Sam Liedtke & Austin Abbott of BestCellular.com noticed a catch in the “unlimited data” where the carrier includes “introductory offer” text for “Unlimited Data.” Two other major US carriers both did this a while back as well… Understanding your competition is the most powerful defense when your competition is playing dirty! What Sam did is called, “shopping your comps” in the industry.
One major US carrier was fined $100,000,000.00 (One Hundred MILLION dollars) for deceptive marketing while offering “unlimited data” with “reasonable usage policy caps”. Another major US carrier was fined $48,000,000.00 (Forty-Eight MILLION dollars) for the same thing.
Industry reports say the, one of the major carriers made $3.47 BILLION DOLLARS in the last quarter of 2016 alone. With that kind of profit at stake, these companies are fully willing to pay a hundred million dollar fine. They literally make BILLIONS by getting customers locked into an expensive contract with deceptive marketing.
Let’s break it down – Mobile data costs
What happens if you’re a customer who doesn’t have WiFi and you’re averaging 80GB per month. You sign up for the introductory “unlimited data” plan… What happens when the carrier cuts “unlimited” and bills you at $0.03/MB over 18GB. There are 1,024MB/ GB.
80GB (-) 18GB (=) 62GB Overage.
62GB (×) 1,024 (=) 63,488MB
63,488 (×) $0.03
(=) $1,904.64 overage (per MONTH)!
You’ve signed a contract and legally, they can make changes to cover compensatory damages, for abuse of the network; including but not limited to: Streaming music, video or excessive utilization of network resources.
Every carrier has legal protection policies written to save them from financial loss in the case of abuse.
Excessive Utilization of Network Resources: Consuming a disproportionate amount of available Network resources resulting in the potential to disrupt or degrade the Network or Network usage by others. The determination of what constitutes excessive use depends on the specific state of the Network at any given time. Excessive use is determined by resource consumption relative to that of a typical individual user of the Network and not by the use of any particular application.
In a nutshell, this means the carrier can restrict any user, at any time, for any reason they deem necessary. Low usage customers are profitable so they (obviously) won’t be penalized.
Notice the part about how, “Excessive use is determined by resource consumption relative to that of a typical individual user of the Network and not by the use of any particular application.”… This protects a carrier, even if their fine print says that throttling doesn’t start until 28GB, 23GB, 22GB, 18GB, 5GB, etc.
How can prepaid dealers compete and what should customers look out for?
Prepaid dealers need to explain to every customer that “unlimited data” is not really unlimited. Big carriers bank on customers paying for mobile data they don’t need. Help your customers find the right plan for their data usage. Consumers can save a lot of money and be more satisfied knowing they’re not paying for data they don’t need. Of course, help your customers read the fine print. Look out for throttling, video resolution restrictions, data caps, hot-spot restrictions, etc. “If something seems too good to be true, it probably is.”
As you can see, all of this is very vague, leaving plenty of room to protect carriers in case of abuse.
This is called a “wholesale carrier breakage gamble”. They’re gambling that most users will pay for “unlimited” while only consuming 768MB of mobile data monthly… The rest is just pure profit!
If they get a user who uses, “unlimited” data, it’s fully within their right to either throttle or cap that users mobile data… Pretty safe gamble, wouldn’t you say?
*Data overage charges do vary greatly between different carriers and MVNOs but many MVNOs charge up to $0.05/ MB or more! In this article, we use $0.03 as a reference for overage.