Is AT&T robbing you blind?

Posted by Matt Farmer on February 02, 2011 · 3 mins read

A report came out yesterday at Macworld that AT&T may be cheating iPhone and iPad users out of some data that is rightfully theirs.

AT&T switched to a system last summer that changed their data plan offerings from having unlimited data for $30/month into two tiers of data plans. One tier consists of 250MB of data for $15/month and the other consists of 2GB of data for $25/month. Overall, it was a good switch… if their data counting is reliable. It seems that is not the case.

The chief accusation of the lawsuit is that AT&T has utilized “phantom data” to over bill their customers. Essentially, the claim is that AT&T subtracting megabytes of data from the user’s data plan when they are not using their phone. The consulting firm hired by the plaintiff’s lawyer found that AT&T is overstating data usage by as much as 300% in some cases. To explain how this is happening, they equate AT&T’s billing system to a rigged gas pump that rounds transactions up to the nearest gallon.

AT&T denies these claims, of course, and is planning on fighting the lawsuit. The law firm is seeking class-action status, and if granted will allow other AT&T customers to jump on the bandwagon and join in the fun. However, if you were grandfathered into the old, unlimited data plan – you won’t be eligible to join in the fun.

I’m not sure how this happened, but I’m wondering if it isn’t simply a carry-over from some older telecommunication business practices of rounding up to the nearest minute for billing purposes. So, for example, on many telecommunication billing schemes if you talk for 1 minute and 30 seconds, you will be billed for 2 minutes. This has been accepted practice for a long time. Minutes are a reasonable unit of measurement for a phone conversation.

For internet billing however, the telecom companies use kilobytes as their base unit of measurement. In reality, a kilobyte isn’t much data. There are, however, many internet trasactions that take less than 1 KB of data. Take checking email for example. An exchange between a phone and an email system to check an empty inbox may only take 200 bytes (about 0.2 KB), but if you round up to the next KB you’re billed 1KB. That’s an 80% waste. If your phone is set to check your email every 10 minutes, you’re being billed for about 115 KB of data that you didn’t use every day. Over the course of a month, you will be billed for almost 3,500 KB or 3.5MB of data that you didn’t use. If charged $0.01/KB, which is the standard a la carte price, that would be roughly $35 out of your pocket for data that you didn’t use.