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Your wireless carrier is gouging you and we have the numbers to prove it

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Don’t cap data, throttle it

bobbarkershowWhy do AT&T and Verizon have to cap data plans (cut you off), instead of throttling them (slowing down your speed if you overuse)? What’s the excuse? Whatever reasons the two largest carriers in the U.S. may give, many carriers outside the U.S. don’t just cap data once you reach the limit, they throttle it.

Throttling is a very common way to offer a set amount of high-speed data, and then limit users to a mere 128 Kbps (or other slower) Internet connection should they exceed that limit. If a carrier doesn’t already offer ‘unlimited’ data in some way, they offer data as a “high speed” amount, rather than a hard cap on usage. Most of the top carriers around the world slow down your mobile Internet speed if you go over, rather than slap you with a hefty overage charge.

Vodafone, Telefónica, Orange, Deutsche Telekom, and Hutchinson are but a few of the many wireless carriers out there that throttle you once you go over your data limit. American carriers used to be same way with the invisible “soft cap” in data plans just a few years ago, throttling heavy users. These days, hard caps are now in place by the top two carriers. They pay for a ceiling of data that isn’t completely used, and are punished if they go over. It’s like some sort of sick game of The Price is Right.

It would be better if U.S. carriers were more like Softbank in Japan and offered some clear scale showing just how you pay for your data, and showing how you don’t have to pay for unlimited unless you go over the “unlimited” threshold. (Ting, a tiny carrier in the U.S., does offer freedom of service like this.) This à la carte methodology is not only more economical for the carrier, but applies common sense and is completely transparent with the customer.

Data capping is a poor excuse to charge customers $10 per gigabyte overage fees when they really did nothing wrong. No one can effectively plan their data usage two years in advance, so shame on American carriers for punishing its customers for being human, or for picking a ceiling they can never be allowed to touch.

Why is texting not part of data?

Texting, or its more official name, SMS (Short Messaging System), has been around for ages, and has molded the very way we speak. Twitter alone is a testament to the power of the 140 character message, and while we continue to revolutionize our ways with it, we also continue to let carriers charge us for texting like we’re in the Stone Age. While some carriers, such as T-Mobile and Sprint, try to bundle texting with ‘unlimited’ deals, others continue to charge a small fortune for a service that is, essentially, using data.

AT&T is really the worst offender. It charges $20 per month for SMS on any of their older, non-unlimited mobile plans. While most carriers, inside and outside the United States, offer plans that include unlimited messaging, the problem is more than just the insane markup on messaging, but the fact that it’s pretty much the equivalent of a tiny, miniscule piece of data (unless it has a picture attached). Carriers should throw SMS into the equation as a data-using application. The only reason it’s not is that this would kill the $5-$20 markup wireless carriers get on SMS. Wireless carriers need to start being honest with their customers and drop SMS fees. It won’t be long before all voice goes over data as well.

U.S. subsidized phones are still overpriced

While we’re busy talking about ending subsidies for phones in America, over in Europe subsidies are all the rage.

While we give credit to T-Mobile for its efforts to actually change its ways, we have a serious problem with its new “Value plans,” where you get an impressive smartphone plan for just $55 a month, but only if you buy your phone outright. Sure, if you have the $600 to drop, you can pay as little as $55 a month for an unlimited 4G plan with 400 minutes of talk. But, for reference, let’s look at Everything and Everywhere in the UK.

U.S. carriers like Verizon and AT&T charge $200 for a Galaxy S3 or iPhone 5 with any 2-year contract. But Everything Everywhere lets you buy a 4G-powered smartphone of choice, and depending on the plan you buy, it increases the subsidy for you phone – as in, you pay less. That’s right. If you pay $80 a month for the 5GB data plan, plus unlimited talk and text, then you only have to pay about $50 for a Samsung Galaxy S3. If you go for its top plan – a whopping 20GB for only $95 a month (20GB will cost you $180 per month on Verizon) – then you you can pay as little $35 for an iPhone 5. How you like dem apples? European carriers have realized their customers like it when they’re rewarded for going in for the long haul and for bigger & better plans, rather simply trapping them.

Perhaps the irony in it all is that T-Mobile’s own parent company, Deutsche Telekom, does the same exact thing. If you buy a plan with the German wireless company, they’ll discount the phone even more, even though their prices are not much better than those in America.

T-Mobile USA’s Value Plan is cool and all, and it really makes sense. But it should reward those who are willing to take a 2-year contract, much in the way Everything Everywhere does. Is this so much to ask? And these aren’t the only folks that do it either. Orange, Vodafone, and others all offer up a discount if you pick a bigger plan, actually giving incentive to those who foot a bigger bill. Orange France will even give you a subsidized phone every year if you cough up just $95 a month – still cheaper than Verizon and AT&T (and that’s with unlimited calling, texting, and 5GB of data.)

Will it change?

In the end, U.S. carriers are unlikely to learn from their international counterparts. We can only hope that a smarter competitor emerges. Right now, we’re spending too much on wireless service and getting far too little in return for our $80-$100 monthly investment. While T-Mobile and Sprint remain the edgier than Verizon and AT&T, all four of them could use a price makeover. Here’s to hoping something changes soon.

We’re not holding our breath though.

First image courtesy of imagefactory/Shutterstock

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