Study Confirms What You Already Knew: Mobile Data Throttling About The Money, Not Stopping Data Hogs

from the it's-all-about-the-$$$ dept

Fri, Feb 24th 2012 1:55pm — Mike Masnick

Of the four national mobile operators, only Sprint still offers an "unlimited" data plan -- and most industry watchers expect that to go away soon. When the operators talk about this stuff, they complain about how unlimited plans are abused and the amount of data being used by so-called "data hogs" is crippling network bandwidth. Of course, the alternative story is that they just want to charge people higher rates, and putting a toll booth on data usage makes that possible. A new study by Validas confirms that the latter theory seems to match with reality. The company looked at 11,000 mobile phone bills of users on both throttled (tiered) plans and unlimited data plans and found... data usage was effectively the same. In other words, for all the talk about how tiers and throttles are needed to stop bandwidth hogging... reality shows that these plans have little impact on actual data usage. Or, to put it really simply: these plans are all about the mobile operators making more money and have nothing to do with network capacity.

Of course, as I've argued in the past, this is a pretty short-sighted strategy by the mobile operators. While they have every right to set up whatever business models they want in order to maximize profit, this might come back to haunt them. The problem with a tiered or throttled data plan is that it actually makes the mobile data service less valuable. Not only does it cost more for the same usage, it adds mental transaction costs as users have to keep track of their usage. That's only going to make people value alternatives much more. The carriers can get away with that if there are no alternatives (as is the case some of the time), but as more alternatives hit the market, expect people to shift their usage to networks they can actually use without fear.

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Filed Under: bandwidth, bandwidth hogs, business model, caps, data hogs, spectrum, throttling, usage
Companies: at&t, sprint, t-mobile, verizon wireless

48 Comments

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Anonymous Coward, 24 Feb 2012 @ 1:57pm

But Mike they are a business. Businesses are people too and they have the right to rape you as hard as they want for profits and lie to your face the whole time. There is nothing wrong with this.
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- Anonymous Coward, 24 Feb 2012 @ 2:01pm
  
  Re:
  and while im at it http://verizonfails.ytmnd.com/
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  - Anonymous Coward, 24 Feb 2012 @ 4:15pm
    
    Re: Re:
    "... http://verizonfails.ytmnd.com/ "
    
    Now I'm scared.
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    - Anonymous Coward, 24 Feb 2012 @ 5:56pm
      
      Re: Re: Re:
      I can understand why the verizon reps were confused... Canada is on the metric system so math works different. I think they only have like 20 hours in a day or something up there.
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  - ltlw0lf (profile), 24 Feb 2012 @ 4:38pm
    
    Re: Re:
    and while im at it http://verizonfails.ytmnd.com/
    
    This is where all the E911 money went. They asked Congress for 300 billion cents, not 300 billion dollars. Congress thought 300 billion cents = 300 billion dollars. It all makes sense.
    
    Sad. I like the "I am not a mathematician." quip... If she doesn't know math, what the hell is she doing in accounts payable?
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John Fenderson (profile), 24 Feb 2012 @ 2:03pm

Unlimited abuse
I've never really understood how it's possible to abuse an unlimited plan. It's unlimited! Even if I pump data through at top speed 24/7, that could hardly be called "abuse".
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- The Groove Tiger (profile), 24 Feb 2012 @ 4:32pm
  
  Re: Unlimited abuse
  Hello.
  
  This is a representative of the PC Keyboard Co. It has come to our attention that you have abused your 104-key by pressing all 104 keys during the last month. When we sold you a 104-key keyboard, we assumed you wouldn't abuse your purchase, as most customer use mostly 40 or 50 keys tops each month. This will result in an extra surcharge of US $4.35 on the original purchase price of your keyboard.
  
  If you continue to abuse your Keyboard Data Plan, we will take further action, which could result in the throttling of your keyboard (one of our representatives will visit you and throttle it out the window).
  
  Have a nice day.
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- Derek Kerton (profile), 27 Feb 2012 @ 12:53am
  
  Re: Unlimited abuse
  Good point. They have changed the meaning of "unlimited" to something contrarian. Very "Alice in Wonderland".
  
  But given that "unlimited" doesn't mean what you think it means, even then if their top tiered plan is 5GB, wouldn't it be rational to expect that the "unlimited" plan is a notch above the top tiered plan. Yet it is not.
  
  As a rare techdirt citizen who is in favor of tiered pricing, I agree that this is exactly the kind of implementation that makes people hate their carrier.
  
  Here's three ways they could have made this work better/fairly:
  
  - make the cut-off a clear cut, publicized, no BS, 5GB for "unlimited" customers
  
  - make the throttling drop speeds to a usable, but noticeably slower 128Kbps - NOT the unusable trickle they current throttle to.
  
  - alert the user pro-actively BEFORE they reach the threshold, not just as it is reached.
  
  If they had done that, they would have been able to argue "unlimited" semi-credibly. As it is, I have to agree with Masnick that it looks not like a way to manage "data hogs", but a way to force legacy 'unlimited' users to switch to tiered plans.
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Jay (profile), 24 Feb 2012 @ 2:05pm

AT&T is screwed at least
If you factor in this study with how AT&T is throttling customers, expect that a lot of people are going to be sue-happy in the near future.
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- Anonymous Coward, 24 Feb 2012 @ 3:16pm
  
  Re: AT&T is screwed at least
  "At the end of the day, our contract governs our relationship with our customers," he said.
  
  Is it just me, or is this statement completely obnoxious?
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  - DC, 25 Feb 2012 @ 12:25am
    
    Re: Re: AT&T is screwed at least
    You realize that contracts are not always negotiated on equal footing, legal, or in this day and age apparently even viewable before payment?
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- Johnny5k (profile), 24 Feb 2012 @ 5:17pm
  
  Re: AT&T is screwed at least
  Yeah.. but how many people can afford to spend a few months (or more) going to court, for a possible $850? This is why we have class-action lawsuits; but wouldn't you know it, AT&T expressly forbids those in the agreement they all had to sign in order to get their 'unlimited' service in the first place!
  
  So, hopefully a million people sue individually.. but it doesn't really seem likely.
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  - nasch (profile), 26 Feb 2012 @ 9:58pm
    
    Re: Re: AT&T is screwed at least
    but wouldn't you know it, AT&T expressly forbids those in the agreement they all had to sign in order to get their 'unlimited' service in the first place!
    
    I wonder if such a provision is enforceable. There are some rights you cannot sign away. I kind of wish the right to sue were one of them - many contracts (probably almost all of them eventually) force you to waive your right to sue in favor of binding arbitration, which basically always favors the company over the customer.
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Glen, 24 Feb 2012 @ 2:06pm

And yet, they keep pushing and advertising how you can stream audio and video.
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- Anonymous Coward, 24 Feb 2012 @ 2:19pm
  
  Re:
  Yeah, they want you to go over your limit.
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Anonymous Coward, 24 Feb 2012 @ 2:09pm

The carriers' problem is not the "data hogs", is that they now see everyone as a data hog, even those using only the amount they were given.

Yes they did give everyone 2 GB of data, but they never expected people to actually use it. They used it only as a form of marketing - that "unlimited" trick, too. This is why they don't allow you to tether your own phone's data to your laptop, either. Because they don't want you to use that data fully, even though you paid for it fair and square.
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yourrealname (profile), 24 Feb 2012 @ 2:20pm

People won't switch to Sprint, they'll go where their iPhones tell them to. Part of the pride in owning Apple products is showing that you can afford such items, and that includes not caring what the plan costs. They're milking people because they know they won't switch because that would make them seem less rich/cool to their peers.
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- :Lobo Santo (profile), 24 Feb 2012 @ 2:24pm
  
  Re: o_0
  Yeah... ain't nobody but iPhone users using their data plans up in here!
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- weneedhelp (profile), 24 Feb 2012 @ 2:38pm
  
  Re:
  "Part of the pride in owning Apple products is showing that you can afford such items"
  
  Part of the stupidity in owning Apple products is showing that you can afford such items
  
  FTFY
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  - Ed C., 24 Feb 2012 @ 3:09pm
    
    Re: Re:
    Right, but he line between the two is often very blurry.
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- Anonymous Coward, 24 Feb 2012 @ 2:39pm
  
  Re:
  Phones available from Sprint include the iPhone 4 and 4S. Interestingly, iPhones, for all their "neatness", do have limitations that are not associated with phones from other manufacturers. For example, I can "GPS" just fine with my Samsung, and GPS is one of the services included in Sprint's data plans. Unfortunately, this service cannot be used on an iPhone, even though subscribers are already paying for it. Instead, iPhone GPS requires a subscription app.
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  - Anonymous Coward, 24 Feb 2012 @ 2:44pm
    
    Re: Re:
    Ummm No, I use GPS on my iphone all the time. I do not subscribe to any GPS service. There's an app for that.
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    - Chronno S. Trigger (profile), 24 Feb 2012 @ 3:05pm
      
      Re: Re: Re:
      AC's probably talking about the GPS you get from the Cell towers, which is more accurate (and easier to get in a City) then the Sat GPS. While I could see Apple limiting the iPhone to only one navigation app, I can't see Sprint doing that.
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      - Some Other AC (profile), 27 Feb 2012 @ 7:19am
        
        Re: Re: Re: Re:
        Chronno, I have worked in the Wireless Industry before(Sprint, ATT, and retailers). SAT GPS(when you get lock) is much more accurate that Cell Tower location. Cell Tower location is based on Triangulation between the closest towers that your device is associated with. This can be verified by disabling your GPS for apps like Google maps.
        
        As for Apple or any other company limiting you to "their" service? I cannot speak to that. It would be self defeating as many apps for both iOS and Android require GPS for basic functionality.
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- dennisl, 27 Feb 2012 @ 6:23am
  
  Re: showing what you can afford
  Oh pleazzz. People who have the iPhone are mostly a bunch of actors (or tools). They THINK they are being cool by walking around with that little white brick stick to their head but from what I've seen at their stores, in cell phone stores and in the general population is it's a bunch of people who want other people to think they have something they don't. Class. In the world where the path was set by the Black Berry, the TREO's and now Android's. Apple only provides devices to the technically-declined people who can't follow a trend if it was nibbling them on the azz.
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  - nasch (profile), 27 Feb 2012 @ 7:25am
    
    Re: Re: showing what you can afford
    Apple only provides devices to the technically-declined people who can't follow a trend if it was nibbling them on the azz.
    
    I thought the reputation of Apple users is that they're best at following trends.
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Josef Anvil (profile), 24 Feb 2012 @ 2:23pm

You don't need studies
This one is a no brainer. You don't need studies to figure out the Telcos and Cable companies blatantly lie when it comes to bandwidth hogs.

First of all, fixed and wireless networks in the US have been merging their traffic for at least the past 5 years. In the fixed world, ATT and Verizon have been trying to put caps on usage because of "bandwidth hogs" while at the same time promoting their TV offerings, which will definitely use far more bandwidth than they accuse the hogs of using.

It's all about getting the monthly phone bill back to where it was before IP destroyed their pricing model. So they charge us for the pipe and when we use it they create an artificial scarcity ( sound familiar? ).
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- sehlat (profile), 24 Feb 2012 @ 2:45pm
  
  Re: You don't need studies
  It's all about getting the monthly phone bill back to where it was before IP destroyed their pricing model. So they charge us for the pipe and when we use it they create an artificial scarcity ( sound familiar? ).
  
  That's a nice internet connection you got. Be a shame if anything happened to it.
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- nasch (profile), 26 Feb 2012 @ 10:01pm
  
  Re: You don't need studies
  In the fixed world, ATT and Verizon have been trying to put caps on usage because of "bandwidth hogs" while at the same time promoting their TV offerings, which will definitely use far more bandwidth than they accuse the hogs of using.
  
  I don't know the details of the deals, but do they include the TV stuff in the monthly caps? Because that would come from their local network and so not require any peering. It would be basically free to the ISP if I understand correctly. So that would be double douchebaggy to include that in the capped data.
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Anonymous Coward, 24 Feb 2012 @ 2:39pm

Alternatives?
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Anonymous Coward, 24 Feb 2012 @ 2:54pm

Australia has had these tiered plans since day dot. No suprises if you get the same scams pulled on you as our wireless companies pull. http://www.smh.com.au/business/optus-fined-for-misleading-ads-20110518-1esb8.html

Many customers go over their 'caps' and are slugged with really high call/data rates. Stories of people having monthly bills in the thousands of dollars are not uncommon.

With many apps on smart phones connecting automatically to the internet it can be hard to keep a track of your usage.

Usually the companies response to criticism about these plans is that it is the users responsibility to know what they sign up for, and to watch their usage, unfortunately now days companies have no moral responsibility to play fair.
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PW (profile), 24 Feb 2012 @ 2:58pm

Three words, OVER-THE-TOP. If you consider that a good part of carriers' revenues come from voice and SMS traffic, and both of these are being disrupted by IP level services (ie. Skype, BBM, et. al.), then the carriers are looking at a bleak future where some very important revenue is slowly disappearing. If they don't capture this, then one day they could see all their users on the lowest level voice plan and taking advantage of the unlimited data plan to do everything they used to pay for before. From a carrier's perspective, I have to believe this is a tough situation to be facing, and it's not easy to see how they might address more gracefully. Of course, lying about their reasons isn't helpful, and telling the truth certainly won't gain them any sympathy, but thems the facts ;)
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- Ed C., 24 Feb 2012 @ 3:19pm
  
  Re:
  The thing is, it's already happening. The bandwidth crackdown, however, isn't moving customers back to the high-profit structured services carriers want--it's moving them more to wifi. Once people get a taste of freedom, there's no going back.
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  - nasch (profile), 26 Feb 2012 @ 10:07pm
    
    Re: Re:
    The bandwidth crackdown, however, isn't moving customers back to the high-profit structured services carriers want--it's moving them more to wifi.
    
    And it's a death spiral. The more the carriers clamp down/overcharge for data, the more people move to wifi. The more they use wifi, the less money the carriers get, so they cap/overcharge more to compensate, and so on. If it continues like this, cities will eventually be blanketed by free wifi and I would guess a lot of people won't even buy a data plan (if that's even allowed by their carrier). Maybe buy a prepaid mobile hotspot for travel.
    
    If unlimited data plans really aren't profitable (a claim I'm skeptical of), I'm not sure what long-term alternative the carriers have.
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- Anonymous Coward, 24 Feb 2012 @ 4:26pm
  
  Re:
  The problem with that is that cable ISP's are capping their 'unlimited' plans as well. Cox sent me a letter several months ago because my monthly useage amounted to little more than a couple of HD movies per week (and nothing else). Now add blu ray players, stand alone game players, media boxes and phones connecting - and someone is going to get paid as much as possible for it, if not everyone along the way.
  
  The future is wifi and they know it.
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Anonymous Coward, 24 Feb 2012 @ 3:00pm

maximizing profits is one thing, lying to customers is a completely different and unacceptable practice. same as with all money grabbing industries, take the piss out of customers once too often and you end up losing a whole lot more than you expected! but, like the entertainment industries, the telecoms wont listen to sense, thinking they are always right!
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Rich, 24 Feb 2012 @ 3:01pm

SURPRISE!
Mobile operators install infrastructure for the betterment of mankind and making money is the last thing on their minds. They would gladly eat dirt if they could only satisfy your highly important data-streaming needs. They would never dream of charging more for a commodity with an inelastic demand curve. Here's a lesson on that http://www.investopedia.com/university/economics/economics4.asp#axzz1nLKQC7ox . By the way, look up you just ran over an old lady and it's time to take that left turn.
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Anonymous Coward, 24 Feb 2012 @ 3:17pm

same thing...
data hogs are a drain on the system, requiring network upgrades. Of course it's about money, that's the whole point of a business.
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- DC, 25 Feb 2012 @ 12:31am
  
  Re: same thing...
  Truth in advertising anyone? anyone? Bueller?
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Anonymous Coward, 24 Feb 2012 @ 3:20pm

I don't understand why people just stop using the cellphone networks and start using the fiber networks instead, it is easy to route data through it, just dump their asses and leave them without the money.

Femtom cell technology is everywhere these days you can even do it yourself one of those that doesn't use the networks of the telco company, now that would make them mad.
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- fb39ca4, 24 Feb 2012 @ 3:33pm
  
  Re:
  because fiber networks aren't wireless. durr.
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  - Anonymous Coward, 25 Feb 2012 @ 2:11am
    
    Re: Re:
    Buy a $10 WiFi router then.
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Jim O (profile), 24 Feb 2012 @ 4:49pm

Precise reason I picked Sprint
I'm sure that my average monthly usage is nowhere near 2GB/month, but I was too lazy to verify that. That's the main reason I went with Sprint's unlimited data. I won't use it, but I don't have to think about it if I go on a streaming spree.
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RichWa (profile), 24 Feb 2012 @ 5:02pm

ATT can lose big
"Pro-tem Judge Russell Nadel found in favor of Spaccarelli in Ventura Superior Court in Simi Valley on Friday, saying it wasn't fair for the company to purposely slow down his iPhone, when it had sold him an "unlimited data" plan."
--- http://news.yahoo.com/judge-awards-iphone-user-850-throttling-case-195042925.html
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Endtimer (profile), 25 Feb 2012 @ 12:40pm

Just stupid, not evil?
I may be naive in saying this, but isn't there a chance that they DO throttle to stop bandwidth hogs, and it's just not having the desired affect? It seems kind of a stretch to go from "Their plan didn't work" to "They must have lied about what their real plans were!" I bash the telecom companies all the time, but sometimes they're just stupid, not evil.
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- nasch (profile), 26 Feb 2012 @ 10:14pm
  
  Re: Just stupid, not evil?
  I may be naive in saying this, but isn't there a chance that they DO throttle to stop bandwidth hogs, and it's just not having the desired affect? It seems kind of a stretch to go from "Their plan didn't work" to "They must have lied about what their real plans were!"
  
  Except that they've been doing it long enough that it's demonstrably not working. So even if that were originally the goal, it can't still be the goal, because they know it won't work. Therefore, if they're still claiming it's about data hogs, they're lying now, even if they weren't before. Unless they're so stupid they actually haven't noticed it's not working. I like to bash them too, but I don't think they're that stupid.
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dennisL, 27 Feb 2012 @ 6:12am

Don't sell what you can't deliver
For once, why won't the telco's come clean. They are marketing services they or their network can't or won't deliver. They KNEW what these phones were going to do to their networks but they got everyone to buy their Android and Apple phones only to pull the (or at least try) rug out from under everyone and then to start charging MORE for less. It's not the datahogs that's the problem. It's those idiots in marketing who are trying to sell something they can't provide.
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vastrightwing, 27 Feb 2012 @ 10:08am

Go retro with analogue encoded data.
Yes you understood that right. Perhaps I�ll write an app that uses the voice channel to revive the old analogue modems of the past. This can take advantage of unlimited voice plans to encode data and thus surf the internet without restriction. Of course, this would require a bank of modems to call into. Imagine using the AP mode of your phone to act as a WiFi access point using 56K modems on the other end. I imagine this wouldn�t be too much worse than what we get now for speeds anyway.
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