Why AT&T's new 'throttling' policy isn't as bad as last one

AT&T has clarified its "throttling" policy for its unlimited data customers who the company says use too much bandwidth. But many users are still confused and angry.

In this Ask Maggie, I explain why the new policy--though still annoying and not customer-friendly--is actually a better deal than what unlimited data subscribers had been getting. Also in this edition of Ask Maggie, I explain why Verizon and Sprint may still not be the best carriers if you plan on taking your phone on your travels with you.

AT&T's throttling mess

Dear Angry Bird,
First of all, take a deep breath. The situation sounds much worse than it actually is. That said, I think what you're expressing here is a general feeling of annoyance at a carrier who promises one thing and then seems to wiggle out of that promise so that the company can charge customers more.

Let me explain what AT&T's throttling policy is all about and why it stinks no matter what. I'll also explain why it isn't going away. And then I will explain why the new policy is actually a better solution than the one the company previously imposed.

Nearly two years ago, AT&T got rid of its unlimited data plan for smartphones for new customers. The company said that it was being overwhelmed by the amount of data a small percentage of customers were using, and it needed to put some economic incentive into the plan to curb usage.

Outraged customers took to social media calling AT&T lots of really bad names. And it worked, sort of. AT&T quickly told its existing customers that they could keep their unlimited data plans for the rest of their lives if they wished, so long as they made no significant changes to their plans.

Subscribers were once again happy. But then, several months ago, AT&T announced that some of those unlimited users were still using too much data so it started a new a policy. The top 5 percent of unlimited data users would see their usage slowed as a way to keep things in check on the network.

The problem with this policy is that AT&T didn't clearly define who was in the top 5 percent. Was this the top 5 percent of data users across AT&T's nationwide network? Was it just the top 5 percent of data users in a neighborhood? On a given street? In a particular cell?

And because it was a percentage with no real defined parameters, it was difficult for customers to know if they were falling in this top 5 percent or not until they got a notice telling them that they were. And then their data usage would be slowed until the next billing cycle started. But since they didn't know how much data triggered this slow down and because the trigger point could be different from month to month, it was hard for customers to adjust their usage so they wouldn't get throttled.

From the start, I thought this was a pretty stupid policy. My main complaint was that there were no clear boundaries or cutoffs that would allow customers to manage their usage. And because AT&T was so vague about how it calculated its top 5 percent of data hogs, it just seemed sneaky. People already don't trust their cell phone providers, AT&T in particular, and the policy just seemed to add fuel to the fire.

On Thursday, AT&T came out with a statement amending the unlimited data throttling policy. The company will still slow down service for heavy users, but now it's put a limit or cap on when that throttling will be triggered.

Now AT&T will begin slowing service for customers who use its 3G HSPA and HPSA+ service once they've consumed 3GB of data. And subscribers with a 4G LTE phone will see speeds slow down after 5GB of usage per month.

The news of this change has outraged some and has re-stirred the pot over the issue of throttling.

I agree that throttling users on an unlimited data plan stinks anyway you slice it. As a consumer, if I'm promised unlimited usage, I don't want to be limited in any fashion even if the limitation is the speed of my connection.

That said, throttling isn't going away. AT&T feels it needs to throttle customers for two reason: For one, unfettered use of the network means that just a few users can overwhelm the network. In fact, AT&T claims that the top 5 percent of unlimited data users use 50 percent more bandwidth on average per month than the top 5 percent of customers on a tiered data plan.

Think of it this way. Imagine if people were given unlimited access to electricity. I live in New York City where the summers can be unbearably hot. If I paid one flat rate for electricity, I'd run my air conditioner all day in the summer, so that my apartment is nice and cool when I get home after work. But it's simply too expensive to do that. And it's wasteful. So my utility company charges me based on usage and that changes how I use the service. I am much more conscientious about conserving energy.

The same is true with bandwidth. AT&T is trying to offer an incentive for customers, even those on an unlimited plan, to conserve data usage. Maybe this will prompt users to use Wi-Fi more or to compress their data.

The second reason they're doing this is because what they really want is for more customers to move to a tiered offering. AT&T won't admit this, but it's true. The company would much rather have all its customers on a tiered offering than the unlimited plan. Why? AT&T can't make any more money from an unlimited customer. The more data that customer uses, AT&T is paid the same monthly fee. There is no opportunity to up-sell that unlimited customer a higher-tier of service. But if that customer is on a tiered plan, AT&T can eventually sell him or her more bandwidth.

To summarize, AT&T is not getting rid of throttling and it's not getting rid of tiered plans anytime soon. These are realities we as consumers will have to live with.

So if we have to live with this reality, why is this new throttling policy better for consumers than the old policy?

The fact that there is some transparency in the plan is the most important change. The other thing is that AT&T may actually be giving unlimited data users a bit of a break by making the threshold for 3G customers 3GB and 4G LTE customers actually will get up to 5GB of data before their service is slowed.

Under the previous policy, there was no clear threshold that subscribers had to cross before they'd get throttled. But according to Onavo CEO Guy Rosen, whose company has created an app that monitors smartphone data usage and can compress some kinds of data, most of the people who were getting notifications warning them that their service would be slowed had been using 2GB of data or more per month.

This means that if AT&T sets its threshold at 3GB per month, then some consumers, who were getting throttled for 1.5 GB or 2GB of data usage, will no longer be slowed down.

"According to reports collected on DontThrottle.Us (a Web site set up by Onavo to protest the throttled network plans,) many users were throttled at below 3GB up to now," Rosen said. "So I welcome AT&T's clarification."

But Rosen said he still thinks that throttling is bad for consumers.

"Throttling is still throttling," he said. "2G speed mobile Internet is the same as no mobile Internet: no video, no streaming, no maps, Web browsing at a snail's pace."

He said the biggest issue for consumers is still the fact that they don't have the understanding or tools to manage their usage better.

"In general, any data management policy based on caps is incomplete when consumers don't have tools to understand which activities are actually sucking up those megabytes and to do something about it," he said. "This is why we created the Onavo apps."

In any case, most unlimited customers don't have to worry about this at all. AT&T still says that the new policy only applies to a small minority of customers, who are the heaviest smartphone data users.

Put another way," AT&T said in its statement. "This does not impact more than 95 percent of our smartphone customers."

So should you switch to another carrier? That's a tough question. I understand that you're annoyed with AT&T and you may not be happy with the way it is treating customers. But where would you go for service?

Verizon Wireless only offers tiered plans for new customers. And you actually get about 1GB of data less per month for the same $30 you're spend on AT&T's unlimited plan. T-Mobile USA also slows down users when they reach a given threshold. Sprint Nextel is the only carrier that still offers new customers unlimited data. This may be just fine for you. But you need to make sure that Sprint offers coverage where you live and work.

So unless you want to switch to Sprint Nextel, you might be stuck with AT&T.

I hope this advice was helpful.

Why Verizon and Sprint may still not be the best carriers for travelers

Dear Larry,
You hit the nail right on the head. In order for Verizon or Sprint to offer a "world" phone, they need to add a GSM radio and SIM card slot. While this is not impossible, it does add cost to the device. So as a result, these companies don't include this feature on every new device.

I also checked Verizon's Web site, and I only found a handful of devices that are considered world phones. And you are correct that none of them support LTE. The Apple iPhone 4S is a world phone. Verizon also offers several variations of Research In Motion's BlackBerry devices, but none of the hottest new Google Android 4G LTE devices recently launched on Verizon are capable of roaming in Europe or any other place where GSM is the predominant network technology.

As for Sprint Nextel, it has not built its 4G LTE network yet, so it doesn't have any 4G smartphones that support LTE. The company uses another network technology called WiMax for its current 4G devices. That said, Sprint is planning to offer an LTE service. But it's network will be limited initially until it can build out the network extensively. The company has pledged to bring 4G LTE to four cities (Atlanta, Dallas, Houston, and San Antonio) by middle of 2012.

And it's already said it will have 4G LTE phones available midyear. The LG Viper and Samsung Galaxy Nexus are expected to be the first two 4G LTE devices available for Sprint.

But remember that even though your 4G LTE phone will be able to roam onto Sprint's 3G network when 4G LTE isn't available, it will not roam onto the 4G WiMax network that is already in several cities.

So what should you do? You can certainly wait. There should be more devices coming later this year that will support 4G LTE and GSM for use worldwide. But I can't say exactly when.

If having a phone you can use in Europe while you're traveling is really important to you, then you should probably consider signing up with AT&T or T-Mobile USA. They both use GSM technology as the foundation of their services, so you can use any device from any one of these carriers in Europe.

I hope that helps. And good luck!

Ask Maggie is an advice column that answers readers' wireless and broadband questions. The column now appears twice a week on CNET offering readers a double dosage of Ask Maggie's advice. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.