Late last year Radio Shack, Acer, and AT&T teamed up to offer customers a chance to pick up an Aspire One netbook for $99 when they sign up for a 2 year wireless broadband service contract. This sort of deal is common in Europe and other parts of the world, but kind of new in the US. So while customers are used to dealing with monthly bandwidth caps on their cellphone data plans (after all, what are the odds that you’re really going to do 5GB of surfing on a phone with a 2 inch display anyway), customers aren’t as used to the idea of having restrictive bandwidth caps on their computer usage.

And so we have the case of Billie Parks, a woman who picked up an Acer Aspire One from Radio Shack, signed up for the AT&T service plan, and promptly started using her netbook. A lot. She expected her first monthly bill to be around $96 dollars, to cover the $60 service charge and $36 activation fee. But instead she got a bill for about $5,000.

AT&T’s terms of service states that the company can impose additional fees if users exceed their 5GB monthly bandwidth cap. But it’s buried in the fine print, and Parks’s attorney states in a lawsuit filed this week that there’s nothing indicating that the fee could reach into the thousands of dollars.

The lawsuit could eventually reach class action status. My guess is that there’ll be some sort of settlement. Although parks probably did rack up enough minutes online to earn herself this astronomical bill, it shouldn’t be that hard for AT&T to wave some portion of the charges and agree to state its fees more clearly in the future. In a perfect world, this kind of lawsuit would lead to higher bandwidth caps. But unfortunately we don’t live in a perfect world.

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14 replies on “How reading the fine print could save you $5,000”

  1. Or… and here’s a wild thought… since it is a “cap”, just cut off access when you reach the cap? And have a procedure where one can call a 1-800 number to authorize going over the cap. Presumably one has to use client software to use the wireless adapter as a modem, the software can warn the user as they approach their monthly cap, and when they reach the cap, to require the user to approve going over the cap.

    1. It’s even worse than that. All data goes through a proxy, so they could put up any web page they want if the person is getting close or actually exceeds their limit. They have no excuse about not warning people. It’s all just corporate greed.

    2. Anything of the sort would not fit the current:
      “Greed for today, to hell with the future (revenues)” model.

      But that model is both short term thinking and incomplete –
      Incomplete? Yes, incomplete.
      What we (the TelCo I worked for and I) found in our modeling was:
      That it typically cost 15 times as much to acquire a *new customer*
      (to replace the one you just pissed off) as to keep an “existing customer*.

      So poorly disclosed limits and fees are actually counter productive.
      Much better to display the % of cap used at every connect with some
      option to approve going over.
      Better that you lose a few bucks today than lose the customer when
      you next send them their bill. 😉
      New customers are **expensive** to get!

  2. In the USA, putting the extra charges in the fine print is *extra stupid* –
    Because, when push comes to shove, the communications provider has no recourse to collect.
    Their only recourse is to stop providing the service to the subscriber.
    Which is sort of self defeating – as a provider then you don’t even get the monthly flat fee. 😉

    So it would be in the best interests of both the provider and the consumer to boldly state
    the extra’s and the limits. Also to warn the user (if the user chooses) when they get near
    the limit.

    That would keep the accounts open, the data flowing for the consumer, the money flowing
    for the provider. . .
    Unfortunately, in this country, providers have fallen into a:
    “The greed of today outweighs the recurring revenues of tomorrow”
    business model. Which may get the provider’s revenue today but is long term dumb.

  3. I live in Europe (Belgium) and these potential surcharges on mobile broadband are indeed the norm here. Actually, getting a 5 GB cap on mobile broadband is extremely generous by European standards. To give you an idea by my provider offers 3 plans: the entry level data plan offers 10 MB (yes MEGAbytes) per month for like 7$, the medium data plan offers 200 MBs (again MEGAbytes) for around $12, and the top end plan offers 2 full GBs and cost around $30. This cost is in addition of your voice plan.

    For the first 2 plans (10 Mb & 200 Mb month) any traffic beyond the quota is charger $3 per MB (again, yes $3 per MEGAbyte of data). People on the 2 GB plan that go beyond the allocated bandwith only pay $0.12 per MB).
    So if you have one of the small plans and you download 1 GB of data you can easily get a bill in the thousand of $.
    This has always been like that and is the reason why very few people use mobile data for anything beyond checking mail and light surfing. Even on the big plan people know that applications like web radio and Youtube should be used in moderation if at all.

    This price and usage difference between mobile internet and real broadband is something of which everybody is aware because this is VERY clearly stated in the pricing structure. Operators have realised that if someone isn’t aware of this and go mad whit his mobile internet, they tend to refuse to pay the big bill that comes afterward. An operator that puts these things in the fine print is just stupid.

    1. It seems like you have a horrible data plan, but it is not really a typical example for Europe. You can e.g. easily get tariffs with 6 GB/month for 12€, or 15GB for 20€.

  4. On my T-mobile data plan in the UK if you exceed your data allowance there is no fee – they contact you and tell you not to do it again.

    Some other providers, such as 3, charge 10p/MB once you go over your limit. So go over by 1GB and you’ll get charged £100 (about 140 USD).

    I’d like to see all providers adopt the T-mobile UK approach instead of trying to catch people unawares when they accidentally use more bandwidth than they expect.

    An alternative approach which I think everyone could agree was completely fair would be to charge any excess at the same rate as you pay for your flat rate. So if you are on a 1GB/month for £10 monthly plan and you go over by 500MB, you’d get charged an extra £5 fee. You would still be paying more per GB than if you’d just opted for a higher data allowance (because of how they’re priced), which is fair.

  5. You always have to pay more if you go over your limit. But that much more is just ridiculous.

  6. Drinking the Cool-Aid….bandwidth is not that scarce, nor is it that expensive to provide by these companies. Anyone that looks at these bandwidth caps and prices and thinks , “This is a fair” is deluded.

    1. Yeah, somehow it’s economical to charge $12/gig for the first five gigs, but it suddenly ramps up to $480/gig after that? (Using numbers as I remember from consumerist, earlier, I might be somewhat off.) That’s _punitive_. They’re hoping you slip over your allotment so they can reap 9x your normal bill in one fell swoop.

  7. I purchased a Verizon Broadband Access card a few months ago, primarily for use with my netbook. The first month, I came very close to using up my bandwidth, but I quickly learned how to monitor my usage. I disable Dropbox, limit the amount of streaming video I watch, and wait to download any large files until I’m back at home. My usage now averages 1-2 GB per month.

    But that’s all easy to do, since I actually have to physically plug in the wireless modem before it connects. Using a device with an integrated cellular internet connection could easily lead to this problem. I agree, however, that bandwidth is a precious resource.

    What I really wish they’d do is come out with a broadband card “family plan” kind of thing. We recently added a second broadband card for my husband (since he was constantly stealing mine), but neither of us use 5 GB per month, or even close. I’d LOVE a shared bandwidth pool!

  8. It should be extremely easy for customers to track the amount of bandwidth they’ve used, and there should never have to be any doubt as to whether the device is using 3G or WiFi when available.

  9. I don’t think it’d be so “perfect” to just have higher bandwidth caps. Bandwidth is a scarce resource, and having people pay according to the bandwidth they use is probably the best solution out there for allocating it. However, providers need to be up-front and honest about their bandwidth charges and oligopolies in the cell phone market need to be shaken up. If people know about the costs and there’s a competitive market, then these absurdly huge charges will be history.

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