Artificial Hotspot Limits

It’s common for cell phone plans to include limits on mobile hotspot data that are separate from limits on overall data use limit. E.g.,

  • Verizon’s Get More Unlimited offers unlimited regular data but caps mobile hotspot use at 30GB.
  • One of Mint Mobile’s plans comes with 35GB of regular data but caps mobile hotspot use at 5GB.

Recently, a Reddit user was confused about Mint’s policy and asked:

What’s the reason for the 5gb cap on the hotspot? I have a friend who this plan would be perfect for, however he tethers his iPad frequently to watch YouTube. Not sure what the big deal is since you could just switch the sim anyway.

Here’s how I responded:

My speculation:

Even though Mint allows 35GB of use, it knows the vast majority of subscribers won’t use that much data. If all subscribers used their full allotments, the plan would be much less profitable for Mint.

By restricting hotspot use, Mint reduces data use and (more importantly) dissuades some very heavy data users from ordering the plan in the first place.

I may not have that that exactly right. Mint’s arrangements with its host operator, T-Mobile, are not public knowledge. But the underlying logic is right. A gigabyte of mobile hotspot data isn’t more cost-intensive for a carrier than a gigabyte of on-device data.

Verizon Plans To Acquire Tracfone

This morning, Verizon announced plans to acquire Tracfone. The planned deal will involve an acquisition of the Tracfone brand and a bunch of subsidiary brands like Total Wireless, Straight Talk, and SafeLink.

At the moment, these brands have about 21 million subscribers. The deal is slated to be worth six or seven billion dollars (or about $300 per subscriber):1

The consideration for the transaction will include $3.125 billion in cash and $3.125 billion in Verizon common stock, subject to customary adjustments, at closing. The agreement also includes up to an additional $650 million in future cash consideration related to the achievement of certain performance measures and other commercial arrangements.

Along with the subscribers and brand names, Verizon is acquiring Tracfone’s roughly 850 employees and Tracfone’s retail presence in over 90,000 locations.2 Verizon expects the deal to close in the second half of 2020.

Reflections & open questions

Tracfone and Verizon will need to pass through some regulatory hoops before the deal is official. If the acquisition goes through, it will cause a massive shift in the industry. Tracfone’s user base makes up about 5% of the U.S. wireless market and a major share of the prepaid market.3

At this time, I’m guessing Verizon will continue to operate several Tracfone brands rather than consolidate Tracfone subscribers under the Verizon brand name.4 Years ago, a Verizon executive discussing Verizon’s lackluster number of prepaid subscribers stated the following:5

“Our retail prepaid is above market. We’re really not competitive in that environment for a whole host of reasons and it’s because we have to make sure that we don’t migrate our high-quality postpaid base over to a prepaid product…Quite honestly, we use the Tracfone brand as our prepaid product.

About 13 million of Tracfone’s subscribers already have service running over Verizon’s network.6 I don’t know what will happen to the 8 million subscribers on other networks. I’m guessing Verizon will try to transition most of them to the Verizon network, but Verizon may sell the subscribers to other carriers.

When the merger between Sprint and T-Mobile closed, I wrote:

I continue to think the merger is going to be bad for consumers over the long term.
I’m guessing the merger between Sprint and T-Mobile contributed to the viability of Verizon’s Tracfone acquisition. As with the merger, I’m not optimistic about the effects this new acquisition will have on consumers in the long term.

Unlimited Plans: A Race To The Bottom?

In the last few years, many cell phone carriers have released “unlimited” plans that actually have limits. Most of these plans are sufficient for the average person. Problems show up for a minority of cell phone users that are especially heavy data users.

Many people read my posts explaining the limits carriers place on their “unlimited” plans and react with a version of:

Ok, fine Chris. Sure these plans aren’t technically unlimited. But you’re being pedantic as hell. These plans are as-good-as-unlimited for 98% of people.

My pushback on “unlimited” plans isn’t about protecting heavy data users. In the long run, I’m worried that “unlimited” plans are part of a trend that will be harmful to a much larger group of people: light and moderate data users.

Huh?

This has happened before

For more than a decade, I’ve been following the portion of the web hosting industry that caters to personal websites and small-business websites. When I first started watching the industry, almost every web host offered a fixed number of gigabytes of bandwidth each month. Customers that wanted more bandwidth had to pay more. At some point, a few web hosts began offering “unlimited” bandwidth plans.

Of course, no web hosts actually offered unlimited bandwidth. Hosts put restrictions in their terms of service agreements that made it possible to shut down websites that hogged server resources. If Google had tried to host its infrastructure on a $10 per month “unlimited” plan, it would have been shut down instantly.1

Even though most websites are tiny and have modest resource demands, people running tiny websites tend to like the idea of having an unlimited plan. Since the internet has way more tiny websites than medium-sized websites, web hosts could allow some unprofitable, medium-sized clients to stick around. The hosting bills for tiny websites essentially subsidized some more popular websites.

Over a few years, it became clear that offering “unlimited” plans was a winning business strategy. Gradually, unlimited plans became the industry standard. Fixed-bandwidth plans faded away.2

Back to cellular

Fixed-data cell phone plans are fading in the U.S. market. Take a look at the websites of any of the Big 3 networks. Which plans do you see? Unlimited plans get the attention. Fixed-data plans still exist, but they’re buried.

It didn’t used to be this way. The move towards unlimited plans has been rapid and will probably continue until unlimited plans dominate the market. Unless regulatory bodies step in, I see only two ways this can play out in the long run. Both scenarios seem bad:

  • Unlimited plans without many restrictions become standard. Light data users essentially subsidize heavy data users.
  • “Unlimited” plans with significant restrictions become standard. We get a race to the bottom.

Racing to the bottom

When fixed-data plans dominated the market, customers were aware of the limitations they were likely to run into. Hell, plans were their limitations. A 5GB plan might have been named “The 5GB Plan”.

As unlimited plans have risen, limitations have been hidden from customers and tucked away in the fine print of legal documents. Plan names turned meaningless: “T-Mobile Magenta” and “Verizon Above Unlimited.”

Carriers place limits on their “unlimited” plans so they can compete on costs. Have you noticed the policies below on the rise?

  • Video throttling
  • Hotspot data throttled to slower speeds than regular data
  • Monthly hotspot allotments that have no relation to overall data allotments
  • Data transfer that’s restricted to sluggish speeds after subscribers use a certain amount of data

For network operators, it’s not important whether a gigabyte of data is used streaming video, loading web pages, or running a hotspot.3 All these policies have the same purpose: reducing subscribers’ data use.

Low-priority data is another common limitation thrown on plans. Subscribers with low-priority data will experience normal speeds when a network isn’t congested, but their speeds will turn sluggish when things get busy.

Limits aren’t the problem

I’m not broadly against limits. I’m against limits that confuse consumers. I’m against limits that aren’t explained clearly and prominently.

Unfortunately, unlimited plans attract the kinds of limits I oppose. At some level, it makes sense, at least from a business perspective. If a carrier downplays how serious the limits are on one of its plans, the plan will be more appealing to consumers.

Carriers throttling heavy data users to 128Kbps don’t make candid disclosures. Imagine what that would look like:

After 35GB per month of data use, download speeds will decrease to frustratingly slow speeds (around 128Kbps). You probably won’t want to use the internet at these speeds unless you really need to. But if you have to load a boarding pass or an email after you’re out of regular data, you should be able to with a bit of patience!

No. We get vague disclosures like:

Data speeds reduce after 35GB but data is unlimited.4

Plans with low-priority data will have fine print mentioning reduced speeds during congestion, but details will be sparse. Customers trying to figure out how common congestion is, where congestion tends to occur, or how much speeds are slowed aren’t going to find the information they’re looking for.

Hell, it’s not just regular consumers that get confused and misled. My favorite tech review site can’t sort out prioritization policies. Here’s a bit from Wirecutter:

A T-Mobile spokesperson confirmed that policy, saying that although postpaid and prepaid T-Mobile service have the same priority, Metro by T-Mobile and other resellers ‘may notice slower speeds in times of network congestion’…However, AT&T and Verizon told us that they don’t impose any such prioritization.

Perhaps the scariest part of the excerpt is not that Wirecutter is wrong, but that people speaking for AT&T and Verizon were wrong about their own companies’ policies.

Where will we end up?

If nothing changes, we’ll continue to see the low-cost side of the market (a) throw more limitations on plans and (b) bury limitations deeper. In my view, the problem isn’t evil carriers. It’s bad incentives. Maybe the FCC or the NAD (National Advertising Division) will jump in and change carriers’ incentives. I’m not too optimistic, though.

Mint Mobile’s Unlimited Plan Has Limits

Today, Mint Mobile launched an “unlimited” plan. Mint has officially joined the ranks of carriers like Google Fi, Altice, Total Wireless, Wing, Tello. What do all these carriers have in common? Each offers an allegedly “unlimited” plan that strictly limits how much data subscribers can use.

The rest of this post is a rant. To be clear, I think Mint’s new plan is great. I just hate seeing the cellular industry move towards a scenario where every carrier has to offer plans that are misleadingly labeled “unlimited” in order to remain competitive. If you’re looking for a level-headed overview of Mint’s new plan, see my previous post. If you’re looking for cynicism and entertainment, keep reading.

Limits

Mint’s unlimited plan has three major restrictions:

  • Subscribers can only use 35GB of full-speed data each month. After 35GB of data use, Mint throttles data to sluggish speeds.
  • Mint limits mobile hotspot use to 5GB per month.
  • Mint throttles video streaming to a maximum of 480p.

How slow are speeds after 35GB?

Mint screwed up its communications about the throttling it imposes after 35GB of data use. Pre-launch information I received said subscribers would be throttled to 128Kbps. The only specific speed I’ve found mentioned on Mint’s updated website is 64Kbps:

Mint Mobile’s ‘Unlimited Data’ plan comes with 35GB of high-speed data, which is slowed to 64 kbps thereafter and reset at the next billing cycle.

I expect Mint will clarify its policies by the end of the day. For the rest of this post, I’ll give Mint the benefit of the doubt and say the throttle is 128Kbps. In some sense, it doesn’t matter if the throttle is 128Kbps or 64Kbps. The internet will be almost unusable at either speed.

Objections

But Chris! Mint lets you use unlimited data at 128Kbps! Sure, 128Kbps is slow as hell, but the plan is still unlimited!

No. At 128Kbps, a lot of things won’t work. Video won’t stream. Some web pages won’t load at all.

More importantly, a rate limit can’t coexist with unlimited data. If a full 128 kilobits is transferred every second for an entire month, only 41GB of data is used.1 There’s an absolute cap on Mint’s unlimited plan on data use of about 76GB (35GB + 41GB). Realistically, almost no subscribers will get much past 35GB of use in a month, since the internet will be so frustrating to use after the 35GB of full-speed data runs out.

But Chris! 35GB is practically unlimited! Almost everyone uses way less data than that!
Agreed! If you’re excited about the plan, this post probably shouldn’t dissuade you.

I don’t even fault Mint for calling the new plan “unlimited.” I’m impressed Mint managed to hold out so long while its competitors offered unlimited-but-not-really-unlimited plans.

My point is that consumers would be better off in the long run if carriers weren’t incentivized to mislabel plans.

Anyhow, if you’re interested in Mint’s new plan, go for it. It’s an awesome deal for $30 per month. Just realize it’s a 35GB plan.

Mint Mobile Launches An Unlimited Plan

Mint Mobile launched an unlimited plan this morning. It’s available for as little as $30 per month.

Plan terms

Like many unlimited plans offered by mobile virtual network operators (MVNOs), the plan isn’t actually “unlimited” in the mainstream sense of the word:

  • Subscribers can use 35GB of regular, full-speed data each month. After 35GB of data use, Mint throttles speeds to a sluggish 128Kbps.1
  • Mint caps mobile hotspot use at 5GB per month.

I’ll save my complaints about Mint misusing the word “unlimited” for a second post. 35GB of data and 5GB of mobile hotspot access will be sufficient for the vast majority of people.2

Like Mint’s old plans, the new plan includes unlimited minutes and texts. Calling to Canada and Mexico is also included at no charge.

Subscribers with 5G-capable devices will get access to 5G coverage from T-Mobile’s network. While T-Mobile’s 5G network is lackluster in terms of speeds, it leads the nation in 5G availability. You can check coverage at your location with Mint’s interactive map.

Pricing

With the new unlimited plan, Mint is continuing to price service based on how many months of service customers pay for upfront.

  • $30 per month – 12 months of service
  • $35 per month – 6 months of service
  • $40 per month – 3 months of service

The unlimited plan is eligible for the same introductory offer that Mint offers on its other plans. New customers can purchase three months of service at the rate Mint usually reserves for customers that purchase 12 months of service. I.e., three months of service on the unlimited plan costs $90 ($30 per month).

Reflections

Competitiveness

I’m glad to see Mint offering a plan for heavy data users with such a low price point. I expect the plan will be popular, especially among people who only need one or two lines of service. The new Mint plan should be competitive with other low-cost unlimited plans offered by carriers like Visible and Cricket. While I don’t think Mint’s new plan will make T-Mobile’s Essentials plan irrelevant, I’m ready to argue Mint’s plan is almost strictly the better option.

Pricing strategy

Interestingly, Mint has narrowed the distance between pricing tiers with the new plan. Mint’s 8GB plan costs $20 per month for customers that purchase a year of service upfront. The plan is 75% more expensive ($35 per month) for customers that purchase 3 months of service.3 Mint’s unlimited plan is only 33% more expensive for customers that opt for 3 months of service.4

In the past, I’ve wondered whether Mint’s pricing structure made volume discounts too aggressive. The large difference between monthly rates on three-month terms and twelve-month terms may have made the carrier unappealing to budget-sensitive consumers that could have been a good fit for Mint. Is it possible we’ll soon see Mint narrow the gap between pricing tiers on its old plans?

Mint’s new approach to pricing has a funny consequence. In some situations, Mint’s 12GB plan is now $5 per month more expensive than the 35GB (unlimited) plan.5

There’s No Escaping Bad Customer Experiences

Even cellular industry insiders can’t order phones and service without trouble. Prakash Sangam, an industry analyst, shared this tweet last month:

I’ve been thinking about the tweet a lot. In the last few months, I’ve opened accounts with all three of the major networks. Two of my ordering experiences were quite bad.

I’ll run through my experiences with each network. Go ahead and skip to the second half of the post if reading about my experiences doesn’t sound interesting.

Order 1: T-Mobile

I ordered a new line of service and an iPhone SE from T-Mobile. Everything went as expected. T-Mobile was the clear winner in terms of the customer experience.

Order 2: AT&T

I tried to order service from AT&T’s website while making use of AT&T’s bring-your-own-device (BYOD) program. AT&T was running an online-only promotion for BYOD lines that involved a waived activation fee and a $250 visa gift card for new subscribers.

A canceled order

A day after placing my order, I got an email from AT&T explaining that the company canceled my order. Here’s an excerpt:

We couldn’t verify this order [redacted] really came from you. For your security, we canceled it. Don’t worry. If there was a hold on your card, we’ll release the funds. Let us help you reorder your item(s). Visit an AT&T store. Be sure to bring your identification.

I have no idea why AT&T outright canceled the order. It would have been more convenient if AT&T paused the order until I could verify my identity.

Attempted phone resolution

I called AT&T to see if I could resolve the issue without going into a store. The agent I spoke with encouraged me to restart the order over the phone. I was worried that ordering by phone would make me ineligible for the online-only promotions. The agent told me she could add on the promotions at the end of the ordering process. I was skeptical, but I proceeded.

The reordering process was aggravating. I had to slowly re-share all of the information I had previously sent through AT&T’s website. After over an hour on the phone, the line dropped before I finished my order. AT&T didn’t call me back.

Going in a store

After two failures, I gave up and went into an AT&T store. I was worried placing an order in a store would make me ineligible for the promotions I wanted to take advantage of.

The AT&T sales representative I met with told me that the store could waive my activation fee and match the $250 visa card promotion with a bill credit of the same size. After sitting at the AT&T store for a bit while the AT&T representative consulted his colleagues, I was informed that the store actually couldn’t match the $250 promotion. I decided to cut my losses and pulled the trigger on service anyway.

A long-running problem

AT&T’s support forum is full of people frustrated with the same issue. Worse yet, complaints about this problem with promotion eligibility have been showing up for more than two years. In that time, AT&T hasn’t done a damn thing to solve the problem.

Order 3: Verizon

Along with a new line of service, I ordered a Galaxy S20 UW and a smartwatch from Verizon. The customer experience sucked.

Trade-in fiasco

When I placed my order, I decided to trade in an iPhone 6. While Verizon typically valued an iPhone 6 trade-in at $12, Verizon was running a promotion where customers who upgraded to the S20 5G UW could get a $350 credit for an iPhone 6. Based on the terms on Verizon’s website, it wasn’t clear whether I’d be eligible for the promotion as a new customer. Here’s a screenshot of the terms:

Trade in terms for $350 credit

When I checked the value of my iPhone 6 on Verizon’s website, I was offered $200 for it. I couldn’t quite figure out what was going on. I ultimately assumed I was ineligible for the $350 credit but eligible for some other promotion.

During the checkout process, Verizon’s website continued to suggest I’d get a $200 credit. Once the phone was actually inspected, Verizon revised its value down to $12. Here’s a screenshot from the email I received:

Trade in adjustment email

I don’t know why Verizon wrote, “Better qualifying promotion found.” Looking at my Verizon bills, I don’t see any credits that would correspond to either a $200 or a $350 credit.1

Contacting support

I reached out to Verizon’s support to figure out what happened with my trade-in. It didn’t go well.

The agent I talked to through Verizon’s chat-based support initially agreed that something went wrong:

The agent ran into trouble trying to make adjustments:

The agent later told me that I wasn’t eligible for the bill credit since the promotion started after I submitted my trade-in:

A promotion for a $350 bill credit was running in June. My earlier screenshot was taken at that time. I don’t know why the agent suggested otherwise.

Per the advice of the original agent, I switched over to contacting Verizon’s trade-in department by phone. After a few unsuccessful hours with Verizon’s support, I cut my losses and gave up.

Wrong phone specs

The S20 5G UW I ordered arrived with different specs than Samsung initially advertised. I previously wrote a whole post dedicated to the issue.


Why the hell are customers’ experiences so bad?

I’ve described the cell phone industry as a “confusopoly.” Scott Adams coined the term and defined a confusopoly as:

A group of companies with similar products who intentionally confuse customers instead of competing on price.

In my recent orders, I came out several hundred dollars behind my expectations. If Verizon and AT&T had user-friendly ordering systems and less confusing policies, that wouldn’t have happened. Still, I don’t think the confusopoly concept fully explains my bad experiences.

By canceling my online order, AT&T made me ineligible for its gift card promotion. There’s a sense in which that saved AT&T a few hundred bucks. On the other hand, I don’t think AT&T intentionally screwed me. New customers are worth a lot to AT&T. Each time AT&T cancels an online order, there’s a chance that they’ll entirely lose a customer. Many people won’t bother coming into a store after a canceled order.

I’m left scratching my head. In most industries where new customers are valuable, a lot of effort goes into making customer experiences positive. What’s going on in the cellular industry?

Verizon Updating Unlimited Plans

Yesterday, Verizon announced a set of updates to its postpaid unlimited plans. The new plans are slotted to release on August 20th. All plans will keep their current names and monthly prices. Existing Verizon customers will have the option to switch to the new plan structures or stick with the old structures.

Changes

All of Verizon’s next generation of postpaid unlimited plans will allow 720p video streaming. While details are vague so far, it looks like customers will have to enable 720p streaming in their plan settings. I expect streaming will default to 480p by default.

Verizon has also changed its approach to Premium Data. Going forward, all plans other than the Start Unlimited plan will offer 50GB per month of Premium Data.

Plan by plan changes

Start Unlimited

Positive:

  • Video streaming up to 720p (must opt in, previously 480p)

Negative:

  • Disney+ now included for 6 months (previously 12 months)

Play More Unlimited

Positive:

  • +25GB Premium Data (now 50GB)
  • Disney+ included indefinitely
  • Hulu and ESPN+ access added

Negative:

  • 720p video streaming now requires opting in
  • Apple Music now only included for 6 months (was indefinite)

Do More Unlimited

Positive:

  • Video streaming up to 720p (must opt in, previously 480p)
  • Smartwatches and HumX now eligible for 50% connected device discount
  • +100 GB Verizon Cloud storage (now 600GB total)

Negative:

  • Disney+ now included for 6 months (previously 12 months)

Get More Unlimited

Positive:

  • Hulu and ESPN+ access added
  • Smartwatches and HumX now eligible for 50% connected device discount
  • +100 GB Verizon Cloud storage (now 600GB total)

Negative:

  • -25GB Premium Data (now 50GB, previously 75GB)
  • 720p video streaming now requires opting in

Rumors About A Potential Consumer Cellular Sale

Earlier this week, Mike Dano of Light Reading reported on rumors about Consumer Cellular:

Consumer Cellular – one of the nation’s largest MVNOs – is in discussions with other companies for a potential sale, according to two people familiar with the issue. The discussions appear to be in the early stages, and may not result in a transaction.

An acquisition of Consumer Cellular’s roughly four million subscribers would be big news. The new rumors combined with Ting’s sale of its subscriber base earlier this month raise the possibility that MVNOs are feeling squeezed.

As Sprint folds into T-Mobile, network operators may be increasing what they charge MVNOs for network access. MVNOs may also worry their offerings will become less competitive as DISH enters the marketplace. The CEO of Ting’s parent company, Elliot Noss, suggested something along those lines:

For many quarters now, I have discussed the outlook for Ting Mobile within the context of how DISH enters the market and what that would mean for the industry competitively. I absolutely believe that they will be very aggressive with pricing, which has two implications for our announcement. First, it would make remaining as a retail MVNO that much more difficult. Second, it will make their entry into the market that much more successful. The net result is that DISH is well positioned to disrupt the US mobile market.

Ting’s Subscriber Base Acquired by DISH

News came out today that most of Ting’s assets, including Ting’s mobile customers, have been acquired by DISH:1

Effective August 1, 2020, most Ting Mobile customers across the U.S. became customers of DISH. These customers will continue to use their current phones and will enjoy the same rates and excellent customer experience. As with DISH’s recently acquired Boost customers, these Ting Mobile customers will have access to the new T-Mobile network.

Tucows, Ting’s original parent company, will retain ownership of Ting’s technology stack. Tucows plans to offer Mobile Service Enabler (MSE) solutions to help wireless carriers run their businesses. Here’s a bit of information I received from Tucows’ PR team:

Now, as a Mobile Services Enabler (MSE), Tucows is opening up its mobile platform and the foundation on which the MVNO Ting Mobile was built. The same platform that helped Ting Mobile create some of the happiest mobile customers and top Consumer Reports lists year over year. DISH is becoming Tucows’ first MSE customer—starting with Ting Mobile, and adding Boost Mobile’s estimated 9 million customers in the 2nd half of 2021.

The Verizon Network

So far, I haven’t seen Ting directly address the plans for the carrier’s Verizon-based service. An email from Ting’s PR team said there would be “no data migration, service interruption or billing changes.”

I expect customers on Ting’s Verizon-based service will not be forced to migrate immediately. I’m not sure what will happen in the long term.

Don’t Take Ookla Too Seriously

Ookla recently published its Q2 report on the performance of U.S. wireless networks. As I’ve discussed before, I’m not a fan of Ookla’s methodology.1 Because of my qualms, I’m not going to bother summarizing Ookla’s latest results. However, I do want to draw attention to a part of the recent report.

Ookla’s competitive geographies filter

In the last year or two, Ookla has restricted its main analyses to only account for data from “competitive geographies.” Here’s how Ookla explains competitive geographies:

To meet the definition of ‘competitive’ in the U.S., a zip code must contain samples from at least three top national competitors…but no competitor can have more than 2/3 of the samples in that zip code.

The competitive geographies filter mitigates some of the problems with Ookla’s methodology but also introduces a bunch of new issues.

Availability

Ookla’s latest results for 4G availability illustrate the issues:

Ookla 4G availability scores

Sprint unambiguously has the smallest coverage profile of the four nationwide networks.2 The competitive geographies filter makes Ookla’s availability metric so meaningless that Sprint can nevertheless tie for the best availability.

Lots of regions only have coverage from Verizon. All those data points get thrown away because they come from non-competitive geographies. Other areas have coverage from only Verizon and AT&T. Again, those data points get thrown out because they’re not from competitive geographies. What’s the point of measuring availability while ignoring the areas where differences in network availability are most substantial?

Giving Ookla credit

Despite my criticisms, I want to give Ookla some credit. Many evaluators develop complicated, poorly thought-out metrics and only share those metrics when the results seem reasonable. I appreciate that Ookla didn’t hide its latest availability information because the results looked silly.