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Verizon to slow speeds for data hogs

By David Goldman, staff writer

NEW YORK (CNNMoney) -- On the day the iPhone went on sale for Verizon Wireless customers, the carrier delivered a warning to its heaviest data users: Verizon reserves the right to slow down your access speed.

For the subscribers that fall within the top 5% of the network's data users, Verizon (VZ, Fortune 500) said it may reduce their download speeds for the current and subsequent billing cycles, according to a memo on the carrier's website. The company said the slow-down would most likely be periodic and during peak hours.

"Our proactive management of the Verizon Wireless network is designed to ensure that the remaining 95% of data customers aren't negatively affected by the inordinate data consumption of just a few users," the memo said.

The new throttling option will only apply to customers who sign new contracts on or after Feb. 3 -- existing customers are grandfathered in and won't have the speed brakes applied.

But that 5% won't be just a "few" customers for long. Verizon currently has 21.5 million smartphone customers. As their contracts come up for renewal, the new rules will apply. If Verizon's subscriber based stayed constant, that would mean that the top 1.1 million data users could have their speeds throttled down each month.

"1 million customers are not suddenly going to stop getting their YouTube videos," Jeffrey Nelson, a spokesman for Verizon Wireless, said Thursday afternoon. "We're reserving the right to slow speeds for a small group of customers should the time come when we need to. We don't expect it to come tomorrow, or the next day or the next month."

Nelson said that increasing data usage means that some of Verizon's towers could max out their capacity during peak hours, and the new measure is meant to ensure that all customers get access to the mobile Internet.

T-Mobile is currently the only other U.S. wireless carrier that throttles speeds for its top users. That company slows down data throughput speeds for customers that exceed 5 gigabytes of data usage per month.

AT&T (T, Fortune 500) instituted data tiers for its customers, offering a lower-priced plan for light downloaders and a 2 GB cap for heavier users. Those that exceed the 2 GB cap have to pay AT&T an overage charge of $10 per gigabyte.

Mobile carriers are looking for solutions to a growing problem: mobile data usage is growing fast, and building up their networks to handle all that traffic is an expensive proposition.

The average smartphone user's monthly wireless download traffic doubled in 2010 to 153 megabytes, according to a wireless data report released Tuesday by Cisco (CSCO, Fortune 500).

But T-Mobile and Verizon have found an easy culprit to go after: The Cisco report also revealed the top 1% of mobile data users account for 20% of all mobile traffic. To top of page

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