That is correct. They throttle overall speeds, satellite company's do it all the time under the fair access policy.
HughesNet - Satellite Internet | High-Speed Internet Access, Only $99 check that out. I think this would be the best way to control network abuse. With out sticking it to the customer for overage because of data caps. Buckets of megabytes are not the solution. Plus it shows just how greedy these company's are. It will cost a third less to deploy and maintain but charge more for it. Makes no since.
Further more, with faster download speeds people will reach there caps faster. As it is now... most will download larger files over wifi. It just takes to long over 3g. Add 4g speeds now people will start using the network instead of wifi. So they will use more data then what they currently are. So it is not fair to base bandwidth caps off of 3g speeds. This whole thing really makes my blood boil.
I completely agree with you. 4g is supposed to be 100% better then 3g, and the speeds far outweigh that of 3g, i think if verizon doesn't have an unlimited data package, then it's based solely off of greed. Yes there are a few who abuse the system, but most do not.. even according to the article which states most users use 600-800MB. If they want to offer lower priced plans for people who only want to pay for say 2GB and make it like 15$ then that's one thing, but to go from unlimited at 30$ to whatever they will be making you pay soon, is outrageous, and would solely be based on profit. If they allow unlimited on 3g, then they should do it under 4g, after everything i've read, there would be less congestion and less upkeep with the LTE anyways, and then they want to charge more for it. Surprise, Surprise.
One other thing to keep in mind as well is that the average *current* user utilizes that much data bandwidth in a month. Like you said, higher speeds may mean higher usage, but there is another thing as well that everyone seems to be forgetting:
VZW has said that by 2012-2013 *ALL* voice traffic over the LTE network will be VoIP, which is going to greatly increase the data utilization on the network. Now, this argument can be used both for and against the tiered pricing, but let's do the math here... Let's assume on the low end of the spectrum of 600M data, 400 minutes of talk time, and 64kbps encoding.
64,000bps * 60 seconds = 3,840,000bp/m
3,840,000bp/m * 400 minutes = 1,536,000,000 bits total
1,536,000,000 bits / 8 = 192,000,000 bytes total voice for the month
If we take the 600M that we started with, and add the 192M we just added with VoIP, we're at 792M. That's an increase of 32% of data usage in just this one low-end example.
So, if we continue this example to it's logical conclusion, VZW has stated that they expect LTE will cost 1/3 the price of 3g for the same amount of bandwidth. From this moderate example above, we see that their traffic increased by about 1/3, which means that technically, the price of bandwidth is reduced to only being 2/3 the price of 3g. If we factor in the high-end users (that whole 98%/2% thing again) then we'll probably see that the cost to run the network would be about the same as with 3g, but with much better efficiency.