Verizon’s PR Disaster

Recently I was reading an article titled Family, Verizon far apart over nearly $18,000 phone bill; basically, a college kid thought his family’s unlimited data plan was still in effect, and downloaded a little over 1 GB over the network, only to find out that they were being charged at a rate of $15 per MB (the homepage of Amazon.com is 0.9 MB).

Just to illustrate how ridiculous this scenario would be in any other market, here is an equivalent story where data == water.

Imagine that you get your water from a little company called Verizon. They normally supply water at a price of $100 per month for an unlimited amount, but for the past 2 years they’ve given you a promotional deal where you get unlimited water for free. Your son has a garden and uses quite a bit of water for irrigation, but it’s fine — after all, you have limitless water for free.

One day you get a bill in the mail from Verizon for $18,000. You had (understandably) forgotten that your 2-year promotional deal had ended 2 months ago. Now, this bill staring back at you says that since you did not have the $100/month unlimited plan for the past 2 months, you must pay for your water usage at a rate of $10 per cup, for a total of $18,000.

Should you have to pay the whole bill? Based on the above scenario, the answer to is quite obviously no, so the real question is:  if not $18,000, how much should you have to pay? Even that is pretty clear: 2 months for unlimited water at $100 per month, for a total of $200, plus tack on some silly management fee for rolling you over into the unlimited water plan, giving $225 as the grand total. Water works as a fairly accurate and handily intuitive comparison to data transfer — most of the differences between the two are not relevant here.

At first, this news report was rather infuriating, since an innocent family was to be burdened with a $18,000 debt for no good reason. After more thought, it is simply puzzling as to why Verizon thinks it’s a good PR move to defend its position. And the story above makes it more than apparent how overages like this one should be handled — it’s not as if the water coming out of your tap will ever suddenly go from costing $0.02 per cup to costing $10 per cup, because you used beyond your monthly limit.

Consumers should demand a stop to being tricked into giving telcos extra money for something that has a marginal cost equal to its non-marginal cost.

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