the appeals court said Nottingham dealt with this issue in an abrupt, off-the-cuff manner. Such requests are supposed to be handled by the bench in a thoughtful, balanced way.

“The appeals court has concluded that the judge did not give this defendant a fair shake,” said Steve Peikin, a partner in Sullivan & Cromwell and a former U.S. assistant attorney for the Southern District of New York.

To avoid this very outcome, Peikin said savvy prosecutors often allow — rather than try to block — expert testimony. “Let it in and ridicule it,” he says, referring to a popular tactic among prosecutors.

On a positive note for the prosecution, the appeals court concluded that there was sufficient evidence to convict Nacchio. That’s probably why the case was overturned, and not dismissed outright, Peikin says.

U.S. Attorney Troy Eid tried to put a good spin on the court’s ruling. “This is a setback, not a defeat,” he said in a prepared statement. Eid noted that the appeals court found “sufficient evidence to convict Mr. Nacchio of insider-trading,” adding, “We’re considering all our legal options.”

Prosecutors have the option of asking for a hearing before the full Court of Appeals – not just the three judges who heard the case this go-round. If the full court still thinks a new case is warranted, prosecutors, at that point, would have to decide if they want to retry the case.

NEW YORK — AT&T and Verizon Wireless lately have embraced the idea of giving consumers greater control over the wireless devices and applications they use, such as e-mail, downloading and picture-sharing.

Warming up to “consumer choice” is a new riff, to say the least. For years, both have pushed cheap, subsidized handsets to grow their wireless businesses; they penalized these same customers by imposing a raft of restrictions on devices and applications.

Meanwhile, Google has been trying to tell cell phone carriers how to run their wireless businesses and treat customers.

Who? While it’s a monster in desktop Web searches, Google is just another widget on the handset in the mobile world — like Yahoo or e-mail. Google has no wireless experience or even a customer care unit.

Has the wireless world gone crazy?

The short answer: You bet.

Big profit potential is the driver. As the mobile Web gains traction, a big chunk of online revenue could migrate to wireless. That’s financial catnip to players of all sizes, from wireless incumbents such as AT&T to wireless newcomers such as Google.

Consider online shopping. When the tally on this holiday season is finished, JupiterResearch estimates it will show consumers spent $39 billion buying online. Total online retail in 2007: $116 billion.

Companies that figure out how to corral mobile customers early could reap big rewards later, says Morgan Gillis, executive director of the LiMo Foundation, an industry group dedicated to creating a Linux-based operating system for mobile devices. “The opportunity is very substantial.”

And growing all the time. The global population expands by three people a second, according to International Data Base, an arm of the U.S. Census. In the same second, 38 wireless devices will be sold. At that rate, within 24 months another billion devices will be added to the 2.5 billion currently in circulation.

Meantime, the “mobile Web” — shorthand for browsing the Internet with a mobile device — is gaining steam. Pushing the trend is a flood of new smartphones and other wireless devices that make surfing on the run a snap. “In five years, the wireless Internet will be bigger than the desktop Internet,” predicts Rajeev Chand, a senior wireless analyst at Rutberg & Co., an investment bank in San Francisco.

Kevin Martin, chairman of the Federal Communications Commission, says the wireless explosion is very good for consumers, and for the United States overall.

To date, he notes, broadband providers have tended to focus on densely populated areas where they can turn a profit quickly. Rural markets have had to make do, sometimes for years, with slower broadband speeds. In some small markets, dialup is still the primary Internet access.

Martin says wireless-based broadband, cheaper and more efficient to deploy than traditional desktop broadband, can help bridge the gap. “The technology does provide the U.S. with an opportunity to significantly leap ahead in terms of broadband deployment,” he says.

Pushing for customer freedom
Under Martin, the FCC has pushed the wireless industry for more customer freedom. With that goal in mind, it is requiring buyers in the upcoming spectrum auctions to use it for networks that let consumers use any device and application.

The FCC’s rules apply only to services using these new airwaves, which is ideal for wireless broadband because of its ability to penetrate walls and other obstacles. The spectrum is being vacated by TV broadcasters as they go to all-digital transmission

Still, Martin says, it’s a step in the right direction. “Consumers are going to reap a lot of those benefits,” particularly if carriers extend those freedoms to other parts of their wireless businesses. “We hope (the spectrum auctions) will accelerate those kinds of changes.”

Consultant Craig Settles, president of Successful.com, says the wireless evolution, given its current trajectory, will leave customers “with greater options and greater reliability. Your world will not be dictated by your (wireless) carrier or your hardware maker, which is where it is now.”

With so much opportunity, companies are jockeying hard for pole positions.

Cut to the Android announcement. In November, Google announced plans to work with 33 companies on a Linux-based operating system called Android for mobile devices. The group’s goal: to create “consumer choice” by making it easier for customers to use any wireless application they want. Google has invited developers to write applications for Android and made developer tools available free.

T-Mobile, a coalition member, says it will sell an Android-based device late this year. One of the first prototypes, by A La Mobile, based in San Ramon, Calif., is expected to be unveiled next week.

While “consumer choice” might be the coalition’s mantra, Android has another, arguably higher, purpose for Google, says Jane Zweig, CEO of The Shosteck Group, which tracks the wireless industry.

“This is about extending Google’s presence in people’s lives under the guise that the wireless industry isn’t providing an open environment” for applications, she says.

Charles Golvin, a senior wireless analyst at Forrester, agrees. “This is about Google getting access to consumers.”

The Android announcement riveted the wireless world. Verizon Wireless, which has historically kept customers on a short leash, soon announced that it, too, would champion the cause of “consumer choice” by opening up its network to all compatible devices and applications.

Lowell McAdam, CEO of Verizon Wireless, says the move wasn’t driven so much by Google as by the lure of profit. “We saw an opportunity for additional growth for the business that we weren’t tapping into.”

He says that Eric Schmidt, Google’s CEO, recently invited Verizon to join the coalition. “We’re still crawling through the data,” he says. “We’re impressed so far, but we’re not ready to make that kind of leap.”

One of Verizon’s biggest concerns, he says, is “customer privacy.” That’s code for arguably the biggest bone of contention for U.S. cell phone carriers: the ad-based business model.

While PC users are accustomed to being blasted with banner ads and spam, he points out, cell phones have historically been off-limits to such tactics.

That’s a problem for Google, whose survival hinges on growing ad-generated revenue, because its huge customer base is migrating to wireless. That’s a universe in which the tech behemoth currently has no stake, or leverage, to speak of. By making it easy for wireless customers to access its services via Android, the tech giant is hoping to secure its future.

Google’s insulated from customers
Google can well afford to test its ad theories in the wireless zone. It doesn’t deal with customers directly, so it has no worry about complaints from cranky customers who object to their wireless devices being turned into mobile billboards.

Verizon and AT&T, on the other hand, have plenty to lose. Each has spent billions to build relationships with customers, with a hard focus on reducing “churn” — industry parlance for the number of people who dump their services each month.

After years of chipping away at it, Verizon has one of the lowest churn rates in the industry — just 1.3 percent. AT&T isn’t far behind with 1.7 percent. For post-paid accounts, the rates are even better: 0.9 percent and 1.3 percent, respectively.

“When you build your reputation on a reliable experience, you don’t want to surprise customers with something they don’t want and don’t expect,” McAdam says. “Some people might argue that we are moving too slowly, but we have low churn and great customer loyalty, and we intend to keep it that way.”

Ralph de la Vega, CEO of AT&T’s wireless business, seconds that notion. “We are erring on the side of the customer, to make sure we don’t make the handset just another advertising site for spam and other things.”

AT&T’s wireless customers already get access to Google — and any other application they want — on their cell phones, de la Vega notes. The freedom, he says, owes to the AT&T network’s GSM technology, the standard in use by 85 percent of the world’s wireless consumers.

As such, de la Vega says he’s not so sure how Android will help AT&T’s 67 million customers. “You can already use any application on our network, including Google,” he says. “We don’t prohibit it, or even police it.”

Manageable searching
Dan Olschwang, CEO of JumpTap, a start-up that has developed a search engine and search-advertising platform for cellphones, says Google’s biggest problem isn’t the lack of an open operating system for mobile devices — it’s Google’s basic search algorithm, or how it searches. “They have to seriously overhaul it” to serve a mobile audience, he says.

For example, in the mobile Web world, “If somebody asks, “Where is the closest gas station?’ they need that information now, and they don’t need 20,000 results.”

Olschwang’s prediction: “I don’t think they’ll completely fail” in wireless, “but I don’t think they will be nearly as successful as they are on the (desktop) Web.”

Google declined to make executives available to be interviewed for this story. A founding member of its coalition, wireless provider T-Mobile, shed some light on its strategy, however.

Cole Brodman, T-Mobile’s chief development officer, says Google’s basic wireless goal is to use Android to better target ads to wireless customers so it can charge advertisers more.

By combining “unique information about consumers from the Web,” he says, with “other information” from mobile devices, such as location, “Google believes search responses can be much more targeted for Google, and that the value they can bring back to advertisers can be quite a bit higher.”

On the positive side for consumers, Brodman says, Android won’t favor Google over Yahoo and other search-engine rivals. He says consumers also can “opt out” of Google’s “cookies,” used to track their movements on the Web.

Regardless of what happens with Android, Brodman says, T-Mobile won’t blanket its customers with advertisements from Google or any other company.

“Mobile phones are personal and private, and we want to ensure that we are speaking for the consumer in terms of any advertising” that gets pitched their way, Brodman says. “Just getting blasted with search results and banner advertising is not something most consumers will accept.”

It remains to be seen if Android will become a monster success or a monumental flop. Regardless, Brodman says T-Mobile thinks there’s a lot of value to having a front-row seat on the strategy and thinking of the world’s biggest search engine.

“For us, the choice was to be a part of (the Google coalition) or watch it happen,” Brodman says. “We chose to be a part of it.”

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Mobile software moves PC headaches to phones

Spam on your cell phone?

Ready or not, that day is coming.

As wireless customers start using software applications not sold or even vetted by their service providers, spam, viruses and other cyberheadaches are inevitable, says Deepak Mehrotra, a vice president at Aricent, which tests applications for carriers such as AT&T and Verizon Wireless. “The cell phone becomes fertile ground for hackers.”

Mehrotra says big carriers do not make applications available to customers until they go through a “certification” process, which includes a battery of field tests to make sure the application performs as promised. Testers also make sure it doesn’t interfere with voice calls or compromise a device’s internal circuitry, including memory.

The process can be time consuming, he says. “Just to test out a single application with a single carrier is a three- to six-month process.”

Such vigilance is one reason U.S. cell phone customers have never had to deal with the viruses, spam and other headaches that can plague desktop PCs. This abundance of caution, however, has also made it difficult and time consuming for application developers to get their wares distributed broadly on cell phones.

As the wireless environment becomes more “open,” all that could change, Mehrotra says.

On the upside, U.S. consumers could soon be able to easily download dozens, or even hundreds (memory permitting), of new software programs to their wireless devices. On the downside, Mehrotra says, they will have to exercise caution when downloading new applications or could wind up infecting their wireless devices with “nasty viruses, the kind that can eat (PC) hard drives.” Noting that today’s wireless devices are essentially minicomputers, he says it wouldn’t be that difficult for a hacker to devise a program “that makes your (mobile) device use 99 percent of its processing power to add 1 plus 1 for the next six months.”

“Those are the types of problems we have not seen in the past” on mobile devices, Mehrotra says. “But they can happen.”

FCC Chairman Kevin Martin agrees that the new, open world of wireless brings additional responsibilities for consumers. “The Internet model is moving its way to the wireless world,” he says, noting that today’s PC users have similar responsibilities. Even so, he thinks it will be worth it. “Consumers will be able to get broadband all the time, in real time.”

Bill Plummer, a vice president at Nokia, the world’s largest handset maker, also thinks consumers will benefit. “The more competitive the (wireless) broadband space gets, the more we, as an industry, will continue to innovate.”

That, in turn, will pave the way for “new applications and new consumer experiences,” he predicts. “Whatever the Internet is tomorrow, mobility is going to be at the heart of it.”

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Race is on for Mobile Web’s pot of gold