Light Reading

Verizon Applies 3G Throttling Policy to LTE

Sarah Thomas
7/25/2014
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Back in 2011, Verizon began throttling its heaviest 3G data users in a bid to move them to its higher capacity LTE network, but now -- three years later -- it's applying that same policy to 4G unlimited users. (See Verizon Embraces 4G Traffic, Throttles 3G.)

Verizon Wireless has so far been the most effective US wireless operator at migrating its customers away from unlimited data plans. Consumer Intelligence Research Partners (CIRP) reported this week that, of the four largest US operators, Verizon has the fewest still on unlimited -- 22% compared with 44% on AT&T Inc. (NYSE: T), and 78% on Sprint Corp. (NYSE: S) and T-Mobile US Inc. , which both still market unlimited data. (See Verizon Continues 4G LTE Capacity Spend in Q2 .)

Now Verizon wants to drive those numbers even lower by applying its "Network Optimization" policy to LTE as well. Droid Life first discovered that it will begin slowing down network connections for those heavy unlimited data customers that "have fulfilled their minimum contract term" on LTE and are on a heavily-trafficked cell site. The policy kicks in on October 1, and Verizon says that throttling could last as long as the current billing cycle or even into the next.

Wondering if you could be one of the affected customers? Verizon says it should only affect its top 5% of data users, but it will apply to those who meet the following criteria:

  • have an unlimited data plan;
  • are in the top 5% of data users, meaning they use 4.7 Gbytes of data per month or more;
  • have fulfilled their minimum contract term, and;
  • are on a congested cell site.

These customers can, of course, use WiFi more often and better monitor and manage their network usage with Verizon's data tools, but the carrier is hoping they'll choose the option to move to one of its More Everything shared plans and away from unlimited. (See Verizon Manages Its Own Data Destiny.)

While its 3G throttling policy was aimed at migrating customers to LTE -- it said at the time that it welcomed the traffic on its 4G network -- applying it to LTE is all about economics: Shifting the remaining 22% of its customers away from unlimited deals will bring in more revenues for the operator, even if the policy only affects a small subset of customers.

CIRP says that because of Verizon's success in squashing unlimited plans, 51% of its customers pay at least $100 per month, compared with only 47% at Sprint, 46% at AT&T, and 33% at T-Mobile. Usage-based data plans and shared buckets are clearly the most attractive option for Verizon, and it's hoping to increase their adoption by making unlimited data increasingly less attractive to its customers.

— Sarah Reedy, Senior Editor, Light Reading

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Michelle
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Michelle,
User Rank: Moderator
7/28/2014 | 11:21:48 PM
Re: 3G v LTE
"So how can companies make intelligent decisions to bring in the profits without seeming unfair to their customers?"

This is a great question. Internet service providers happily throttle traffic at regular intervals.
briandnewby
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briandnewby,
User Rank: Light Sabre
7/28/2014 | 7:01:19 PM
Re: 3G v LTE
Mark, you're right.  As a business geek, I admire companies that know their profitability limits.  As a customer before anything else, I hold these companies in great disdain. 

Signed, Conflicted in KC

Anyway--good points to all my, um, points.
MarkC73
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MarkC73,
User Rank: Light Sabre
7/27/2014 | 3:24:06 PM
Re: 3G v LTE
For the we don't want you part, the insurance industry works this way, I mean for car insurance, even if you aren't at fault but an accident magnet, you cause too much cost, your insurance goes up or you can't get insurance.

In theory, I agree with you, they shouldn't change unlimited, but basically they are abiding by their contracts and the industry itself is moving to per bit buckets, hopefully that means better control of costs and the competitive market will make it go towards lower costs.  Whether it goes mostly to the bottom line or lower fees, well we can all debate that later.

I definitely agree on your point of congestion control, though this should only be a damage control measure until the bottleneck relieved, some connectivity for all is far better than everyone just loosing random packets and having to retransmit.
briandnewby
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briandnewby,
User Rank: Light Sabre
7/27/2014 | 2:46:29 PM
Re: 3G v LTE
I'm a throttling opponent, I guess (I didn't really have a throttling position until just now), but aside from the lack of customer focus here, isn't throttling something all carriers do (wireless and land-line, and even utilities) at some point or other to manage volume load?

I guess the part that struck me as fair with this post was that throttling might be done in a congested cell site.  That seems reasonable.  Now, I think everyone should equally be throttled down because, other than in an emergency, the true issue is less than stellar network planning.  I guess throttling just a few limits the unhappy customers and Verizon is really telling those higher volume users, "We don't care if you leave and, actually, we'd rather you do."

The wireless industries is one that has embraced the idea of "bad customers."  As a customer of many things, I don't like that concept at all.  But in a competitive industry, and if you are the scale of Verizon, it probably is shareholder-friendly.

Heck, even the term throttling smacks of a non-customer-focused view.  I know it's been around for a few years, but the electricity industry has managed peak levels for decades and surely used some other softer phrase.
MarkC73
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MarkC73,
User Rank: Light Sabre
7/27/2014 | 1:58:30 AM
Re: 3G v LTE
The question will be how much will they be throttled and for how long?  Didn't seem like it was very specific.  My own speculation is that Vz cares more about PR than these high bandwidth users.  Any readers on an unlimited Vz plan?
Liz Greenberg
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Liz Greenberg,
User Rank: Light Sabre
7/26/2014 | 12:36:00 PM
Re: 3G v LTE
Exactly Dan,  I can't remember the pricing that many years back when data was unlimited but it was for the most part more expensive than today.  I think that is the reason why many users, myself included, who really weren't using that much data switched off the plans when they could finally save money.  Verizon will figure it out in a way that benefits the majority of their customers.
danielcawrey
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danielcawrey,
User Rank: Light Sabre
7/26/2014 | 11:53:30 AM
Re: 3G v LTE
Verizon operates a very effective network with excellent coverage and speeds. Some of that has to obviously do with how the company has been able to mete out unlimited data. I did not know that the company had so few unlimited subscribers, which likely is limited to businesses and power users that are paying a ton of money for those services.
kq4ym
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kq4ym,
User Rank: Light Sabre
7/26/2014 | 9:03:07 AM
Re: 3G v LTE
But as the customer useage changes and the highly used cell sites get overloaded, what's to protect the consumer from unreasonable changes to pricing schedules. 

If the changes affect the  "top 5% of data users, meaning they use 4.7 Gbytes of data per month or more" today, what's the rule going to be next month? 

So how can companies make intelligent decisions to bring in the profits without seeming unfair to their customers?
Liz Greenberg
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Liz Greenberg,
User Rank: Light Sabre
7/25/2014 | 2:53:09 PM
Re: 3G v LTE
My first thought was, darn I should have stayed on my unlimited plan!!!  But the reality is that I still save a bunch per month and when I have heavy usage I can pay for it.  For the consistently heavy users, staying unlimited can make a lot of sense.  As you point out, it is on congested towers so unless all the heavy users are there, it will affect a very small percentage of users.
SReedy
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SReedy,
User Rank: Blogger
7/25/2014 | 2:15:29 PM
Re: 3G v LTE
That's true, AT&T throttles after 3GB on its 3G HSPA network or after 5 GB on its LTE network, so Verizon is more generous. And the fact that it (supposedly) only applies to congested cell sites should mean it affects even less people. 
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