Readers weigh in on data caps

Readers last week offered some thoughtful and insightful comments to my editorial [1] questioning how long mobile operators can institute data caps on usage. I cited the instance of Billie Parks, who filed suit on behalf of herself and others against AT&T Mobility and RadioShack [2] after she purchased a $100 netbook at a RadioShack bundled with a two-year data contract from AT&T. Her first bill was more than $5,000.

The industry clearly faces a conundrum: Operators desire to push mobile data services, and as they do, they face a consumer who wants to use these services just like they use their fixed broadband connections. Wireless operators cannot allow this as they are hamstrung by the finite spectrum resources associated with broadband wireless.

Some readers were bothered by insinuation that operators hide their data limit stipulations in the fine print. In fact many operators, such as Verizon, clearly spell out the 5 GB limit in their contracts and online and work to educate users about how much data is used up to send an email or view a video. So be it. But the fundamental problem is that the average consumer has a very difficult time understanding how much data they are using. This is an issue I have gone back and forth with many a carrier executive about. To them it is straight forward: Customers are accustomed to a certain amount of voice minutes, why can't they understand that they only have a certain amount of data?

Consuming data is not a matter looking at the clock to watch the minutes go by. There are some really tricky elements to it, as readers pointed out. For instance, a customer lands on a web page where streaming video and audio continually send data but they don't realize it. Spyware also continually running in the background eats up bandwidth too. (Yes, there are data usage statistics available, but as some readers pointed out, they aren't often reflecting usage in real time and they aren't available everywhere.)

At any rate, I want to share with you some snippets of the insightful comments that I picked out from the many commenters last week. Many of them sell these devices and plans in the field, so they have first-hand experience as to how customers understand caps on data plans:

"Most consumers who purchase these data cards only care about one thing... broadband Internet access. To inform them that a GB is 1000 or 1024 MB or 1,000,000 KB is a waste of energy because they will forget it. They will not remember that they can download 17,000 web pages or 25,000 photos. They came in to purchase mobile Internet access."

"I could give my customers all of the literature in the world explaining downloads and limits (which I do) and 99 percent of them end up in the garbage can. Most of my customers have cable modems or DSL at home with no limits. Some of them live out in the country and have been using no limit dial up connections."

"There are better ways to handle instances where the consumer contacts the carrier with that first big bill. I believe Verizon's policy is such that when the consumer has failed to read all the information about their plan and the sales person either did not adequately explain the policy or the consumer did not retain the information and this results in one of these big bills, the consumer can call Verizon Wireless customer service, get a credit of the overage on a one time basis while getting an explanation of how the cap and overage charges work, and how to monitor their usage. There is also a cap on overage charges that keep the second and third occurrence limited to no more that $200 dollars in overage charges. On subsequent bills, the customer is responsible for the charges. That's after 3 educational conversations about how the plan and overage works."

"The disclosure of policies, procedures and general product knowledge is so inferior with data compared to voice and that it effects each and every one of us who sells and represents the product and company. The lack of decent training with data is another compelling reason why the wireless companies hire people who know data to run their data divisions."

"Personally, I sell these products and I warn each and every customer about the usage threshhold. However, customers will be customers and most do not even understand how to properly use their computer and with the low prices for netbooks, many are getting their first computer and since the prices are so low, they are purchasing these computers for each member of their family, along with a wireless router to share the connection."

"...The customer uses their account for a couple of months, gets charged $59.99 per month and then sees a commercial about the NCAA basketball tournament being FREE and online at CBSsports.com. The customer watches hours of "free" online coverage of the tournament and then next month when the bill comes in, it is for thousands of dollars... Most people cannot possibly remember what they signed five months earlier. They just wanted to watch the "free" basketball tournament online. Incidently, while they watched the tournament, they saw the Verizon or AT&T or Sprint commercial advertising the free modem and wireless broadband service."

Thanks for reading and for your thought-provoking comments. I suspect that the debate over this issue is just heating up. --Lynnette [3]