Thursday, April 29, 2010

T-Mobile Offers Overage Compromise: Throttling

T-Mobile takes a unique approach to 5 GB monthly limits on 3G service: Instead of charging overage fees, T-Mobile throttles your data rate after you pass 5 GB. This isn't a penalty, but it eliminates any excess charges. The company didn't reveal how low throughput will drop to, and there's apparently no way to opt to pay such fees and use data until you break the bank.

This is a fascinating move. Carriers used to have a soft 5 GB limit and then canceled service or warned customers or throttled. After Verizon's brush with New York's attorney general over the term "unlimited," carriers started to expose the 5 GB cap; in the last year or so, each carrier decided to let customers exceed it for per MB fee from 5 to 20 cents per MB.

T-Mobile's approach cuts the baby in two, just a bit. You can go over 5 GB, but you won't be charged for it, but you won't get 3G speeds. Apparently. It's possible T-Mobile is reserving the right to throttle, and will only engage in congested areas, or it's using this to study what happens when you remove price sensitivity.

This clearly makes T-Mobile the right carrier if you want to have 3G service and share it among multiple devices via Wi-Fi, like Apple's iPad.

This is in addition to previous price changes from T-Mobile, which reduced its 3G service costs. If you purchase hardware at full retail, you pay $20/mo for 200 MB and $50/mo for 5 GB (no overage); it's $10 more per month if you opt for a subsidized broadband modem. There's no contract required for the cheaper price, either. Rather remarkable.

T-Mobile has also reduced the egregious $0.20/MB overage fee it previously charged--$200/GB--on that 200 MB monthly plan; the overage rate is now $0.10/MB, which is in line with competitors.

New customers can get $10 off the 5 GB monthly price, while existing customers with multiple lines or who add a line get $5 off the 200 MB plan and $10 off the 5 GB plan.

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