Don’t waste your money: 4G with data caps is worthless

Public Knowledge has published a white paper written by Michael Weinberg entitled 4G + Data Caps = Magic Beans (PDF format) which asserts that 4G data subscriptions from US carriers (except Sprint) are a complete waste of money: “Simply put, data caps make the advantages of 4G irrelevant. The caps prevent anyone from making habitual use of the full potential of a 4G network . . . The 4G offered by major wireless carriers (with the notable exception of Sprint) is a waste of money because it comes with strict data caps. These data caps actively discourage the types of activities that 4G enables. Activities that are made possible by 4G, such as watching movies or uploading video to the internet, are made impossible by the data caps. As a result most users will avoid taking advantage of these new services out of fear of incurring large overage fees. That makes capped 4G little more than a bait and switch, like being sold a handful of magic beans.”

The paper focuses on the 4G data plans offered by AT&T and Verizon because the two companies have such a massive market share in the US. In his conclusion, he states the obvious — that decreasing competition among mobile carriers (especially now that AT&T has announced the acquisition of T-Mobile) is bad for consumers.

Download the PDF: 4G + Data Caps = Magic Beans

Comments

  1. Doug Berman says:

    It’s not entirely about the amount of data one uses monthly; it’s also about how fast it gets downloaded to your mobile device. For example, if you surf to a web site that normally takes 30 seconds to load, 4G will load it in significantly less time, perhaps 10 seconds. I don’t know how many people watch movies on their phone, nor do I know how many people use more then their monthly allowance. In my experience, less then 5% of users download more then their allowance.

    For the rest of us, 4G offers more capacity and faster downloads. I’ll be first in line for an iphone with LTE.

    doug

  2. Esme Vos says:

    I just dumped my AT&T mobile phone subscription. Because I’m now living in Santiago, Chile, I do not need AT&T anymore and I have not used it for ages. I rarely get (or make) voice calls and even when I was living in SF, my voice calls would get dropped. I found that I was using WiFi most of the time. Here in Santiago, I got a prepaid card from Entel which I pop into my old, but still functioning Nokia phone. I use this only for voice calls, which are getting rarer and rarer. Basically it’s for calling people to tell them I’m late or for receiving calls from people telling me they’re late.

    I have still have a Netherlands T-Mobile prepaid card which I use in Europe, and I have a Google Voice number. In the US, I use my prepaid card with T-Mobile USA (sadly about to become AT&T).

    As for the speed of LTE, hah, wait till everyone is on it. I remember the carriers saying 3G is fast. Yes until the whole world is on 3G. Then they said 3.5G would be better. It’s not. When 3.5G was launched in London and Amsterdam, it took only a few months until the networks were (again) overburdened.

    Sorry but I’m not wasting ANY more money on a postpaid cellular subscription. And as the article said, it’s not about the speed, it’s precisely the speed which gets people into trouble. You download so much or watch so many videos that you bump up against the cap, and then the carriers get to bill you up the wazoo.

  3. Doug Berman says:

    Chile! I’m jealous. I agree about AT&T dropping calls. They are really bad in this regard.

    I also agree that LTE will quickly saturate. Give users an inch and they will take a mile. This is precisely why the carriers wish to protect themselves. What are carriers going to do, let their networks become overloaded? I believe they have to protect their assets from being overwhelmed. Caps are step towards this. Perhaps there are others which can be exploited.

    I use about 500MB a month on 3G and I’m on an unlimited plan. I rarely exceed this amount. Maybe I’m just in areas where WiFi is always near. Good to hear from you, Esme.

    /doug

  4. “Caps” is a misleading term. As the source document says (and then moves on from), service is tiered. Charges increase in a linear fashion above the top of a given tier. With AT&T and Verizon costs go up by $10/Gb above the original $25 for 2Gb.

    My point: the mobile carriers do charge for use. But they don’t “cap” that use.

    I’m not saying this is a good thing, or that I approve of it. I am saying that the term “cap” suggests a limit that isn’t there.

  5. One of the points the author was making is that people’s usage habbits change as connection speeds increase… hulu/netflix weren’t that practical on older connections… but as connection speeds increase, it’s being popularized… soon it MAY BE normal for the everyday user to check out videos on the phone. If you asked someone from the 90s if they needed more than email and IM’ing, they would have told you no… now look at us using Google maps, Facebook, Google+, Wikipedia, Youtube, iTunes, streaming galore (yes, fb streams to an extent, as does google maps). My main point is this, give the consumer a faster, more powerful connection, and eventually they’ll learn to use it to it’s full advantage, so as a provider, why not give them the capabilities to *reach their caps faster*? and once over it, go FAR over it without noticing? You use .5 gb now, what about in the future? We used to use computers that had 64MB of ram, now that can’t hold many of our popular desktop applications. Those 64MB computers didn’t necessarily get slower, our STANDARD needs from a computer have increased, rendering 64MB not enough. Basically, web pages used to run without flash content, just pure text… so 56k was enough… flash/multimedia hit the internet and now usages increased. Just look at Intel Co-Founder Moore’s Law. People I keep hearing always have said/thought the same naive thing… just like the salesman of a computer who used to say, “512MB of RAM is ALL you will ever need, trust me.”

  6. dan020350 says:

    I agree with the author. I just signed up for 4G and I fell in love with the speed, then several minutes later I saw a message that says 3Gb has been used. I stop and thought wtf? Having a data cap and charge extra for another GB is a marketing trap. I never heard anything specifically about this when I talked to the customer rep. Lucky, I asked them is their a trial period, and he stately 14 days upon activation.