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> The reason why I call these programs "good" is that they all but eliminate overage charges from a consumer's bill. With limited data, you often get charged excessive amounts if you go over your cap (disproportionately large amounts at times).

That's a bad solution, because it solves the wrong problem. The real problem is overage charges.

Of all the other companies who provide me with metered service, not a single one uses the same pricing structure where I purchase an initial quota for one price, and then have to pay out the nose if I go over it. Everyone else just charges a flat unit price. It's a flat $x/gal for water, $x/kW/h for electricity, $x/m^3 for gas, $x/min for land line phone service, $x/min for Azure compute time, etc. etc.

That style of pricing is good. It's a straightforward, easy-to-understand "pay for what you use" model. Cell phone style pricing is worse because it's unpredictable and consumer-hostile because it makes you feel punished for using more of their service. Unlimited cell phone pricing is worse yet. It's supremely consumer-hostile because it forces light users to subsidize folks who watch Netflix while riding the city bus. As a light user (and informed consumer) I find that offer to be downright insulting; I hate it just as much as I'd hate if the gas station wanted to charge me the same flat monthly fee for me to buy gas for my economy car that I only use on weekend as they charge my neighbor to top off his Escalade that he uses for a 45-minute commute.

> Everyone else just charges a flat unit price. It's a flat $x/gal for water, $x/kW/h for electricity, $x/m^3 for gas, $x/min for land line phone service, $x/min for Azure compute time, etc. etc.

Except that consumers don't like those kinds of billing plans.

Consumers like fixed bill per month. Period. A plan that charges more per month than metered would still wins because the consumer sees it as a fixed charge.

>Consumers like fixed bill per month.

[CITATION NEEDED.]

It depends. I have no particular problem paying for electricity, oil, water, and Amazon S3 based on usage and it does provide me with the appropriate incentives to conserve. Obviously I'd have no problem paying a fixed rate for these services if doing so cost me less than I pay today but I have no particular preference for a fixed charge provided that my usage is relatively predictable and transparent.

I doubt that I'm atypical. As someone who tends to turn the lights off when I leave a room and keeps the thermostat relatively low in the winter, I don't have any particular desire to subsidize someone who leaves all their lights blazing and cranks the heat up to 75 degrees.

I find it somewhat interesting that people seem to be more accepting of usage-based pricing in some scenarios than others. I expect part of it is what we're used to--pricey per-minute domestic long distance phone pricing seemed quite normal until relatively recently. But I expect things like degree of predictability and control-ability factor in as well.

> [CITATION NEEDED.]

http://arstechnica.com/tech-policy/2012/04/why-we-should-wor...

Thanks for the link. A lot depends on where a flat price ends up of course. There's benefit to predictability but not if I pay 2x what I would under a usage-based scheme.

That flat price is going to depend on things like marginal costs, to what degree flat pricing drives up average costs, and how much the heavy users drive up costs for others. As the link suggests, flat pricing seems to work pretty well for broadband but it's unclear how practical it is (today) for wireless.

> Thanks for the link. A lot depends on where a flat price ends up of course. There's benefit to predictability but not if I pay 2x what I would under a usage-based scheme.

Not necessarily. The combination of the value of the services you decided to forgo to not rack up metering charges and the mental cost of doing those calculations can be arbitrarily large, because the mental cost is a sunk cost[1] by the time you know whether paying for the additional metered bandwidth is worth it. You could theoretically spend all day worrying about using too much bandwidth without ultimately deciding to use any at all, so your bill would be much lower but at the cost of spending all day worrying about it.

[1] http://en.wikipedia.org/wiki/Sunk_costs

There are also knock-on effects of not having unmetered service. It causes people to use less bandwidth (obviously) but that means they're deriving less value from the network, which means they're not willing to pay as much for service, which means slower upgrades, which means potentially higher customer costs in the long term as the price per GB stays higher longer.

> That flat price is going to depend on things like marginal costs, to what degree flat pricing drives up average costs, and how much the heavy users drive up costs for others. As the link suggests, flat pricing seems to work pretty well for broadband but it's unclear how practical it is (today) for wireless.

The strange thing about wireless is that it seems likely to eat itself. Spectrum is scarce and towers are expensive, but charging a high monthly fee for unlimited usage or a high metered rate is likely to drive customers to use WiFi rather than cellular whenever possible, which reduces demand for cellular and pushes the prices back down.

I suspect the equilibrium is going to be "unlimited" wireless service where only the first X amount of MB per month is "fast" and then the service works but is throttled. The result then is that everybody uses WiFi whenever they can to preserve their "fast" cellular bandwidth (or because they've already used it and then WiFi is much faster) but nobody actually has to worry about using too much because there is never any bill for the overage. And then you start demanding that WiFi access points be installed at whatever locations you were in where you used all your cellular bandwidth.

I pretty much agree. Quite a while back, Clay Shirky wrote about how one of the problems with micropayments (for online content) was the mental transaction costs that they entailed. There's a lot to that argument.

OTOH, as you suggest, there need to be proper incentives around scarce resources--such as using WiFi where available rather than cellular. The equilibrium you describe seems sensible--perhaps with throttling less extreme than AT&T's current version seems to be and with greater transparency.

Thanks for saving me the time to look that one up.

My water bill changes seasonally by about $5 (I live in an apartment). My electric bill (heating, AC, water heater, etc.) goes from about 1x to 5x depending on season/weather. Cable is the same every month.

But everyone learned their lesson with the old limited minute/text plans. You pay $25 a month for service with occasional bills of $500.

It wasn't your fault. A bunch of people mistyped the phone number for a content and sent you texts by mistake and you got charged for them. You probably won't have to pay, but it will take three hours on the phone to sort that out. And you're busy. And they already took the money from your account so maybe something bounced.

Or maybe you just accidentally triggered the data on your old feature phone without a plan to the tune of $100/mb.

So no one trusts the phone companies. Everyone wants unlimited because the billing systems are so broken and byzantine at least you can predict what the bill will be. It's very hard for normal people to budget accidental $500 charges for making a trivial mistake.

I don't think it's fair to say that consumers overall like either one more than the other, it depends on what we're paying FOR.

Why are consumers okay with paying a metered fee for electricity, water, and gasoline?

There's competition and/or regulations pushing those prices into reasonable ranges. Usage is fairly predictable. These are things that are horrible to have suddenly shut off without warning (like what effectively happens when you're throttled into unusability). They are things that people need in order to be a functioning member of society in the majority of places on Earth (in places with good public transit, gasoline gets removed from this list).

Aside from point #1, those also sound like the Internet.

> Why are consumers okay with paying a metered fee for electricity, water, and gasoline?

They're not. But normally they don't have a choice.

However, some of the utilities in the Northeast have plans wherein your bill is mostly constant year round even in spite of the spikes at certain times of the year. Lots of people like them even though they almost always wind up paying more than they would otherwise.

>> Why are consumers okay with paying a metered fee for electricity, water, and gasoline?

> They're not. But normally they don't have a choice.

Wait, what? Says who? I certainly don't speak for everyone, but I'm perfectly happy paying just for my usage of these things.

I think the difference is predictability and that the costs aren't astronomical if you have a high-usage month. If it's colder than usual, I'd perhaps expect to pay another 10% on my utility bill. That's reasonable and not a hardship.

If I were to spend, say, $30/mo on a plan with 500 minutes of voice calling, and went 100 minutes over, but was only charged, say, $6 for that overage, I'd have no problem with that (because 30/500=0.06 and 0.06100=6). But instead I get charged something like $20, which is way out of proportion to the overage. That's* the objection.

And I think part of it is related to an understanding of actually "using something up". When I use more electricity, I know that I actually used something up: that extra power came from more coal being burned, or more water falling from a dam, or something of that nature. When I use more water, I know that my use of it drained a reservoir a little bit more than it otherwise would. I used up a physical good, and I'm paying for that use. If I use more than what a regulator has decided is my "fair share", I might pay a premium for that extra (many utilities have tiered pricing), but I'm ok with that because I do recognize I'm using more than usual, and the added cost of the higher tier isn't unreasonable or burdensome.

But the cost of me spending 100 extra minutes on the phone costs the carrier basically nothing. Sure, if everyone did that in a month, perhaps it would strain the carrier's network (not that it would cause the carrier to spend capital on increased capacity; they'd likely be fine with more dropped/failed calls that month). In general, though, the marginal cost to the carrier when you use more minutes than your plan provides is near zero -- and yet the carrier charges an exorbitant markup for that overage.

It's not just about constancy, it's about having some relationship between how much you pay and how much you use. Utilities that offer that "pay the same every month" feature base the amount you pay on your average usage throughout the year.

Here's an analogy that's closer to cell phone unlimited plans: Imagine if it were instead the same flat fee for everyone across the country. I imagine you'd find the family that lives in a small apartment and keeps the house cool in the winter isn't too happy to find out that very little of their gas bill is explained by their own energy usage, and the vast majority of it is paying to heat the mansions of the rich people across town.

> Why are consumers okay with paying a metered fee for electricity, water, and gasoline?

I don't think they are; certainly in my country people hate metered water. And people love fixed-rate mortgages even when they'd pay less on floating. If people had the option of unmetered electricity or gasoline, I think they'd take it.

It could be a regional thing, or it's possible that I am unusual myself, but I've never thought twice about metered electricity, but that's largely because I've never been hit with anything I consider unfair like I have with both mobile phones and home Internet.

Speak for yourself. Web access is a utility and it needs to be treated/regulated as such. Meter it at a flat rate. Telco pricing plans are confusing for a reason. It's a dark pattern so they can bleed you dry and make it hard to compare to their competition.

Citation provided by AnthonyMouse: http://arstechnica.com/tech-policy/2012/04/why-we-should-wor...

You are in the vast minority in preferring metering.

Part of you comment is good, but you may be missing a key effect: in the short term (and possibly the medium term), the marginal cost of data transmission is much less than its average cost. When the marginal cost is more than the average cost (as it is for gas, because of low-hanging fruit effects), then the simple Econ 101 solution is that the unit price will be the marginal price, and the supplier and buyer will split the surplus. However, when the marginal cost is lower there are all sorts of weird game theoretic and normative considerations that enter. It can be a Pareto and Utilitarian optimum for different users to be charged different marginal rates.

Data overage charges in Canada became such a headache with the flood of consumer complaints that the CRTC (rough Canadian equivalent of the US FCC) implemented regulations dictating a wireless code of conduct[1] for Canadian wireless operators to follow for their consumer segment. These regulations supposedly took effect on 2 December 2013[2].

One of the interesting ones is the following nugget: "to limit your data overage charges to $50 a month and your data roaming charges to $100 a month."[3]

[1] http://www.crtc.gc.ca/eng/info_sht/t13.htm

[2] http://www.crtc.gc.ca/eng/archive/2013/2013-271.htm

[3] http://www.crtc.gc.ca/eng/info_sht/t15.htm

I like T-Mobile's no BS approach. I had CLEAR for less than a month because of their throttling. Used it for a week or two and then loaned it to a friend while I was traveling for work. When I got it back, it was throttled so severely I could no longer log into gmail! It was slower than the EVDO modem it had replaced. Throttling is one thing, claiming 5G cap and then they'll throttle you but it'll be useable is another. It was unusable.

Clear is especially egregious, as their advertising is (or at least was, when I had it) explicitly geared towards using it as a replacement for a wired home broadband connection, and touting how it could be used for streaming video and all sorts of other bandwidth-intensive uses. But they throttled me into oblivion after a couple of weeks of using it like a home connection, then gave me the runaround for weeks because none of their techs had been informed of their throttling policies.

We just need truth in advertising. Do what you will, just tell me what it is, and I can figure out the rest. I personally like metered wireless plans because I know that my incentives align with those of the provider, and I'm comfortable with the overage charges. If unlimited-with-throttling is better for others, great! But don't try to sell me "unlimited, period" and then not deliver.

Agreed. If there is ever a shining example of why competition is important and mono/duopolies are bad, take a look at T-Mobile. Can you imagine if the DOJ let the AT-T/TMobile merger go through? And given that history, how they are even considering letting the Comcast/TimeWarner merger go through is amazing to me.

You have to use a TON of bandwidth for CLEAR to throttle you. The only time I've been throttled was when I streamed Netflix for about 8 hours straight. I've transferred GBs/day many times without throttling.

That said, they are not transparent about it. They refused to call it throttling or even agree that they were throttling me. They used misleading language like "fair-share for the antenna you're on."

I can not see how this is good for consumers, if compared to actual unlimited data.

At least T-Mobile Germany is throttling users to 64kbit/s after the cap is reached, which is so slow that you can't use most online services (logins over https just time out). Of course you can buy more uncapped gigabytes.

This is a perverse incentive scheme for the providers: they have no reason to upgrade the network capacity, because they can use the "network is overloaded" argument to limit the data volume, and to charge more from their users.

They can't if there's competition. We used to have caps on our cable connections here in Portugal; that works fine for the ISP until its competitor raises the cap, which they did, until we got unlimited connections.

What bothers me is that half of our regulatory system is basically a jumble of patches designed to fix the problems caused by lack of competition, which is often artificially introduced by the other half of the regulatory system.

Not to say this is the case, though. I think the FTC is completely right here - unlimited should mean nothing is curtailed based on your usage. Anything else is misleading, bordering on fraud.

E-Plus resellers are now offering a thing where you can buy 5GB for €15/month, but then buy another 5GB for €3 when you reach the cap. Repeat as needed. Not a bad deal for heavy users.

The worst part is that AT&T was VERY vague about the threshold. They just called it "in the top tier of users". The policy would push the average down over time, which means that "the top tier" threshold would become lower and lower.

Yes, the real issue in the complaint is likely the grandfathered consumers who signed up to AT&T understanding one definition of unlimited just to be forced into another. I don't think it's an FTC attack on "unlimited but throttled" data plans.

And they said they "may see reduced data speeds" which really means "will see drastically reduced data speeds."

Once I found out they were doing this I immediately cancelled my unlimited data plan.

It's basically a scam and NOT what most people want.

The essentially offer 1GB for $10 ... so 5GB is $50, 6GB is $60...

Flat seems fair to me and keeps both parties honest.

I just wish they were honest about 'unlimited'.

The problem is the surprise bill when they charge you exponentially for going over their commited rate.

I imagine they were quite happy when you cancelled your plan. I don't think they want to provide it, but either are somehow obligated to continue providing it for those who have it already due to something in the contract, or think it would be bad PR to just outright cancel it. I'd wager that the throttling is less about network health and more about convincing people to switch away from a plan AT&T doesn't want to have anymore.

> This is how T-Mobile currently operates on all of their Simple Choice plans (both unlimited and limited). They have scrapped overage charges (so there is no bill-shock) and instead just throttle you down.

T-Mobile does this? I use my phone a LOT with them and haven't noticed any throttling.

They don't do this on unlimited, as far as I can tell. However, if you're not on an "unlimited high-speed" plan, they will throttle to almost unusable speeds.

It might be that you don't use as much data as you think. I use my phone for data stuff all day long, but don't stream music or video, and it's the rare month I go over a gigabyte. Apparently perusing stock prices and weather reports doesn't use all that much. However, on a recent motorcycle trip in Canada it hit some limit and got throttled. Non-https would work if I was really patient. Apple Maps worked okay, if slowly. Google Maps: don't even bother.

EDIT: I got it wrong. I got throttled because a 3rd-party contractor dug up Frontier's FioS lines, so I used my phone as the house hotspot on a 5Gb plan. Then we tried to watch something on the Apple TV. In HD. Oopsie. Upgraded to unlimited high-speed data after that. The Canada thing was T-Mo's "unlimited data in select countries". Problem there is that high-speed is quite tiny (200Mb?), then it's throttled. They'll sell you an international roaming pass for a reasonable price, though.

Wind Mobile (in Canada) has an "Unlimited US Roaming" package that includes "Unlimited data". In reality its T-mobile, they give you 1GB and throttle you down to a useless speed (>1 Minute per page load when browsing)

Yes. It is on every page about Simple Choice e.g.:

> Up to 3 GB of 4G LTE data. Speeds reduced after 3 GB. No overage fees.

Maybe it's where you are located. In WI, after my LTE/3G throttling ran out, my EDGE was basically not internet. My phone was only useful as a cell phone at that point.

T-Mobile advertises "xGB of high speed data", and the unlimited is actually unlimited without throttling as far as I can tell.

There is a 2.5GB cap on hotspots.

As a t-mobile customer who has exceeded 50GB a month for nearly a year now via tethering on the unlimited plan, I disagree.

They told me 3 gibibytes for tethering. Not that this refutes your statement at all. But I find it interesting they differ.

The issue I have with this type of service is that although we understand the need to remove network congestion caused by a very minute group of heavy users, it doesn't really solve the problem...

(1) They're still heavy users for that portion of the month when they have 2GB or 10GB or whatever of full access data (2) When they're using non-peak hours or less populated towers they're still throttled even though there is no service impact

A better service would be an aggressive QoS that prioritizes users who haven't used their fair share of the network and allows those heavy hitters to wreck havok when they're up streaming 1080p videos at 4AM.

T-Mobile has an unlimited plan that doesn't throttle. That's what we're talking about.

No cap.

The difference between T-Mobile and AT&T is that one is unlimited, the other is 3-5GB for "unlimited"

If your company makes a claim of X but doesn't deliver, perhaps instead does Y, it is an FTC issue. This is a lesson everyone who runs a company should be thinking about.

"Unlimited" or otherwise, throttling has been done for a long time by other carriers as well. I would like a refund.

yes, for new customers, unlimited-throttling is better than flat+overages, but it is not as good as unlimited (which is no longer offered). the problem, as you pointed out, is that at&t baited & switched.

and to be sure, throttling is a limit. for those on unlimited plans and according to the way it was advertised, you should be able to get up to the physical limit of the network every month. if that's 500GB/month, the you should be able to use 500GB/month every month according to the agreement. allowing you to use 5GB at the normal rate and 5GB more (or whatever it is) at a drastically reduced rate is not unlimited. the fact that they didn't consider bandwidth requirements when they made the offer is not the concern of the customer who accepted that offer.

Agreed. I'm on a low-data-plus-throttling plan on AT&T's prepaid subsidiary Cricket. I was on their lowest-tier 200MB plan for $15, and if I went over by even 1KB, I was "conveniently" given another 200MB for $15, effectively doubling my data bill. Now, if I go over my limit, I can still get texts and emails while I'm out-and-about, but I can't visit tumblr. I much prefer that, especially if I hit my limit the day before my billing cycle restarts.

The roaming includes international roaming in most countries.