Many top-tier wireless and internet companies have a unique definition of the word "unlimited," when it comes to their service plans.
In many cases, unlimited actually means limited as both AT&T (NYSE:T) and T-Mobile (NASDAQ:TMUS) throttle certain users when they exceed certain usage levels. That means that their so-called "unlimited" wireless users get much slower data access after they go over a data cap. It's like an all-you-can-eat wings offer where after 25 wings, they start bringing you one every hour. That may not legally violate the all-you-can-eat concept, but it certainly violates its spirit.
Now Verizon (NYSE:VZ) has its own take on how to stop heavy users on unlimited plans from using so much data. It's not throttling, but it may even be worse. At least for those who are affected by it.
What is Verizon doing?
Verizon has not sold unlimited data plans since 2011, so the only people who have them are legacy users who were grandfathered in. Those customers were recently hit with a price increase and before the Federal Communications Commission (FCC) passed its net neutrality policy they too had their data throttled when the company viewed data use as excessive.
Now Verizon has decided that it simply does not want its heaviest users to continue as-is. The company has notified customers with unlimited plans who use significantly more than 100GB a month that they must switch to a limited data plan or be dropped from the network as of Aug. 31, Ars Technica reported.
Switching to a limited data plan would either curtail use for those customers or bring Verizon more of the overage fees that have greatly helped the company's bottom line. This move basically kicks the super-hungry guy out of the buffet.
"Because our network is a shared resource and we need to ensure all customers have a great mobile experience with Verizon, we are notifying a very small group of customers on unlimited plans who use an extraordinary amount of data that they must move to one of the new Verizon Plans by August 31, 2016," a Verizon spokesperson told Ars. "These users are using data amounts well in excess of our largest plan size (100GB)."
The 100GB plan costs $450 a month, well more than what Verizon's current unlimited users are paying.
Why is Verizon doing this?
Verizon is following the industry standard logic when it comes to citing broader network needs as a reason to kick out its highest-volume users. AT&T uses similar language to justify its throttling, which kicks in for unlimited users at a surprisingly low threshold.
"As a result of AT&T's network management practices, customers on a smartphone with an Unlimited Data Plan who have exceeded 22GB of data in a billing period may experience reduced speeds for the remainder of that billing period when using data services at times and in areas that are experiencing network congestion," the company says on a web page detailing its policy.
It's possible that these policies do have some ancillary benefit for other users on the various networks, but that's not what Verizon, AT&T, and even T-Mobile are trying to accomplish. In all three cases it's really about punishing people who use their unlimited plan to beat the system.
This is the all-you-can-eat hot dog place putting a policy into place when perennial eating champion Joey Chestnut decides to train there. It's not about the greater good, it's about the tiny percentage of users who actually make high-priced unlimited plans unprofitable for the wireless carriers.
Verizon has taken a particularly harsh stance here, but it's not very different from what its rivals have done and ultimately it's bad for a very small amount of users while perhaps slightly enhancing the bottom line. Unlimited, at least in the wireless world, does not mean unlimited, but that impacts so few customers that a public backlash is unlikely.
Daniel Kline has no position in any stocks mentioned. He has never been kicked out of an all-you-can-eat buffet. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends T-Mobile US. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.