Avoid the $180-per-user-per-year 3G rip-off

If you have a business smartphone data plan with your carrier, chances are you’re paying $180 per user per year more than you have to. The reason? The major wireless carriers charge $15 extra per month on some or all of their 3G data plans for access to corporate email, meaning Microsoft Exchange, Lotus Notes, or GroupWise.

Why? After all, the plans are sold in tranches of usage, so why does it cost $15 more to get, say, 2GB of data if you use corporate email versus personal email (POP or IMAP accounts) only? The probable answer of course is that corporate email servers are chattier, checking in more often due to their push-email approaches than personal email servers do. And employees probably get higher volumes of mail on corporate accounts, so their usage is higher.

Here’s the pricing schemes from the major U.S. carriers for smartphone 3G data plans:

The carriers’ game: Surcharges based on what you use the 3G access for So what? If you’re paying for 2GB, you should get 2GB, no matter how you use it. But the carriers are playing a game, knowing that when you buy 2GB of data for personal usage, you’re likely to consume less than 1GB, whereas if you buy it for corporate usage, you’ll likely take more. So the business plans hike the cost to cover that usage difference.

That’s the same reason carriers charge different amounts for the same tranche of data based on the device you use. As Verizon Wireless spokeswoman Brenda Raney put it, “The reality is a person using a smartphone can access the Internet, get email, and do any number of data-centric activities, but the overall usage doesn’t compare to a person using a modem with a laptop or a laptop with an embedded modem.” That’s also the justification carriers trot out for charging extra for tethering, based on the notion that tethering makes the smartphone into a 3G modem, accessed by a computer that by nature uses radically more amounts of data than a smartphone alone.

Maybe such price differences are justifiable for unlimited plans across devices whose data consumption is so radically different. I don’t believe it’s justified for plans sold by the byte, any more than electricity or gasoline should cost more per unit based on its use. In the case of the corporate surcharge, the extra $15 applies to devices that do the same things (Web, email, messaging, apps) regardless of why they are being used.

The $15 surcharge might be appropriate if it bought a relevant bonus, such as “a significant uptick in Qos [quality of service], prioritization, or other value-add,” says Michael Voellinger, executive vice president at telecom management consultancy Telwares. But it doesn’t. It’s $15 more for the same amount of data and the same level of service sold to other customers.

The reality is that carrier 3G pricing is out of whack with the reality of smartphone usage today. The idea of a business smartphone versus a personal one is fading fast for a large percentage of users. They use their iPhones, Androids, and BlackBerrys for both personal and business tasks. Thus, a company that provisions smartphones to employees ends up paying more for 3G service than companies that let employees go with their own plans and reimburses them for some or all of it — $180 per year per employee, in fact, based on the typical $15 surcharge for access to corporate email.

In the context of the dual-purpose smartphone, “the stance of a premium is rather archaic,” Voellinger says. I think he’s being too kind. To me, it’s a rip-off.

How to end the corporate 3G rip-off Fortunately, it’s an easy rip-off to end. Businesses should simply stop provisioning smartphones themselves. Let employees sign up for the plan and network of their preference, and let them choose whatever smartphone they want.

If the smartphone meets your security and management requirements (more and more do), reimburse the employees a predetermined amount. Not only will you save the $15 corprorate surcharge per smartphone per employee, you’ll end the worry over overage charges incurred by emplopyees not paying attention, and you’ll end the whole provisioning overhead costs of being a device provider to your staff. Yes, there’ll be an increase in costs to reimburse employees, but unless you’re really inefficient, it should be well less than what you’ll save.

You have to be careful in one respect, though: If an employee goes to his or her carrier for help on that corporate email, that user’s account is very likely to be changed to a business one, adding that monthly $15 surcharge. Employees need to be encouraged to come to you for help, not the carrier. Fortunately, research by Aberdeen Group shows that such an IT-assisted approach is inexpensive, and its costs are offset by the other savings.

As the number of carriers dwindles, the risks of abusive behavior increase. Here’s one you can avoid.

This article, “Avoid the $180-per-user-per-year 3G rip-off,” was originally published at InfoWorld.com. Read more of Galen Gruman’s Mobile Edge blog and follow the latest developments in mobile technology at InfoWorld.com. Follow Galen’s mobile musings on Twitter at MobileGalen. For the latest business technology news, follow InfoWorld.com on Twitter.