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Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

Lawsuit: AT&T "systematically overstates" data usage on iPhone bills

By | January 31, 2011, 1:44pm PST

Summary: A class action suit alleges that AT&T’s bills incorrectly charge for too much data consumption among iPhone users.

One of the biggest problems that consumers have faced with mobile phone billing in recent years is that there’s really no way of independently measuring the amount of data that’s being consumed by a mobile Web session. Consumers are at the mercy of the wireless carriers and have put their trust in these providers to accurately bill them.

Now, AT&T finds itself at the center of a class action lawsuit that alleges that the provider’s bills “systematically overstate the amount of data used on each data transaction.” Granted, the overstatement that’s being alleged is small - somewhere in the range of 7-14 percent monthly, according to a post on the Electronista blog.

What’s especially telling is how a consulting firm that was hired by the lawyers of the plaintiff conducted its own test of the data billing. Instead of using data and trying to measure it independently for comparison against the bill, the consultant did the exact opposite. The firm bought a new iPhone and immediately turned off all push notifications and location services, made sure that no apps or email accounts were active and then left the iPhone idle for 10 days.

AT&T billed the account for 2,292 kilobytes of data over 35 transactions.

Granted, that’s not a ton of data. But, multiply any overage charges by the number of iPhones that are being used on the AT&T network and it could have some impact on AT&T’s data revenue numbers, the complaint alleged, comparing it the practice to that of rigged gas pumps that only pump nine-tenths of a gallon of gas but record a full gallon.

AT&T responded to the allegations in a statement to the blog. It read:

Transparent and accurate billing is a top priority for AT&T. In fact, we’ve created tools that let our customers check their voice and data usage at any time during their billing cycle to help eliminate bill surprises. We have only recently learned of the complaint, but I can tell you that we intend to defend ourselves vigorously.

AT&T previously offered an unlimited data usage package but switched to tiered packages with caps. Shortly after Verizon announced that the iPhone - which is hitting that network on Feb. 10 - would be eligible for an unlimited data package, AT&T reportedly has been allowing some of its iPhone customers to switch back to an unlimited plan on a case-by-case basis. The company has not confirmed that.

Regardless, this latest complaint illustrates how consumers remain confused by billing for data consumption. If I wanted to carry a stopwatch around, I could literally track and log all incoming and outgoing voice minutes used on my mobile phone over a given time period. But there is no easy way for consumers - or even independent firms - to accurately measure the data consumption.

And until there is, I wouldn’t be surprised to hear more squawking about the billing for data. As the usage increases, the disconnect between carrier and customer potentially can only get worse.

I’m waiting for a copy of the actual complaint to be sent my way and will update this post with an excerpt, as well as a copy of the court filing, when it arrives.

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Sam has been a technology and business blogger for more than 18 years.

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Sam Diaz

Sam Diaz has nothing to disclose.

Biography

Sam Diaz

Sam has been a technology and business blogger, reporter and editor at ZDNet, the Washington Post, San Jose Mercury News and Fresno Bee for more than 18 years. He's a member of the National Association of Hispanic Journalists and a graduate of California State University, Fresno.

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RE: Lawsuit: AT&T
marco5811 5th Sep
or make our phones check for updates twice a day, which is simply too much. sazkove tipy
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What were the 35 transactions?
Bruizer 31st Jan 2011
It very well could be the "consultants" did not turn off everything. These smart phones "sip" data at a curious rate.

My bet is they had email fetch turned on (though they thought they had mail "turned off" and once they figure that out, will be laughed at very loudly by the courts.
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RE: Lawsuit: AT&T
Pete "athynz" Athens 31st Jan 2011
@Bruizer Could be. I wonder what their data rate would be with the iPhone in airplane mode only for a billing cycle - nothing active at all, just having the unit powered on...

Makes me glad I kept my unlimited plan.
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RE: Lawsuit: AT&T
rolz1966 31st Jan 2011
@athynz Kudos to everyone that kept their unlimited data plan like me!
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RE: Lawsuit: AT&T
pogopeggy 1st Feb 2011
@athynz
Actually, there is no unlimited plan with AT&T. If you go over 5GB, you will be cut off from the network and they will tell you your contract has long expired. They will only reinstate your service if you agree to a 5GB cap. It already happened to so many users who thought they have an unlimited plan.
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RE: Lawsuit: AT&T
unclefixer@... 1st Feb 2011
@pogopeggy If you had an iPhone when the unlimited plan was active, you're grandfathered into it when they eliminated it. I asked them about it, and they told me that I could save $5 and get the 20 Gig plan, but that I could keep the unlimited plan forever if I wanted to- the only catch was, if I ever got rid of it, of course I couldn't get it back.
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RE: Lawsuit: AT&T
notsofast 31st Jan 2011
@Bruizer It's common for carriers to round up. How much varies. There are some companies that will charge your carrier for 200KB, even if you only consumed 1KB. I'd be shocked if everyone isn't at least rounding up to the next KB on each transaction. Due to the way that some billing software works, they may round up to the nearest 10KB or more. Is it a ripoff? Sure. Welcome to the world of telecom.
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Maybe they were "confused".
dgurney Updated - 1st Feb 2011
The author seems to be confused about the meaning of "confused":

"this latest complaint illustrates how consumers remain confused by billing for data consumption"

They're not CONFUSED; they're lied to and ripped off. Spineless "journalists" and PR people love to misuse the word "confused" in order to pass the blame onto the victims, as if the victims were presented with clear and accurate information but somehow botched it. Call rip-offs what they are, or be called out as a shill.
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RE: Lawsuit: AT&T
avoidz 1st Feb 2011
@dgurney -- Thank you for saying what most won't or are afraid to.
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RE: Lawsuit: AT&T
pogopeggy 1st Feb 2011
@Bruizer

You are making 2 unfounded assumptions:
1. that the consultants were incompetent; and
2. email fetch is on and running, even when the article says there is no email acount active.

If smart phones sip data at a curious rate, why would consumers be made to pay for these sporadic data bursts which the users know nothing about and did not use. If the phone companies' reasoning is expanded to our entire daily lives, taxi drivers should charge us for the travel from their garage to our door steps because that trip is equally necessary to take us to our destination.
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RE: Lawsuit: AT&T
lelandhendrix@... Updated - 1st Feb 2011
@pogopeggy Good analogy
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RE: Lawsuit: AT&T
Ronspruell 1st Feb 2011
@Bruizer
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RE: Lawsuit: AT&T
Ronspruell 1st Feb 2011
@Bruizer Come on you know better than that. Who would worry about a tenth of a percent. Adds up thou just like the guy that was putting all odd cents in his banking account from his company. Ended up with a huge amount of maney.
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Grandfathered Unlimited Plan?
pogopeggy 1st Feb 2011
@unclefixer
Many people thought they have this grandfathered unlimited plan for their datacards and iPhones, until they learn the hard way that if they go over 5GB in a month, they will be kicked out of the network. That's what they did to me when I used 7GB in a month. They will can always say that your contract has already expired, which is legally true. You cannot force them to renew that contract on the same terms. What they can do is force you to sign a new contract under their new plans.

But there's only way to find out if you really have an unlimited plan: try to use more than 5GB in a month.

But with the forthcoming entry of Verizon with its unlimited plan, maybe AT&T would now reconsider. I hope so.
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RE: Lawsuit: AT&T
Free Webapps Updated - 1st Feb 2011
@pogopeggy
How funny and true is that. I currently on he legacy/old blue network of att and just got text on ALL Great Grandfathered accounts that my service will be terminated on the 15th of May and to renew for 2yr and get one of the new data packages. They say I'll save money on the new network and in reality I will be spending approx $10 extra a month per line.

So if that happens, I'll move to Sprint or Tmobile and us that $10 and get "true" unlimited everything. I think on May 15 is when the att 4g goes live and that's why they sent that.
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RE: Lawsuit: AT&T
vdonofZD 1st Feb 2011
@Bruizer
If there was only 35 transactions in 10 days I doubt email fetch was the culprit. I do not believe the fetch interval can be set to greater than hourly.
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RE: Lawsuit: AT&T
SteveCarr 31st Jan 2011
The overage could also depend on the point at which packet size is measured. Each layer in the IP protocol stack adds data to the packets. Splitting a packet in transit also adds extra wrappers around it. If you measure the packet size as it leaves an application, you have to expect that the exact same information will be 'fatter' as it crosses the airwaves/wire/WiFi/fibre/cable....
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RE: Lawsuit: AT&T
gjsherr 31st Jan 2011
@SteveCarr -- You describe overhead quite nicely, however, you oversimplified. The number of octets in a packet is defined by IP, but the number of frames is defined by the interface. AT&T decides how much data it carries per frame, but it can't pass that on directly to the user.
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RE: Lawsuit: AT&T
kasapo 31st Jan 2011
@SteveCarr But if at&t is charging you for data, it should be data you requested, and you should not be charged for data their network requires. I say "should" because that's the way I think it should be...however when looking at their Customer Agreement:

"Data sent and received includes, but is not limited to downloads, email, application usage, overhead and software update checks."

F&#%ing overhead. I think they should have to carry the overhead or change the actual numbers given (e.g. "2GB") to reflect the balance some average of the overhead (like "Approximately 1.8gb").

It shouldn't be a 2gb data plan if you can't actually download 2gb. That's misleading.

Doubt the lawsuit will make it far though, especially if this lawyerly bunch failed to read the legal agreement which states that network overhead is included in users' data consumption amounts.

Then again...maybe it's not network overhead, but rather some kind of ping thing going on where the phone is required to ping the network to keep in touch, and this is done over data (hence the requirement of the data plan)...

I guess we'll have to wait for the complaint.
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RE: Lawsuit: AT&T
notsofast 31st Jan 2011
@kasapo 2GB includes whatever data you send as well. So 4KB up 10KB down=14KB.
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RE: Lawsuit: AT&T
pogopeggy 1st Feb 2011
@kasapo

You're right. What if phone companies program our phones to ping their cellsites regularly at frequent intervals -- too frequent than necessary. And these pings are charged to our monthly allowance? Or make our phones check for updates twice a day, which is simply too much. Who would say it's too much? These are all "overheads" that should be borne by the carriers, not the consumers. Overheads are fixed costs in a business that is paid by the business owner whether or not there is business (rent, advertising, power, etc.). Overheads are not to be charged to the customers.
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RE: Lawsuit: AT&T
erik.soderquist 2nd Feb 2011
@pogopeggy

you've never run a business...

no matter how you slice it, overhead must be eventually charged to the customer, or you simply go out of business.

business exist to make a profit. all income comes from the customer. since all income comes from the customer, at some level the customer pays for everything that keeps the business running, including overhead.

however: the suit is alleging that AT&T's billing statement on the amount of data used is inaccurate and is consistently over what is actually used. billing directly rather than indirectly for overhead on the data feed is one thing, and actually a more honest thing than simply rolling the overhead cost in elsewhere (which is what most businesses do). billing for data usage that didn't actually happen is quite another, and that is what the suit is alleging.
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Overheads are not for the users...
pdfappraisals 4th Feb 2011
@erik.soderquist

You have a vague understanding of what overhead expenses are. They cannot be charged directly to the customers. Business owners charge it against their profit. If you have a high cost of doing business, you subtract that from your profit and you become less profitable. The higher your overhead is, the less profitable you will be so you have to find ways to lessen it. You just can't pass it on to your clients or they will leave you. If your factory machinery bogged down and you have to buy new ones, you cannot raise your prices just to recoup your losses. You will have to suffer lower profit margin for a while. You may not tuck in some mysterious charges in your clients' bills to recover your losses.

In the case of AT&T, if their system requires too much data transfers that are not actually done by the subscribers, these data overheads should not be billed. If you pay for 2GB of data a month, it must be 2GB of data you actually used, not by their system.
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RE: Lawsuit: AT&T
erik.soderquist 7th Feb 2011
@pdfappraisals

doesn't matter what you call it or how you slice it, all overhead and expenses come out of your revenue somehow.

while i can't directly bill customers a slice of my electric bill, i still pay my electric bill out of the markup i put on the product i sell to my customers.

and my understanding of this comes from having run few businesses, the most recent of which was a bridal gown shop, for slightly over 5 years. closed partly due to the economy.

{quote}
In the case of AT&T, if their system requires too much data transfers that are not actually done by the subscribers, these data overheads should not be billed. If you pay for 2GB of data a month, it must be 2GB of data you actually used, not by their system.
{end quote}


fuzzy at best. first, who gets to define "too much"?

second, let's take a simple file download as an example. where is the divider between data and overhead? the downloaded file and everything else is overhead? the http protocol? the tcp protocol? the IP protocol? the carrier medium protocol (usually some variant of 3g or 4g)? if only the file, should AT&T have to eat the cost of every query that returns no results?

third, *should* and *legally can* are often two very different things... the contract that every AT&T user signed states that network traffic overhead (while an undefined term in the contract, has its own connotations) is the responsibility of the user. so... while it is perhaps "wrong" for AT&T to directly bill the customer for overhead, whatever "overhead" is considered to be, they have contractual grounds for doing so.

however; we seem to have gotten a bit off topic...

the suit alleges not that overhead is being billed and should not be, but rather that AT&T is billing for data traffic that never occurred.
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RE: Lawsuit: AT&T
vdonofZD 1st Feb 2011
@SteveCarr
This doesn't account for the 35 transactions that were processed and billed even though, supposedly, no data services were being used throughout the test period.
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Overhead costs
pogopeggy 4th Feb 2011
Overhead costs are not to be charged directly to the customers in his bill. It is offsetted by your margin of profit. If you have high overhead, you raise your profit margin. You do not bill each customer with your overhead cost directly. On the other hand, if your overhead cost dip, you end up with a higher profit margin which companies rarely pass on to their customers. The cost of fuel rise and fall almost daily. But bus companies charge the same. In the case of AT&T, the data overhead is directly passed on to the customer thru this alleged paddding scheme. Which means if THEIR network is inefficient, you end up paying the same money for less usable data that you actually used. When a phone company's signal coverage is poor, you get more dropped calls which eventually get charged to your minutes. You can get it back only if you complain. In the case of data, you have no idea how much overhead is being charged to you which you end up paying for, unless an experiment such as this is made. If we allow this to happen, phone companies will profit from their inefficiency.
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Efficiency
pogopeggy 4th Feb 2011
If AT&T has a higher overhead cost than its competitor, it has to EAT that higher overhead cost to stay competitive. It cannot and should not charge that cost to the customers. Otherwise, it will price itself out of the market. High overhead cost is usually the product of inefficiency which the customers must not be made to pay. That's why you cannot and must not charge overhead cost directly to customers, especially in a sneaky way or in the middle of the night.
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Here's to AT&T...
james347 31st Jan 2011
...getting sued into the dirt and their executives thrown in jail.
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RE: Lawsuit: AT&T
bvonr@... 31st Jan 2011
@james347 Do you like anybody or anything??
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RE: Lawsuit: AT&T
stevek@... Updated - 31st Jan 2011
@james347 Wait until the whining starts after Verizon has just as many (or more...) dropped calls as AT&T and Apple has to admit it's a design flaw...
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Or when Verizon's network buckles
Bruizer 31st Jan 2011
@stevek@...

On 1,000,000 activations in a day.
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RE: Lawsuit: AT&T
dgurney Updated - 1st Feb 2011
The iPhone has plenty of design flaws, but the sh?tty network isn't one of them.
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Sucky Apple OS
dazzlingd 1st Feb 2011
@james347 When it's Windows Phone that does this you blame Microsoft.

The iPhone sucks data too but you blame AT&T.

Where's NonZealot when you need him...
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Could it be the iPhone itself?
John Zern 31st Jan 2011
AT&T is just the carrier, it's the iPhone that consumes that data. Is it "phoning home" (Apple) for some reason?
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I fought AT&T
mastman 31st Jan 2011
after i got my bill from being in Europe for 3 weeks. I generally kept my iPhone in airplane mode, only turning on data sync every few days to check email. AT&T hit me with a $500 roaming bill. I had tracked my data use regularly and was able to get the bill greatly reduced.
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RE: Lawsuit: AT&T
support-mg 31st Jan 2011
@mastman

I was in Mexico with the iPhone 4 running iOSv4.0 - had the phone in Airplane mode from take-off in the US until arrival back in the US.

Turned on Wi-Fi (airplane mode still on) at the condo to join the free wifi. Received 2 calls, pressing the power button to dismiss them to VM immediately while scratching my head... Found on my return I was billed some minimal number of minutes at international roaming rates.

A call to customer service got the calls waived without issue. Weird but thankful it was an easy fix. From this, I wouldn't doubt that the phone has a bug in the network stack that "Leaks" data the way it "leaked" these calls to me even though the GPS circuits were supposed to be off based on the phone UI.

What's crazy is AT&T thinking that it makes any since to hold billing to 100% accuracy. Seems a 2 or 3 MB grace on overages would be worth the goodwill, properly advertised. Hell - a 5% grace on overages doesn't seem ridiculous considering the prices for the not-so-wonderful quality of the service provided.

OR, how about some "rollover data" like them voice minutes I can never manage to use =P

Welcome to life in 2011.
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RE: Lawsuit: AT&T
notsofast 31st Jan 2011
@support-mg Nobody's billing is completely accurate. Should it be? Probably, but while the Telecoms don't have clean hands, I doubt any of them write the billing software, which is generally hard to use, riddled with bugs (which they'll say is how the software was designed, as if that means it's not a bug) and limitations that make you do things in ways that aren't optimal. Sometimes it's bad for the consumer (probably most of the time) and sometimes it's bad for the company.
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RE: Lawsuit: AT&T
dazzlingd 1st Feb 2011
@support-mg
If you read the small print in the AT&T contract, you get charged "ring tone" fees for calls received when roaming, even if you don't answer them.

Kudos for getting AT&T to refund but the scumbags were in their "rights" to charge you for them.
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We need an app for that.
bryanbeaty 31st Jan 2011
Phones should be able to report on every bit transmitted or received. Apple should make that part of the OS and provide the ability to download the data by date. That would solve a lot of issues.
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Should'a bought an Android LOL
LarsDennert 31st Jan 2011
@bryanbeaty Easy to monitor and control everything through all interfaces.
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RE: Lawsuit: AT&T
nix_hed 31st Jan 2011
@LarsDennert I bet a years' worth of phone bills that this suit is going to be expanded to Android, Blackberry, Windows Phone, WebOS, and Symbian devices.
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To each his own
Luke Skywalker 31st Jan 2011
@LarsDennert - Please. I bought what I wanted. You bought what you wanted. If I wanted low data consumption I would choose a Blackberry, which compresses everything through BB servers. If I wanted one of the Android phones with the quirkiness of the OS updates, manufacturer and carrier implementation, etc. (my words, not yours for sure) I would chose it. The iPhone, and I suspect the Androids, are data pigs. Fair enough. Using Wi-Fi at home, we could probably go for the low data plan, but have the higher plan.

Hope AT & T blasts the plaintiffs - we sue too much. Sounds like AT & T is very confident of their position.
what about jail breaking and adding a monitoring tool like iptraf?
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RE: Lawsuit: AT&T
bein' easy 31st Jan 2011
I dropped AT&T when they purchased Cingular and never looked back. I was getting charges under a "misc." heading that no one could ever explain to me. This sounds very similar to me...
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How is that 7-14%
gitmo 31st Jan 2011
How does 2,292 kilobytes relate to 7-14% more than zero?
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RE: Lawsuit: AT&T
brichter 31st Jan 2011
@gitmo
The 2 figures don't relate to each other at all, but your comprehension is close to the second, though. LOL

Someone in a blog posted AT&T's charges were 7-14% high, the lawyers for the plaintiff in the class action suit turned the data services off and collected 2,292 kb of data charges.
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KB or MB?
DumbTube 31st Jan 2011
Well, was it 2,292 kilobytes or 2.3 kilobytes??
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Contributr
RE: Lawsuit: AT&T
sldiaz 31st Jan 2011
@DumbTube Apologies for the confusion on that point. It was 2,292 kilobytes. That was my mistake...
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RE: Lawsuit: AT&T
inkwell 31st Jan 2011
It's not just the phone companies - keep an eye on your hydro bills. Our provider (monopoly) sends a mid-term guesstimate that is in the 60 to 70% of the total monthy. YOu go pay on the guesstimate & they've had free use of your money until the finalized bill comes out.
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RE: Lawsuit: AT&T
rolldown@... 31st Jan 2011
they do much the same stuff on home phone lines, I left them before for adding phone calls I didn't make. then they bought out Pacific bell now I'm with them again and the are trying the same thing. AT&T is the most crooked company I've ever been with I and I hope they get their butts sued off
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RE: Lawsuit: AT&T
Trep Ford 31st Jan 2011
I went with an unlimited data plan for my aircard from the beginning, for just these sorts of reasons. A) there's no good way to know what my actual consumption was, B) there's no way to 100% control what my consumption is, since each icon on which we click may lead to some sort of data feed we don't want, C) when it comes to billing, ALWAYS eliminate variables wherever possible.
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RE: Lawsuit: AT&T
marco5811 5th Sep
or make our phones check for updates twice a day, which is simply too much. sazkove tipy

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