One of T-Mobile’s early Uncarrier moves, and a point that John Legere continues to raise with regard to his competition, was to do away with overage charges for customers. Instead of charging customers extra when they exceed their purchased data limit, T-Mobile users see their speeds throttled to a slower rate. Sprint followed soon after and this past summer both Verizon and AT&T rolled out new plans that let users avoid overage charges in exchange for throttled speeds. A new study looked at both how lucrative the old plans were for carriers and whether it makes sense for users to switch.
The study, conducted by NerdWallet using information provided by My Data Manager, showed customers with Verizon and AT&T collectively paid over $600 million collectively in overage charges on an annual basis. These charges racked up from the 37% of smartphone users who occasionally go over the limit and the 15% who do so regularly according to a Pew Research Center study conducted in 2015.
While the revenue generated by overages is lucrative for the carriers and explains why they resisted no overage plans for so long, that does not necessarily translate to the new plans being better for consumers. Despite the benefit for the carriers, customers should still carefully consider whether a switch to a new overage fee plan makes sense. The same study found that for most customers the new plans usually are not worth it. The situation where it does make sense is when a user frequently goes over their data budget. Typically “frequently” would translate to collectively exceeding plan limits by at least 8GB per year.
If you made a switch to a Verizon or AT&T plan with no overage fees, what was your experience like? Did you succeed in improving your costs for wireless service?