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Mobile carriers with all-you-can-eat plans are losing money on 20% of their customers

A study of the economics of cellular networks reinforces what companies like AT&T and Verizon have apparently already concluded internally: Offering users flat-rate, buffet-style mobile plans—like Sprint’s—will put you on the road to economic ruin.

Researchers concluded that when users are allowed to do all the talking, texting, downloading and web surfing they like, one in five of them will consumer more resources than they pay for. The same paper concludes that a company’s profit-per-user can be doubled simply by capping the amount of texts, calls or data a user can consume, while only affecting the 16% of users who are the heaviest consumers of these services.

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