T-Mobile's Unlimited Smartphone Data Plan Has Catch

Finding the right balance between supply and demand has created some interesting financial and lifestyle choices for subscribers to smartphone data and mobile broadband plans. For example, T-Mobile on Wednesday introduced a new Even More plan for its smartphone customers. The plan offers unlimited voice minutes, unlimited text/video/picture messaging, and unlimited wireless data for the fee of $79.99 per month.

If that sounds too good to be true, it sort of is. There's a catch, you see. Users who consume more than 2 GB of data in a given billing cycle will see their mobile broadband speeds throttled until the start of the next billing cycle. T-Mobile hasn't said how slow things will get, but I've been told unofficially that it will be akin to "EDGE" (think iPhone circa 2007) speeds (around 100 Kbps to 150 Kbps).

This is one way to manage data hogs. The other is to charge them more. Set a cap, whether it is 2 GB or 5 GB, and then charge users extra for exceeding their monthly allotment of data. Overage rates are typically painful and can add up quickly.

The question that wireless network operators are really asking is would we rather be strangled (throttled) or robbed (charged for overages)?

In an extremely informal poll I took on Twitter on Wednesday, most respondents indicated that overages would be worse than throttling, as it will impact users financially. Financial pain is apparently more unbearable for many than the pain that comes from a slow Internet connection.

Though most said overage charges would be worse, more than a few said they'd at least like to have a choice which one they'd prefer to suffer through.

One said, "Now that you mention it, what we need is to be presented with that choice right before we reach the limit. Imagine u get an SMS that says 'You're about to hit your data limit. Reply FAST to pay for more 4G speed. Reply FREE for 3G.'" That's an interesting take on the situation.

Another said, "Overages [are worse], but only because of the irrational rates that are charged. Should be slightly higher, but not at the levels we see."

Yet another said, "Overages [are worse]. Ultimately, though, you should be able to choose, because both solve the supply/demand problem."

Gartner's Michael Gartenberg indicated that he believes overages are worse, and Ovum's Jan Dawson said there ought to be a choice.

Though it is expensive, I have to respect Verizon Wireless's take on mobile broadband use. Customers of its new LTE 4G network, for example, can opt to pay $50 per month for a 5 GB allotment. Those who exceed 5 GB in a given billing cycle will be charged $10 for up to 1 GB of additional data. If they surpass 6 GB, they'll be charged another $10 until they hit 7 GB, and so on. While these are indeed overage charges, they are far from the $20-per-megabyte overage fees that some carriers have charged for exceeding limits. (And Verizon doesn't throttle users.)

So, what's the best option? It's a hard to choice, and some wireless network operators play a less-slanted game than others.

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