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These Three Mobile Giants Are Hosing Their Customers… But One Firm is Bucking the Trend

The top mobile carriers just upgraded their strategy from monopolistic to tyrannical.

Recall that at the end of March AT&T (NYSE: ATT) announced its plan to purchase T-Mobile USA – a move that had regulatory officials and consumers up in arms.

Now AT&T is busy hosing consumers again. Only this time, Verizon (NYSE: VZ) and T-Mobile have joined the party.

One More Way for Wireless Carriers to Suck Us Dry

Basically, the three mobile carriers have blocked certain tethering applications from showing up in the Google (Nasdaq: GOOG) Android Market.

In case you’re not familiar with the term, tethering simply allows users to share their smartphone’s Internet connection with their computers and tablets. It’s an excellent feature when you’re stuck without a Wi-Fi hotspot in range.

So why are the carriers griping? A few reasons:

~ Data Overload: Just use AT&T as an example. The company is already struggling to handle the massive amounts of data that smartphone users gobble up on a daily basis. As AT&T says, “A smartphone generates 24 times the mobile data traffic of a conventional wireless phone… Mobile data volumes surged by a staggering 8,000% from 2007 to 2010.” So adding computers and tablets into the mix would take data consumption to another level.

~ Lost Revenue: Allowing customers to use smartphones as Wi-Fi hotspots snatches potential revenue from the carriers’ stand-alone hotspot devices. Those sell for around $200 to $300 a pop, which adds up when you have millions of potential buyers.

~ Functionality Shouldn’t Be Free: Carriers have shown a penchant for nickel-and-diming us for as much as possible – and tethering represents another “ripe” opportunity.

Want to forgo the hotspot device? No problem! The carriers are glad to offer a separate tethering package… for a charge, of course (around $15 to $30 a month).

From a business standpoint then, it’s easy to see why carriers would want to keep free tethering in check. As Wired points out, Missing out on that extra cash while its customers consume its precious bandwidth for free isn’t attractive to carriers.”

That’s fine… except for one glaring detail: We’re not getting data “for free!”

If you have a smartphone, chances are you’re already paying a hefty data fee. So why should carriers also have the power to control how we use it?  That’s like a gas station only letting you drive in one direction after you fill up your tank.

Heck, AT&T already instituted a monthly data cap. Once you consume 2 GB, you’re hit with overage fees. So the company is already making a mint off its biggest data gluttons.

But that didn’t stop AT&T from warning iPhone users about using similar free tethering apps in March, though. So AT&T’s plot to block the apps in the Android market isn’t exactly shocking.

But now that Verizon and T-Mobile are clamping down on customer rights as well, that only leaves one more place for suffocated customers to turn – Sprint (NYSE: S).

Enter “The Official Google Carrier”

As I’ve said before, if AT&T successfully acquires T-Mobile, “Sprint’s unlimited plans will offer the most competitive pricing around.”

And while the other carriers block Android features, Sprint is embracing them. I’m not just talking about tethering apps either.

Sprint is the only carrier that’s fully integrated Google’s customizable dialer application – Google Voice – into its phones. That’s why Gizmodo dubbed the company “the official Google carrier.”

Not to mention it’s the first carrier to snag the new Google experience phone, the Samsung Nexus S 4G. Like my Nexus One smartphone, it comes with tethering capabilities baked right into the device.

That alone should push frustrated consumers to make the switch. But the fact that the phone comes with an NFC chip doesn’t hurt either.

Good investing,

Justin Fritz

Justin Fritz

, Executive Editor

View More By Justin Fritz