Are You Overpaying For Mobile Data Plan? - InformationWeek
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6/16/2011
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Ed Hansberry
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Are You Overpaying For Mobile Data Plan?

Big data plans just waste money for most people, reports a Vadilas study. Here's how to cut your bill down to the right size.

Back when everyone had an all-you-can-eat data plan for $29.99, selecting the right plan was easy. Those cheaper $10-$15 plans that had something absurd like 10-MB a per month made no sense when for about $30 you didn't have to worry about overage charges. As companies phase out unlimited plans, you need to decide how much you need. Many people are overpaying.

Buying a data plan today is like buying insurance. You need to carefully analyze how much you think you will need and buy the product that best fits your need. In both scenarios though, many people overbuy.

Vadilas analyzed cell phone bills from the four main carriers and found that spending extra to get the several gigabytes was more than many needed.

T-Mobile users had the highest average data consumption at nearly 430 MB per month, while AT&T users had the lowest average at 346 MB. Unless you are streaming a lot of video or audio, that sounds reasonable. I also understand that most people reading this blog are way above these averages, but you might look at what your other family members are using.

AT&T, for example, offers three data plans for the iPhone 4. The 4-GB plan is $45 per month and is the only plan that allows tethering. For $25 per month you can buy 2 GB of bandwidth. Each additional GB is $10. Unless you need tethering, this is the plan to buy. If you go over 3 GB, you pay $45, the same as the 4-GB plan.

For a relatively paltry $15 per month you can get a 200-MB plan. Here is where they get you. If you use 201 MB, you get dinged an extra $15 for the next 200-MB block, and that means you just paid $30 for 400 MB, more than the $25 for 2 GB.

On the surface, it sounds like the 2-GB plan is the way to go. Not so fast. The study shows that 60% of users consumed less than 200 MB each month and half consumed under 150 MB. If you assume a family member uses between 150 MB and 300 MB each month, a 200-MB plan makes better financial sense. If you go over the 200-MB threshold six months out of the year and stay below it the other six, you'll pay $270 per year for data, which is $15 in the light usage months and $30 in the heavy usage months. If you take the easy way out and spring for the 2-GB plan, you'll pay $300. Annually, that is only a $30 savings, but if you have three or four data plans in your family, it begins to add up.

With most carriers, it is easy to change your data plan up or down. Check out your statement and see if it makes sense to crank it down a notch.

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