"Activities that are made possible by 4G, such as watching movies or uploading video to the internet, are made impossible by the data caps," wrote the report's author, Michael Weinberg.
"As a result most users will avoid taking advantage of these new services out of fear of incurring large overage fees. That makes capped 4G little more than a bait and switch, like being sold a handful of magic beans."
Both AT&T and Verizon offer plans that charge consumers fees if they exceed their data limits.
An AT&T press release announcing the company's data plans last year noted consumers can monitor their data usage through text message notifications or a smartphone application.
"The tiered plans can meet the needs of the overwhelming majority of our smartphone customers, 97 percent of whom use less than 2 GB per month," an AT&T spokesman said. These plans "opened up the smartphone category to people who otherwise wouldn’t have considered one."
Harold Feld, legal director of Public Knowledge, said, "This report should serve as a warning to consumers not to be misled by the flashy ads and fancy phones. This is a classic bait-and-switch technique. On one hand, the big telecommunications are offering consumers great new experiences, but on the other, they are actively trying to restrict their use."
This post was updated at 3:19 p.m.