Some Apple (NASDAQ:AAPL) iPhone subscribers to AT&T’s (NYSE:T) “unlimited data” plan are beginning to notice that the telecommunications giant has an interest way of defining “unlimited.” Some high volume data users, typically those in the top five percent of data consumers, have found that their data usage has been forcibly curtailed, slowing their phone’s download speeds almost exponentially and making their phones almost useless, in a tactic typically known as “throttling.”
What basically has happened in certain cases is that a customer, despite having the unlimited plan, has reached a certain threshold of data set by the company for that period. That threshold is then matched against the usage in a certain area. If there is too much data usage in the area and AT&T’s local system is overtaxed, that customer may find him or herself throttled for the rest of their billing period (regardless if the pressure on the system is lessened or not).
Right now, about 17 million customers have AT&T’s unlimited plan, representing less than half of its smartphone users. The company stopped selling those plans in 2010, but as more and more subscribers are switching to smartphones, AT&T has found it difficult to be able to keep up with data usage in some areas, and has thus adopted the “throttling” method to deal with it.
What has been a major bone of contention for many users is that their threshold for throttling is actually less than what some people are paying for in limited plans. One individual surveyed was throttled at reaching 2.3 gigabytes for the month when limited plans offered at the same price guarantee 3. Others have received warnings when they’ve reached only 1.5 in a given period. When AT&T has been contacted, subscribers have reported that the company tried to encourage them into switching to the tiered, limited data plan. The frustrations, and what some see almost as bullying, has lead to many to consider switching providers altogether.
AT&T, it should be noted, isn’t the only one who throttles, but it is the only one that does it to such a degree of severity. Verizon (NYSE:VZ), for instance, does some throttling of its top five percent, but only when service around a cellular tower is congested; once that congestion clears, however, the throttling stops (as opposed to AT&T, which extends the throttling to the remaining billing cycle). T-Mobile explicitly states that it starts throttling at 5 gigabytes. Right now, Sprint Nextel (NYSE:S) is the only company that still sells unlimited data plans.
AT&T has countered that they only typically end up throttling about 200,000 people per period, or about half a percent of all unlimited data users (as opposed to the top 5 percent). The average usage of the top 5 percent is about 2 gigabytes per user per cycle. In the end, AT&T has immunized itself from any legal action by users; they still provide unlimited data regardless, and they never guaranteed a certain degree of speed. Nevertheless, there remains a concern that some customers will take action against the company…by switching to another provider.
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