New gotchas

That's bad enough. Nevertheless now there are allegations, contained in a class-action lawsuit, that AT&T's bills "systematically overstate the amount of data used on each data transaction involving an iPhone or iPad account."

AT&T's chief rival, Verizon, last year agreed to pay a $25 million fine and for the time being $52.8 million in refunds to clients who inadvertently racked up data charges on their phones while the last three years. Verizon charged clients without monthly data plans $1.99 per megabyte for data access in several circumstances, according to the Federal Communications Commission. Clients were charged when they accidentally launched Web applications, when they accessed some Web pages that were supposed to be free, and when they made successful attempts to access data when there was insufficient network bandwidth, the FCC said.

The suit against AT&T

Some of those charges are echoed in the suit against AT&T, which was filed in federal court in San Francisco in late January. Citing evidence obtained by a consulting firm hired by attorneys for plaintiff Patrick Henricks, the lawsuit said that a phone it tested was billed for data charges that couldn't possibly have been valid. That's because the testers said they disabled all push notifications and location services and let the phone sit "untouched" for 10 days. At the end of that period it was billed for just in accordance with 2.3GB of data.

AT&T, the complaint says, regularly overstates incoming data between seven per cent and 14 per cent, and in part by as much as 300 per cent. "AT&T's billing system for iPhone and iPad data transactions is like a rigged gas pump that charges for a full gallon when it pumps only nine-tenths of a gallon into your car's tank," the complaint read.

You can judge for yourself if this is fair; I'll just say that there should be much better disclosure of those practices. That would be true at all events, however it's particularly important in the U.S. where wireless service, for the time being when smartphones are the issue, is pretty close to an oligopoly, in other words a market with only a few significant players. Once you get past AT&T and Verizon the pickings are pretty slim. T-Mobile, is a non-starter, in my view, and during Sprint has decent services, its network is not near as extensive as that of the big two.

San Francisco journalist Bill Snyder writes frequently about business and innovation. He welcomes your comments and suggestions. Reach him at bill.snyder@sbcglobal.net.