10 Comments

Summary:

T-Mobile is now campaigning to end overage charges in all cases, eliminating its own fees on older plans. Overage fees aren’t inherently evil, but the way they’re implemented in the U.S. they might as well be.

T-Mobile store
photo: T-Mobile

Starting in May T-Mobile plans to get rid of all overage charges on all of its customer bills, pushing a new marketing strategy that claims consumers should be charged only for the services they sign up for, not the extra minutes, texts or megabytes that accrue before the end of a billing cycle.

The announcement is in part a publicity stunt, as T-Mobile already eliminated automatic overage fees more than a year ago when it launched its Simple Choice plans. Displaying his characteristic bombast, T-Mobile CEO John Legere today launched a Change.org petition calling for all U.S. carriers to end overages. But there definitely is substance to this new policy change if you’re an older customer who never signed up for a Simple Choice plan.

T-Mobile CEO John Legere kicking off the iPhone and T-Mobile's Un-carrier strategy last year

T-Mobile CEO John Legere kicking off the iPhone and T-Mobile’s Un-carrier strategy last year

T-Mobile is essentially turning all of its older grandfathered plans into Simple Choice plans. If you currently subscribe to a bucket of minutes or text messages, you’ll find your plan now offers unlimited voice and SMS. And if you’re still on one of T-Mobile’s old hard-capped data plans, your monthly data allotment will turn into a soft cap. That means instead of incurring data overage charges after you hit your cap, you’ll still be able to surf at no additional cost, just at throttled-back 2G speeds.

Legere is railing against overage fees as the new face of carrier evil, but there are trade-offs if you embrace T-Mobile’s no-overage model. If your primary concern is having absolute control over your monthly bill, then T-Mobile’s plans make a lot of sense. You’ll never get an additional domestic data charge unless you specifically authorize T-Mobile to make it. But it also means that you could be stuck with pokey 2G data access for a week or more if you use up your cap mid-billing cycle (in the case of its new Simple Starter plan, you’d lose mobile internet connectivity completely).

That said, Verizon and AT&T are still charging pretty punitive rates if you go over your cap, especially if you’re on a smaller data plan. For instance Verizon will charge you as much as $15 for an additional 200 MBs on its entry-level data plan, and AT&T will charge you $20 for an additional 300 MB of its baseline plan. It’s a lot cheaper to simply upgrade your plan if you’re regularly going over your cap, which is exactly what AT&T and Verizon are trying to get you to do with their overage policies.

Overages aren’t inherently bad as Legere is claiming, but the way they’re structured today is hardly consumer friendly. What we need in the U.S. mobile industry is an overage pricing structure that gives consumers leeway to occasionally go over their cap or pay for data in metered fashion. Instead we have overage fees that hold many consumers’ feet to the fire every time they stream one too many videos.

 

 

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  1. openlabssocial Monday, April 14, 2014

    Good news for a lot of people.

  2. so does this mean people on the walmart/online only $30 prepaid plan with 100 minutes/unlimited data and 0.10/min overages can now talk unlimited with their plans?

    1. When you prepay there is no overage regardless. That plan you a referencing is a prepaid plan. An overage is inherently a post paid thing.

  3. Reminds me of blockbuster getting rid of late fees

    1. Yeah? And look what happened to Blockbuster.

  4. I called TMobile after they came out with their new plans. They could not find a better priced plan and suggested we stay with what we have. It has 1000 minute limit that we have only gone over 1 time. So, 1000 minutes has been sufficient. Now, it’ll be like getting that unlimited plan, but only paying for the 1000 minute plan.
    Not exciting, but nice.

  5. Mr Legere always take decision in favor of consumers and this time, it looks he is leading for welfare of all consumers. Overage is big burden and fear for a budget conscious consumers……………………….. telecomvibe(dot)com

  6. That’s all great and all, but having a smart phone plan that throttles down to 2g myself, you’ll find its good for next to nothing at that speed.

  7. truly outdated network and data plans, there are carriers out there that now allow all you can eat data and tethering for less than they charge for 200mb.
    Nobody living outside of the stone age would opt for any of T-mobiles plans these days anyway.

  8. McKinley Larson Wednesday, April 16, 2014

    Does this mean people without prior access to data will have it avalible at the 2gb speed?

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