Here’s a new one: Unlimited data plans are actually really bad for consumers. At least according to Verizon.
Jack E. Gold, the founder of technology industry analyst firm J. Gold Associates LLC, recently published a blog post on Verizon’s blog explaining why consumers should stay away from the tempting unlimited data offerings by Sprint and T-Mobile.
So, why do Gold and Verizon believe that unlimited data plans are so bad for the consumer?
Gold started off by talking about how when lots of customers use lots of data, it can cause performance issues for other customers. “Let’s face it,” Gold wrote, ¨if everyone had unlimited data and used it fully, the performance of the networks would suffer because of bandwidth restrictions and the ‘shared resource’ nature of wireless.”
Gold went on to explain how that by imposing these tiered limits on the data service, users are forced to do their high bandwidth activity on WiFi, taking load off of the network. He says that “users are very well served by current wireless data plans, and really don’t require more. So, while unlimited data may sound attractive, there is no practical effect of data limits on the majority of users.”
While Verizon has stated that the views expressed in the post “may not necessarily reflect those of Verizon Wireless,” we reason that if Gold had been talking about how cell phone carriers should be turned in to common carriers and how net neutrality is a great thing, Verizon probably wouldn’t have published it on their blog and tweeted about it.
However, a lot of what Gold says doesn’t really make sense. While monthly data limits do reduce congestion on the networks to a point, they would be designed differently if that was the purpose. Data caps impose limits on users all the time, not only when they are in a congested area. Because carriers do have systems that throttle speeds during peak hours in busy areas, we know that the the data caps are there for more than just reducing congestion.
So, with that debunked, why does Verizon really want everyone to be on tiered data plans?
It really is no secret: by making users guess at how much data they will use in the coming month, the carrier can charge outrageous fees should the user go over his or her allotment. These overage fees often scare the customer into buying more data than they need, which turns in to pure profit for Verizon. At the end of the day, keeping customers on tiered data plans makes Verizon a lot more data than unlimited plans, which they can’t charge overages for.
BGR writer Brad Reed did an excellent job analyzing Verizon and Gold’s mindset: