You'd have to rip the GPS chip out, for example, to actually disable location monitoring.
(Tin foil hat on) And even then, they can still triangulate your location from the cell phone towers. Also, it's possible in many cases to get your location from comparing the WiFi access points that your phone sees to a database compiled by wardriving or from users using something along the lines of http://opensignal.com/. (Tin foil hat off)
Why do you think the data allowances are so low, while believing the network capacity to be so great?
All the analysis I've seen says that it's nothing but a cash grab. No more, no less.
These towers typically only have a T1 backhaul.
Since T1s are a little bit over 1.5 mbps symmetrical, (1.54 mbps IIRC) this result: https://pbs.twimg.com/media/BZJiaGpCcAAonC9.png:large seems to disagree with your statement. If I understand Verizon's network setup correctly, I'd guess that they're using at least something like a OC-3c.
Now, if you'll excuse me for a second, a bit of a related rant.
The only problems with my experience with mobile internet are that:
a) Verizon's LTE network is nowhere near as fast as that result in some places where I regularly use my phone.
b) By my calculations. I could blow through my 2 GB data allowance in under 36 minutes just by maxing out my down speed.
Science is what happens when preconception meets verification.