July 26, 2011

CUB Analysis: 9 Out of 10 Smart Phone Customers on Bad Data Deals, New Guide Helps Consumers Avoid Rip-Offs After Verizon Change

CHICAGO, July 26, 2011 /PRNewswire-USNewswire/ -- Verizon Wireless' move to kill unlimited data plans this month exposes a major problem in the cell-phone industry: Nine out of 10 smart phone users could be burning hundreds of dollars a year on data they never use, the Citizens Utility Board (CUB) said Tuesday as it released a new guide to protect consumers from bad deals.

"CUB's Guide to Cell Phone Data Plans" is a companion to the CUB Cellphone Saver, an online service that analyzes wireless bills. CUB released new statistics Tuesday showing that 70 percent of nearly 19,000 bills analyzed by the tool over three years were bloated by an average of $331 in wasted minutes, texts, megabytes, and useless services. The guide and the Cellphone Saver are free at www.CitizensUtilityBoard.org.

On July 7, Verizon became the latest major carrier to stop selling unlimited data plans. AT&T and T-Mobile also don't offer unlimited plans--leaving Sprint as the only major company to do so.

Verizon's new smart phone offerings--$30 to $80 a month for two gigabytes or more of data--reveal an industry-wide gap. Despite the stereotype of smart phone users chained to their iPhone, Android or Blackberry, most customers don't use nearly enough data to justify the large plans carriers offer.

"Wireless carriers are forcing everyone to shop at what amounts to the cell-phone industry's big and tall store, "CUB Executive Director David Kolata said. "Unfortunately, the suit doesn't fit and customers are pouring hundreds of dollars a year into bulky data plans that aren't tailored to their needs."

In conjunction with Validas, the Houston, Texas company that created the software behind the Cellphone Saver, CUB released an analysis of more than 11,000 Verizon bills nationwide. It shows:

*Smart phone owners used an average of 456 megabytes (MB) of data a month--less than a quarter of the 2 gigabytes (GB) included in most plans. Considering the $30 monthly price tag for Verizon's lowest plan, CUB estimated customers could be paying up to $23.16 per month, or $278 a year, for data that never gets used.

*More than 96 percent of smart phone customers in the sample consumed less than 2 GB of data per month--the lowest usage plan Verizon offers for smart phones.

Those results correspond with what Validas experts and the CUB Cellphone Saver have found across the industry--wireless bills are overburdened with services that don't fit customer needs.

"Wasted gigabytes are causing our bills to skyrocket," Kolata said. "It's time for the cell-phone industry to match the way customers use their phones."

CUB called on the wireless industry to implement three reforms to better serve customers:

Lower tier data plans. A 500 MB or 1 GB plan would fit the needs of most data users.

Offer family share plans. CUB's findings show that 2 GB of data per month would be more than enough for four typical smart phone users on the same plan--not one.

Offer rollover data. Consumers paying for data should have every opportunity to use it, or be able to cash in unused megabytes for reward points and billing discounts.

"CUB's Guide to Cell Phone Data Plans" lays out the major carriers' current offers and helps consumers determine their data usage. The CUB Cellphone Saver allows customers of AT&T, Sprint, T-Mobile, and Verizon to upload an online copy of their bill and within seconds receive a report that tells them if there are ways to save money on their voice, text and/or data plans. CUB's website also has a guide on prepaid cell-phone plans, which may provide deals more suited to customers.

CUB is Illinois' leading nonprofit utility watchdog organization. Created by the Illinois Legislature, CUB opened its doors in 1984 to represent the interests of residential and small-business utility customers. Since then, CUB has saved consumers more than $10 billion by helping to block rate hikes and secure refunds. For more information, call CUB's Consumer Hotline at 1-800-669-5556 or visit CUB's award-winning website, www.CitizensUtilityBoard.org.

SOURCE Citizens Utility Board