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Wireless Data Plan Cap Relief? Sort Of

Phillip Dampier May 13, 2009 Verizon 4 Comments

vzwTraditionally, data plans from wireless phone providers, whether they call them “unlimited” or not, usually carry a fine print “5GB monthly usage limit” somewhere in the terms and conditions.  Some providers do nothing if you happen to exceed it, others will threaten to terminate your service, or charge you overlimit fees that quietly accumulate until the phone bill arrives in the mail.  Wireless data providers limit consumption primarily because they don’t have the capacity to provide you with limitless access, at least not yet.  But the paltry limits most providers set, with nasty overlimit fees for exceeding them, aren’t justified either.  Most providers do everything but come out and admit you are only supposed to use their services for web browsing and e-mail reading, so control yourself.

Verizon Wireless has a complication, however.  In the coming week, they are expected to unveil an HP 115NR Netbook with built-in wireless broadband capability designed to work on Verizon’s network.  The Netbook will cost $199 after mail-in rebate, and your commitment to a two year service contract with a data plan priced $40-60 a month.

Verizon Wireless has never been the value leader in the wireless marketplace.  Its data plans are not cheap, and their current data limits evidently did not test well with focus groups.  Why pay $199 for a Netbook, commit to spending $1,160 to $1,640 over the life of the contract, before taxes and fees, for the data plan and Netbook, and ration your use to between 50MB on the $40 plan, or 5GB on the $60 plan each month?  You can buy your own Netbook for less than $400 and go find your own Internet access somewhere else without a contract.  You’d also avoid the very costly mistake of going over your plan limit, with a $0.25/MB overlimit fee.

When a company has an incentive to ease up on usage caps, such as finding a market for a new product, magically the way is seen clear.  Did Verizon Wireless suddenly develop oodles of new capacity?  No.  Has a major technological innovation suddenly become available reducing their costs dramatically?  Hardly.  Is the company looking for success in selling a Netbook to customers with a data plan that won’t drive customers out of the store shaking their heads?  Yes!

So Verizon Wireless has fired the first shot in what could eventually provide some relief from very low usage caps and very high overlimit fees for mobile broadband.  With the advent of the Netbook promotion, Verizon Wireless will revise their 50MB plan to now provide 250MB of access, with overlimit fees now priced at $0.05/MB.  The punishment price for exceeding your 5GB “deluxe plan” cap has also been cut, to $0.10/MB.  It’s still expensive when compared to Sprint, which offers a 5GB data plan with overlimit fees locked at $0.05/MB, but an improvement over T-Mobile, which charges $0.20/MB for exceeding the 5GB limit.

The company that everyone is waiting to hear from is AT&T, which charges the most outrageous fees for exceeding the limit on its Data Connect plans.  Exceed your 50MB plan there and pay $1.02/MB in overlimit fees.  The 5GB plan is also punishing for those who exceed it, with a $0.51/MB overlimit fee.  Few think AT&T will leave those limits and overlimit fees in place for long.

Wireless broadband growth has not been what it could be, and primarily because it remains too costly for many residential customers to hop on board and pay the $40-60 a month ticket to ride.  A wireless price war on data plans, much like the one now underway on voice calling plans, could dramatically bring prices down and loosen up those caps.  It helps when most Americans have a choice among six or more providers for wireless services, all competing for your business.

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Tim
Tim
14 years ago

Cricket is now offering wireless 3G in some areas for $40/month. It sounds like an awesome deal compared to the other wireless providers. They have that 5GB limit too but all they say about is that they can “throttle” your bandwidth if you go over that limit which to me is a more reasonable solution and makes more sense. [quote] Plan Features Wireless Network Technology CDMA Plan Type and Features Calling area local coverage areas Included Minutes Connectivity unlimited Other Possible Charges None Additional Features Save an additional $5 per month when bundled with a Cricket unlimited voice plan. Contract… Read more »

Tim
Tim
14 years ago

Phillip, I posted something and it isn’t showing up. Also, there was another post by someone else and now it is gone too.

T.M.
T.M.
14 years ago

How can a company advertise something as “Unlimited” but then set a limit at which additional charges apply? That seems like it would be false advertising or bait and switch at least.

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