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T-Mobile’s next move: Shame AT&T and Verizon into ditching data overage fees

Updated Apr 10th, 2014 9:08AM EDT
T-Mobile Vs. AT&T Vs. Verizon Data Overage Fees

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Wireless customers don’t like data caps in general and they really, really don’t like paying overage fees when they go over those caps, even if Verizon and AT&T do send them repeated text messages warning them that they’re about to exceed their monthly limits. With this in mind, T-Mobile has unveiled a new $40 Simple Starter plan that the company is touting as the best plan for casual smartphone users who don’t want to see their wireless bills skyrocket because they used too much data.

In his announcement for the new plan, T-Mobile CEO John Legere repeatedly slammed Verizon and AT&T’s use of overage fees for their capped plans that he said are designed to gouge consumers.

“With AT&T’s entry-level plans, for example, your costs immediately jump by increments of $20 when you slip over the threshold into massive overages — in what amounts to an obscene 44% price hike on those customers least able to absorb overages and bill shock,” Legere writes. “It’s wrong. And I personally want to drive those predatory bait-and-switch schemes out of this industry.”

Both T-Mobile and Sprint offer capped smartphone data plans that do not charge overage fees for using too much data and instead simply throttle users’ connections down to 2G speeds if they go over their allotted amount of data. Sprint has in the past tried to make this into a marketing point for its services but it hasn’t generated much momentum so far. However, T-Mobile’s own marketing efforts have been much more effective than Sprint’s over the past year so it will be interesting to see whether this has a major impact on the industry.

As for the new T-Mobile plan itself, it offers unlimited voice and text along with 500MB of data for $40 per month. However, some caveats apply here as well: The new plan won’t give you access to the unlimited international data and texting perks that T-Mobile offers with its usual Simple Choice plans. Also, because the Simple Starter plan has such a low data cap, T-Mobile is advising that only individuals should subscribe to it and that families should seek something with more data allowances.

We have contacted AT&T to comment on Legere’s latest tirade and will update this post with any response we receive.

UPDATE: We should point out that we’ve found a pretty big caveat in T-Mobile’s new plan — unlike other T-Mobile capped plans that dump you down to 2G if you go over your limit, this plan will simply cut off your data until the start of the next month. This doesn’t mean it might still not be a good deal for some people but it’s definitely something to take into account.

Brad Reed
Brad Reed Staff Writer

Brad Reed has written about technology for over eight years at and Network World. Prior to that, he wrote freelance stories for political publications such as AlterNet and the American Prospect. He has a Master's Degree in Business and Economics Journalism from Boston University.