How Unlimited Is "Unlimited" at Sprint?

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We've all heard the longtime battle cry of Sprint Nextel (NYS: S) : Unlimited!

The company still runs a campaign around that theme on its corporate homepage. "Sprint is the only national carrier with truly Unlimited data," it says. "No throttling. No metering. And no overages."

That's the free-range attitude that's supposed to set the company apart from AT&T (NYS: T) and Verizon (NYS: VZ) , and to a lesser degree T-Mobile USA. When you're with Sprint, you don't have to worry about bandwidth caps or speed throttling. Those other guys cut you off at a certain limit, charge through the nose for surplus megabytes, or slow you down to a crawl if you eat too much at the data buffet.

That's why customers and investors arched a collective eyebrow at Sprint CEO Dan Hesse last week. Speaking at an industry conference, Hesse said that about 99% of his customers really do have an unlimited experience -- but for the 1% or so who abuse the privilege, "We can knock them off."

Shock! Horror! Who are these nefarious one-percenters and should we stage an Occupy Sprint movement against them?

Before you pack up your sleeping bag and a small tent to head for Sprint's headquarters in Overland Park, Kansas, take a deep breath and think about this statement.

On a second listen, Hesse is only offering unlimited data plans to smartphone customers. Sprint does sell wireless broadband modems for your laptop or WiFi tablet, but those don't come with unlimited data. Instead, the largest helping is a 12 gigabyte plan followed by overage charges of $0.25 per megabyte. Exceed your allotted bandwidth by a mere 320 MB and you'll double your $80 monthly bill.

Company spokesman Bill White clarified further that Sprint might cut you off if, for example, you use your smartphone data plan to run a server farm. Some phones can be hacked to do that kind of thing, and Sprint obviously doesn't like the idea.

"You don't have to worry," says another recent Sprint ad. "Only Sprint offers truly unlimited data." Right -- but that doesn't mean that every Sprint plan is unlimited. This underdog is still different from the big boys -- but maybe not as unique as you thought. Pick your poison with care, Sprint fans, and make sure you read the terms and conditions under a powerful spyglass.

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At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies mentioned. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

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