Will bill shock be the death of tiered data plans, or the other way around?

With tiered data plans becoming more prevalent, bill shock is bound to increase, right? The less we're capable of leaning on unlimited plans, the more likely we’re to exceed or monthly megabyte and gigabyte allotments and experience and unpleasant, and costly, surprise in the mail at the end of the month—or at least that’s the New York Times’ take.

I would argue that the rise of tiered and metered data plans could have the opposite effect and--if operators would stop getting so defensive about mandatory usage notifications—they could eliminate bill shock entirely.

First off, I should point out that the metered data plans emerging lately are very different from the capped plans of old. Those capped plans actively punished users for going over their monthly data allotments, charging two, three and sometimes 10 times the rate for data incurred under the cap. With those kind of Gotcha! plans in place, it’s no wonder consumers would suddenly find their bills hundreds of dollars over any given month.

Operators’ new plans aren’t perfect but they’re definitely more egalitarian in how they treat data under and over the cap. AT&T’s (NYSE:T) new smartphone and tablet plans charge $15 for 200 MB in the first tier and $25 for 2 GB in the second tier. If that allotment is used up then data charges incur on a straightforward metered basis, $15 for each 200 MB in the case of the lower tier and $10 per gig in the second tier. Though there’s an awfully big discrepancy between the rates AT&T charges depending on what tier you’re on, the key thing is that the charges for more data progress linearly—they don’t suddenly balloon into massive punitive charges per megabyte, which are responsible for the worse cases of bill shock. Verizon Wireless’ (NYSE:VZ, NYSE:VOD) new tablet and LTE mobile broadband plans follow a similar pattern, which basically comes out to a charge of $10 a gigabyte.

The point I’m trying to make is that while these data plans charge you for overages, they don’t slam you with them. There’s been an overall shift in the operators’ mentality toward getting customers to consume more data, not less—they just want their customers to pay for it. With these types of plans in place it would be virtually impossible to the see the $68,000 bills we hear about with horror on the nightly news (even with AT&T’s lowest tier plan that bill would require consuming 90 GB of a data in a single month). And while overages of $10, $15, $30 might be common on given months, the $100-plus shocker at the end of the month would be a much more rare sight except for those who have no clue whatsoever how they’re using mobile data.

But what about those clueless folks out there, and what about the people who don’t want to the unpredictability of additional $10 or $20 charges on their bills each month? Don’t the deserve a break? They probably do, and wireless operators easily could give it to them if they’d get over their stubbornness about usage alerts. In truth, carriers are already adopting alerts for data: AT&T warns users via SMS when they’re approaching the limits of their iPhone and iPad plans; Verizon is doing the same with its new LTE service. What they don’t want is regulation forcing them to do so.

The operators can fight the FCC over mandatory alerts all they want, but a simple solution is staring them in the face regardless of whether they implement them of their own accord or are forced to do so. There aren’t any bill shock issues with the iTunes App Store, you might notice. That’s because in almost every case, iPhone users are aware of what they’ve purchased. They have to opt in to every purchase by approving a charge to their iTunes accounts and entering their passwords.

Now that data plans are becoming far less offensive in how they bill for overages, why don’t operators simply force customers to opt in to any additional data they use over their monthly limits? The same text alert that warns a customer they’re reaching their maximum allotted megabytes could give them the option to purchase another 200 MB or 2 GB--whatever increment the operator cares to sell. The transaction could be done over SMS, through an operator app or through their own app portals or if the operators are really lazy they can do it through the Android Market or iTunes app store, allowing customers to purchase additional gigs the way same way they’d download Angry Birds.

If everyone is opting in for every additional data charge, bill shock—at least as it pertains to data—would simply end. Customers would still complain about the prices as they’re always wont to do, but they’d actively have to accept those prices each time they wanted a new bucket of bytes. Customers who find themselves purchasing 200 MB more than once a month might come to the conclusion—on their own—they need to upgrade to the next plan tier. Everybody wins.

Part of me thinks the operators are heading this way as they overhaul their data pricing. But part of me is also slightly suspicious that the operators will hold back. A key business strategy in this industry has always been fear—fear of exceeding your allotted minutes, texts, gigabytes, etc.—which has led customers to often overestimate how much they will consume. The problem is compounded with data since, unlike voice minutes or SMS texts, it’s not easy to predict what your exact consumption levels will be. An hour of checking e-mail is much different than an hour of streaming video. That’s why people threw fits when AT&T ended unlimited smartphone plans even though a majority of its customers stood to benefit from the cheaper, lower tiered plans. The more transparency there is in mobile data plans, the more tools customers have to manage their actual data usage and ultimately manage what they pay. That may be a power operators will be reluctant to relinquish.