Ask Maggie: On unlimited data plans and prepaid vs. contracts

This week's Ask Maggie tech advice column sheds light on those mysterious "unlimited" mobile data plans, and helps readers decide between prepaid cell phone service and a contract service.

When it comes to wireless services, sometimes unlimited doesn't really mean unlimited.

Ask Maggie

Wireless is a competitive business, and sometimes operators say almost anything to get consumers to sign up for their service. Over the last few years, outraged customers have forced wireless carriers to stop throwing around the "unlimited" term so freely. As a result, a lot of mobile broadband services note in fine print that they are not, in fact, "unlimited."

But what if you truly want to pay for an unlimited data service? Do any even exist? I have answered this very question in this week's Ask Maggie column. I also answer a related question about why the wireless broadband service of one particular Clearwire subscriber has slowed to a crawl. And finally, I try to help another reader weigh the pros and cons of ditching a contract cell phone service and signing up for a pay-as-you-go service.

And I've added something different this week. I included feedback from a reader about a question I answered in last week's Ask Maggie: On iPhone upgrades and reception issues.

Ask Maggie is a weekly advice column that answers readers' wireless and broadband questions. If you've got a question, please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header.

Does unlimited mobile broadband really exist?

Dear Maggie,

Can you help me find a mobile data plan for my laptop with unlimited data usage? I just found out AT&T and Verizon Wireless don't really offer unlimited data plans, and they charge you if you go over your usage. I learned this the hard way using my Droid X phone from Verizon. Eight Netflix movies later, I got socked with a huge bill. Any suggestions? I'm ready to switch to unlimited.

Thanks,

Ed

Dear Ed,

Most wireless operators make a distinction between mobile broadband customers who are using a data card or internal modem to connect a laptop or Netbook to the Net and people using smartphones. Verizon Wireless does offer unlimited data usage for the Droid X and other smartphones. But it caps its mobile broadband service for laptop customers to 5GB. (The main exception here is if you use your smartphone as a modem to tether or connect a laptop or Netbook to the Internet.)

The reason why Verizon and most other carriers cap mobile broadband for laptops and not for smarpthones is because laptops have much faster processors and bigger screens, which means people can download a lot more content a lot more quickly on a laptop than they can on a typical smartphone. But as smartphones become more sophisticated, this is changing. The increased number of smartphone customers is putting a strain on certain carriers' networks, which is why AT&T has changed its data pricing for smartphones. It got rid of its unlimited plan and now charges $15 a month for 200MB a month or $25 a month for 2GB of data usage per month. So far AT&T is the only major U.S. carrier to do this, but it's likely that Verizon will follow soon.

So back to your question: what are your options for unlimited data use on your laptop?

Verizon Wireless and AT&T offer 3G mobile broadband for laptops and data sticks for $60 a month with a data usage cap of 5GB per month.

Sprint Nextel and Clearwire, which use the same Clearwire 4G wireless network, offer unlimited data usage on their 4G network, but the service has a monthly 5GB cap when the 3G network is used. So if you happen to live in one of the 52 markets that is served by the Clearwire 4G wireless network, you could get unlimited data for your laptop for $60 a month from one of these two companies with a 5GB capped service for times when you need to roam to a 3G network.

Cricket Wireless, a prepaid regional wireless service provider, offers an unlimited 3G wireless service for $60 a month.

But be careful of these unlimited plans. While Sprint/Clearwire and Cricket claim that their offers are unlimited, there are some caveats. The companies don't cap usage or charge customers additional fees if they go over a certain limit, but each company in its terms of service agreement specifies that the carrier can throttle or slow down your traffic if you exceed a certain limit, especially if the network is congested. For more detail on this, check out Cricket's fair-use terms.

What this means is that you can theoretically use as much data as you like with an unlimited data plan, but if the carrier thinks you are hogging too much bandwidth, it will slow your service. And that likely means you'll be restricted in how you use the connection while the service is being throttled.

T-Mobile USA offers a kind of hybrid service. Its webConnect service has a usage cap of 5GB a month. But the company does not charge an additional overage fee if you exceed this cap. Instead of overage charges, T-Mobile will reduce data speeds and throughput when a customer exceeds 5GB of usage per month, for the remainder of the customer's billing cycle. The customer still gets access to mobile data with no fee for overages.

So effectively, T-Mobile offers an unlimited service that is similar to both the Sprint/Clearwire 4G service and the Cricket Wireless service. But it only costs $40 a month.

T-Mobile suggests consumers use its mobile broadband service in addition to a home broadband connection or Wi-Fi.

"When used as a mobile broadband solution in conjunction with an existing home broadband service, only a very small number of customers (less than 5 percent) use more than 5GB per month," said Cara Walker, a spokeswoman for T-Mobile.

Gauging exactly how much data you actually use is tricky. But just remember that streaming video is a huge bandwidth hog. It doesn't take much to eat through these usage caps. If you need help estimating your bandwidth usage, check out AT&T's bandwidth calculator. According to this tool, if you did nothing else but watch 50 minutes of streaming video a day or 25 hours of video per month, you'd use close to 3GB of data per month. And T-Mobile claims that 5GB is equivalent to about 250 hours of Web browsing and 20 hours of video streaming.

Getting throttled

Dear Maggie,

About three weeks ago, I noticed a severe decline in my download speed on my Clearwire wireless broadband service. I called the tech support number and was notified that I am a heavy internet user, which surprised me. They notified me that they had recently rolled out a new network management system to control the amount of bandwidth during peak times for heavy users, and I was one of those users.

At first I went on my way, but it got worse. I spent hours on the phone with Clearwire's customer service with them accusing me of illegally downloading stuff. (I don't). So I went to the Clear Forums where large numbers of users were posting about this same throttling issue. I find out that I use around 10GB a month of data. The threshold Clearwire uses to throttle is maybe between 7GB and 10GB a month. No one knows the exact amount.

Many users on the forum are angry. And I've noticed that my Internet seems to be throttled 24/7 with download speeds of 0.25Mbps when I was getting on a good day download speeds of about 10Mbps. I was wondering if you could find any information from your connections inside the company about why this is happening.

Thank you,

Michael

Dear Michael,

Your question is closely related to the question from the previous reader about unlimited data plans. Clearwire offers what it considers an unlimited plan on its 4G service. This means there is no upper usage cap that if exceeded triggers additional fees.

But even though the service is unlimited, the company says it still must manage the network. To ensure that a small number of subscribers don't hog all the bandwidth and negatively affect the service of other customers, the company slows down some heavy data users' traffic when the network is congested.

I talked to Mike DiGioia, a spokesman from Clearwire about your specific problem. He said that in September Clearwire made some enhancements to the customer experience optimization system that is used across its network.

"We implemented this system to help ensure that our customers continue to get the level of service they expect from us as we grow, and as data consumption continues to expand," he said. "The system was designed with a singular purpose: to provide the maximum number of customers the maximum amount of bandwidth, in the times when they demand it most."

He said that the system was built to be "dynamic, surgical, and selective in how it optimizes available network resources." This means that the new system is constantly evaluating the conditions of the network. It only responds if necessary to deliver the best experience possible to the most customers. It is also highly localized so that it only addresses problems in small slivers of territory. And it limits the time traffic is throttled only to times when there is high demand for shared resources.

What this means is that Clearwire should only be slowing your traffic for brief periods of time when you exceed a certain usage threshold during peak times when bandwidth is limited. The fact that you say traffic is slowed almost constantly now is unusual, DiGioia said. He suggests calling customer support again and perhaps seeing if there is a problem with your modem.

I hope this helps!

Prepaid or contract?

Dear Maggie,

I'm thinking of switching from T-Mobile to one of the pay-as-you-go carriers , such as Boost Mobile or Virgin Mobile. I've always been happy with my T-mobile service, but with the unlimited talk, text, and Web plans the pay-as-you-go carriers are offering, it seems the price can't be beat. I'm wondering how to work out the pros and cons of contract versus pay-as-you-go.

Thanks,

Guy

Dear Guy,

You are not the only wireless subscriber who is being tempted by the new phones and cheap plans offered by some of the pay-as-you-go or prepaid wireless companies. Many prepaid wireless companies, such as Boost Mobile, Virgin Mobile, Cricket Wireless, and MetroPCS, are offering unlimited voice plans for $50 a month, which is a great deal for many people. The idea that you don't have to sell your soul to a wireless operator by signing a contract, is also very appealing. But prepaid offers aren't for everyone. And sometimes signing a contract and taking the free or subsidized phone that comes with it, is worth it.

Because every consumer's needs are different and every service offering is different, I'm providing a high-level comparison to help you weigh the pros and cons of each type of service.

Prepaid Pros:

  • No credit check required. If you've had trouble with your credit, prepaid has historically offered the best option for you.
  • Less expensive. Depending on your usage patterns, prepaid can be less than some postpaid contract service plans.
  • No contract. This means you can cancel service at any time without a penalty.

Prepaid Cons:

  • Not always cheaper. Prepaid offers may not be cheaper than some contract services if you consider your individual usage. Also, some contract family plans may turn out to be less expensive than a prepaid deal.
  • Limited device offering. While some prepaid services are now providing smartphones, they often don't offer the same breadth of choices and they don't have the latest and greatest phones.
  • No subsidized phones. This means you'll pay the full retail price for a new device that works only on that operator's network.

Contract Pros:

  • Subsidized handsets. At least every two years, you can upgrade your phone and get a subsidized price on the device if you agree to a contract.
  • Strong phone selection. Wireless operators use the latest and greatest cell phones on the market to lure customers into signing contracts. So you can expect the hottest phones to be offered on contract plans.
  • Possibly cheaper. Depending on how much you will spend on an unsubsidized phone from a prepaid operator, and depending on whether you are giving up a special deal under a family plan, your service over a two-year contract on a postpaid service could actually cost less than switching to a prepaid plan.

Contract Cons:

  • Contracts. If you break your contract, you have to pay a hefty fee.
  • Credit check. Contract customers are required to get a credit check. So if you have bad credit, you could be out of luck.
  • Expensive. Again, depending on your usage and the plan you sign up for, contract plans could be more expensive than a prepaid offering. This is more likely if you have an individual cell phone plan with expensive data and texting services.

Follow up on 'Broken SIM'

Last week in Ask Maggie I answered a reader's question about a possible SIM card failure causing lousy reception. I spoke to an AT&T representative who agreed with me that this was unlikely. But after the column posted, I received an e-mail from another reader, who said he used to be a customer service rep for a wireless operator. He said problems with a SIM card could cause lots of issues for users.

Check out his comments below:

I love CNET for tech news, and I was reading through several of your Ask Maggie articles online today, and I agree with most of the information. But I want to point out one thing on the ask Maggie question about a broken SIM card.

I have worked with cellphones as a sales rep for three years now, so I have a lot of experience solving problems with phones. A lot of times changing the SIM will fix the issue. In fact, I have seen it fix some crazy things. For example my wife's iPhone was dropping calls a couple of times a day for a few months. Once I got her a new SIM card a couple of weeks ago, it hasn't dropped a call since.

I have personally seen swapping a SIM card fix dropped calls, reception issues, garbled calls, slow data speeds, and more. Now, that said, I do agree that the rep's statement is fishy in that I have never seen a SIM "go bad" without being broken in some way. So I agree that he was misinformed, but the advice given is sound advice to attempt to fix the problem.

I'm not writing to you in any official capacity for any particular cell phone service provider. I just wanted to share my thoughts as a fellow consumer.

Thanks,

Will

 

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