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The real problem with unlimited data plans

The real problem with unlimited data plans
Carriers are trying really hard to get everyone to move to some sort of tiered data plan, and it may not be for the reasons you think. Frequent readers know that the not everything is as it seems when it comes to unlimited data plans. Network carriers have pushed the “we must improve network performance for everyone else” angle, but cold hard facts have called that argument into serious question. While there are very real cases of network congestion caused by individuals who consume 50+ GB of "unlimited" data over a short period of time, studies show that the vast majority of unlimited users consume much smaller amounts of data than the equivalently priced tiered plans allow.

It turns out that even the vilified “top 5% of unlimited users” generally don’t exceed the amount of data available by tiered plans. Think about that for a second – customers with grandfathered unlimited plans tend to be among the longest standing and most loyal customers, yet in many cases they were getting their data throttled long before they had used as much data as a tiered customers is allowed to, even though both customers pay the same monthly rate.

The only reasonable conclusion is that carriers were trying to harass some of their best customers into changing to tiered plans, even though it would have essentially zero impact on network congestion. Recently, the big networks have relented somewhat; after being on the losing end of a very public small claims court decisions, as well as getting the sort of press coverage that makes corporate VP’s reach for the Pepto-Bismol, AT&T (long the worst offender) changed its policy, allowing unlimited data users to consume as much data as their tiered cohorts before getting throttled.

The real problem with unlimited data plans
We certainly welcome AT&T’s move, but now that the “stick” of throttling is becoming less of a problem, the “carrot” of shared data plans is about to arrive. Shared data plans will be a boon to many, and will likely provide a compelling reason for many unlimited customers to switch. The ability to add a 4G tablet to your line without having to pay a separate monthly fee, or being able to put your spouse or children on your data plan will be very appealing to a lot of households.

But why should the carriers be so interested in saving you a little money (and therefore hurting their bottom line)? There are a couple of obvious answers; they can sell tablets that otherwise get sold in Best Buy or Apple stores. And if more people have smart devices that might translate to more people using V CAST, or the Verizon Navigator. But there’s actually a much bigger reason, and it has to do with revenue growth and basic math.

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posted on 20 Mar 2012, 19:03 2

1. rockstarlive (Posts: 307; Member since: 19 Oct 2011)

its all about tech advancement every day. There is already talks about LTE+

posted on 20 Mar 2012, 20:25 2

13. nnaatthhaannx2 (Posts: 820; Member since: 19 Oct 2011)

LTE stands for Long Term Evolution....?

posted on 20 Mar 2012, 20:48 1

17. rockstarlive (Posts: 307; Member since: 19 Oct 2011)

i was talking about lte plus or advance. something even faster then current lte

posted on 20 Mar 2012, 21:42 1

20. remixfa (Posts: 14605; Member since: 19 Dec 2008)

Long Term Evolution - Advanced.

The current theoretical cap is 100mbs, but none of the carriers will ever see it. The networks are not even capable of hitting that. In probably 3-5 more years you will see VZW and others upgrading their LTE to LTE-A systems. That doesnt mean that your phone is going to hit 100mb/s speeds all the time.. heck, it might not be used in phones at all. its better bandwith as well as faster so it allows for more connections.. as well as faster. Those big theoretical speed limits sound great, but in reality it just means that there are more pieces of the pie to split around to users... which is a good thing.

posted on 20 Mar 2012, 19:08 3

2. andro. (Posts: 1999; Member since: 16 Sep 2011)

Networks choke data plans as customers are increasingly using apps like viber,whatsapp etc to make calls and texts rather than paying for the likes of say for example: 300 mins & 300 texts

That saying we did have with individuals on unlimited plans racking up 700gb of downloads data a month,looking at these people leeching is an acceptable reason for networks to limit usage

posted on 20 Mar 2012, 19:19 2

4. ironmarc89 (Posts: 54; Member since: 22 Jan 2012)

Now i dont feel so bad about having AT&T anymore. I have unlimited data now since i have an employee plan with AT&T. But i will be leaving my job for the Army in may so i have to go back to a consumer plan. Honestly, i only use like 2.5-3 GB with the Unlimited data bcuz Wifi works better for my videos anyway. I'll prob get the 5GB and put the 20% Military discount on it and see how much i really use it, if not, i'll downgrade

posted on 20 Mar 2012, 19:23

6. HGMIV (Posts: 52; Member since: 15 Feb 2012)

You're lucky you got their unlimited employee plan. As a new employee, I can only get up to the 5GB plan. That may only be for LTE devices, though. I'll have to ask my rep.

posted on 20 Mar 2012, 20:00 4

10. 14545 (Posts: 1676; Member since: 22 Nov 2011)

IF VZW "KICKS" me off my unlimited plan, I will tell them to get bent. I pay more for their services as is, and if they force me to do this, then I will leave. and if there is a company that won't give me a minimum of 6-10 gb for 29.99 then I will deal without a data plan. If I can't stream music, watch videos, and navigate without fear of crossing my cap, then I won't bother at all. I'll go back to xm and portable navi. Screw the stockholders, because without customers you won't have F---ing stockholders.

posted on 20 Mar 2012, 20:05 2

11. ironmarc89 (Posts: 54; Member since: 22 Jan 2012)

dude, you want alot for nothing. You are too cheap for verizon. You need pre-paid for all of that.

posted on 20 Mar 2012, 20:26 2

14. QWIKSTRIKE (Posts: 1298; Member since: 09 Mar 2010)

You forget that this is not about bottle necks, its about making profits to satisfy stock holders. Wake up, they know hat you want bait you hook you and then charge you up the nose to rob you of your money for something that should be basic. Cable gave you a package, and every time they want more profits they change the package bundle and add more money for you to get what you used to have for x of dollars less.

When will deep pocket fools like you realize that you are being scammed for your money in the name of re-badging, re-bundling, or throttling to make stock holders happy at your expense!

posted on 20 Mar 2012, 20:18 1

12. Socalvenom (unregistered)

I'll tell you whats the real problem is. The real issue is the word"unlimited" the fact is "unlimited" never existed it was just a huge marketing scam to provoke customers into buying the service when in fact the mobile carriers already knew and had a limit for 3g data per customer. Company's like At&t and Verizon to name a few noticed many customers abusing the data limit and so out of precaution "unlimited" data plans were discontinued and the new tiered plans introduced but the new data plans were already there from the get go it was only after customer demand that these company's finally showed the actual numbers per line, as a back fire many couldn't handle and still can't handle the truth and so switch to more affordable carriers like Boost,Virgin or MetroPCS with the the illusion of still keeping an "unlimited data plan". To tell you the truth if company's made good by their customers from the beginning this nightmare of "unlimited" wouldn't of happened but what do you expect when you treat people like morons and when they learn the truth they bite you back in the ass. Plane and simple "unlimited" never existed do your research and you'll see that everything from Unlimited talk to unlimited text has a CAP!

posted on 20 Mar 2012, 21:06

18. QWIKSTRIKE (Posts: 1298; Member since: 09 Mar 2010)

It's more like when they found out that you use lots of data they thought of a way to pry your money out of your wallet. Get you hooked on high data usage and then charge you for it on a pro rated tiered rate. It won't get better until foolish consumers realize they are being scammed.

posted on 20 Mar 2012, 20:43 4

16. JBz007 (Posts: 63; Member since: 02 Mar 2012)

This is one of the most thoughtful articles I have read on PA. Very good stuff. Keep it up.

posted on 20 Mar 2012, 21:39 5

19. remixfa (Posts: 14605; Member since: 19 Dec 2008)

scott, that was your best article in a while. good job. :)

posted on 20 Mar 2012, 22:08 1

21. mettec (Posts: 13; Member since: 13 Dec 2011)

Here's my problem with tiered plans. If providers like VZW want to push consumers to tiered plans then why are they promoting services like V Cast, Netflix, Hulu, Redbox (soon) Blockbuster etc.... when you know after streaming movies a couple times per week, streaming audio, and playing games that require more data to play, you could be over your limit in less than a month.

We know that more graphicly intense games are coming which will take more power and resources that eat up your data quickly. Sure we can use wi-fi to do most tasks but not everyone has it available to them. They want you to have everything but in the end you we are the ones getting the raw deal while the network providers make the profits.

Eventually these APP companies will not exist on your smartphone because most consumers will not be able to use their services and will lose money because of data limits.

posted on 20 Mar 2012, 22:53

22. Tux4g63 (Posts: 121; Member since: 21 Oct 2011)

If you really think about it, you answered your own question. The carriers want to push you over your limits because overage fees are straight profit for them. Like credit card companies late fees and overdraft fees are the bread and butter of their profits. A customer who stays within their limits is profitable, but a customer who blows through their limits is more profitable...

posted on 21 Mar 2012, 04:21 1

23. bigdawg23 (Posts: 462; Member since: 25 May 2011)

I have AT&T unlimited and use around 2.5-3.5GB per month. However I just found out my company has a contract in place with VZW to get Unlimited Data for Domestic and Global. If I begin to get throttled by AT&T it will cause problems. I spend $230 a month with them using three smart phones and two standard phones. There is no reason to target users in the under 10-15GB category. Now if you are 20GB and up clearly you are hotspotting your phone or streaming videos a whole bunch.

posted on 21 Mar 2012, 07:10 4

24. ibap (Posts: 785; Member since: 09 Sep 2009)

First they get you with a phone which you can't readily move from company to company. Then they want to limit data, but they don't make it easy for you to see right on your phone how much you've used.

Profit motive solely.

posted on 21 Mar 2012, 12:56

25. downphoenix (Posts: 3165; Member since: 19 Jun 2010)

This article is wrong. The real problem with unlimited data plans is that there simply are not enough of them available to consumers.

posted on 21 Mar 2012, 18:48 2

26. TheMurkMan (Posts: 2; Member since: 21 Mar 2012)

The real problem is all these greedy bastards in the wireless industry and corporate America in general. Sell you thin air at a premium, then put on a rubber and nail you from behind. I'd personally beat the **** out of McAdams and De La Vega if those assbags were in front of me, but I'm sure I'll never get the chance.

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