"Unlimited" data plans simply do not exist in the United States anymore. All of the major U.S. carriers “throttle” customers who use too much data, and Verizon’s new policy is tougher than its competitors' policies.
If you’re a normal person your definition likely looks like this: “not limited; unrestricted; unconfined.” But if you’re a wireless carrier you apparently define the term differently. To carriers, “unlimited” means as much as you want until they say you’ve used too much.
I’m talking about data, of course. Verizon and AT&T have long since discontinued unlimited data plans. Sprint and T-Mobile still offer them, but they penalize you if you use too much. The penalty comes in the form of throttling, which means your connection speed is slowed way down for a period of time.
Verizon has been trading barbs with the Federal Communications Commission (FCC) over its policy of throttling heavy users. Verizon had been slowing down users who consume too much (in Verizon’s view) 3G data, and now it says it will start to throttle heavy 4G users by October. The FCC cried foul, and Verizon fired back. Much of its defense boils down to this: Everyone else does it, why can’t we? (Verizon responded to the FCC via a letter you can read here.)
There’s some truth to Verizon’s claim. Everyone, at least all four major U.S. carriers, admit to throttling heavy users, though you may have to read some small print to find the admissions. So why single out Verizon?
Verizon no longer offers unlimited data plans. But it still has a significant number of subscribers with so-called “legacy” plans that include the feature. These people are the ones who will be throttled if they use a lot data in heavily congested areas when lots of people are using the network.
This might be reasonable if Verizon slowed all of its customers. If the company did, I’d be more inclined to believe it when it claims that throttling is simply a necessary form of network management. But Verizon doesn’t throttle other customers; only the ones on old, unlimited plans, which makes me think the company wants to push them to more profitable plans.
AT&T does something similar: it throttles unlimited customers on legacy plans who use more than 5GB of data in one billing period. That mocks the idea of “unlimited” data, but at least AT&T only throttles the customers for a single billing period. Verizon does it for two billing periods, which seems more like punishment than network management.
T-Mobile, which loves to call itself the “uncarrier,” explains its policy on throttling like so: “Customers who use more data than 95 percent of customers on the same rate plan typically use in a month may, during times and places of congestion, have their data usage prioritized below other customers.” That’s a convoluted way of saying they’ll be throttled.
So is Verizon worse than the rest of the bunch? On this issue, it is. But the whole bunch is crummy.
On a different — but related — note, I want to add that the collapse of Sprint’s proposed purchase of T-Mobile is very good news for consumers. Combining the number three and four carriers would have been a serious blow to competition in the wireless market. Sprint’s owner, Japan’s Softbank, likely realized that U.S. regulators would not approve the merger and therefore pulled the plug.
San Francisco journalist Bill Snyder writes frequently about business and technology. His work appears regularly in CIO.com and the publications of Stanford's Graduate School of Business and the Haas School of Business at the University of California at Berkeley. He welcomes your comments and suggestions.