LOS ANGELES -- T-Mobile US (NYSE:TMUS) at its Uncarrier X event here announced Binge On, its new offering to provide video streaming from select online video providers at no extra charge to all its customers who subscribe to 3 GB or higher data plans. Much like its Music Freedom announcement, T-Mobile said that it currently supports free video streaming from 24 video providers, and that it would add more providers in the future based on customer and provider demand.
Separately, T-Mobile also doubled the amount of data it is providing in its primary Simple Choice plans, raised prices slightly, and announced its new Family Match promotion. The carrier also increased the price of its unlimited data plan by $15 per month, to $95, while at the same time doubling the amount of tethering data customers get, from 7 GB per month to 14 GB. T-Mobile is also giving its unlimited data customers a free streaming movie rental from Vudu every month in 2016.
Specifically, the carrier said its 1 GB Simple Choice plan of high-speed data will increase to 2 GB but will stay at $50 per month. However, its 3 GB plan will increase to 6 GB and will cost $65 per month, $5 more than before. And T-Mobile's 5 GB plan will increase to 10 GB, and the price of that plan will increase by $10 per month to $80.
"Yes, customers are paying a lower effective price per GB for data, but they will have to pay from $5 to $15 per month more if they opt for anything on top of the $50 entry-level plan," noted Mark Lowenstein, analyst and Managing Director of Mobile Ecosystem and a FierceWireless contributor. "With these new plans, T-Mobile takes some steps to 'right size' the ARPU [average revenue per user] picture. This could help T-Mobile's profitability, and should please Wall Street and the parents at Deutsche Telekom."
Finally, T-Mobile announced its new Family Match limited-time promotion, which encourages families to add the same amount of monthly data to all of the lines under the account. Under the offering, the cost of each additional 4 GB costs $10 per line rather than $15, as long as all lines have the same amount of data. T-Mobile is also offering the fourth line on the account for free. As a result, a family of four can get 6 GB for each line for $120 per month, or $20 lower than the prior plan that offered 3 GB each.
"The new plans more closely align T-Mobile pricing with AT&T at the low end while enhancing the carrier's value proposition at the high end," said Mike McCormack and Scott Goldman, analysts at investment research firm Jefferies, in reaction to T-Mobile's announcements. "Doubling data is positioned as value enhancing and targeting shared data plans/overages, but embedded in the Uncarrier X move are price increases which should improve ARPU, and limit downsizing."
But it was T-Mobile's Binge On announcement that sets the carrier apart from its rivals. Video streaming accounts for the bulk of most users' data usage, and by making that streaming free T-Mobile could undercut the cost of other carriers' data services. For example, streaming an hour of Netflix (NASDAQ: NFLX) over mobile on AT&T (NYSE: T) or Verizon (NYSE: VZ) could cut into 1 GB or more of a customer's monthly data allowance, but on T-Mobile's new Binge On service that streaming wouldn't count against a customer's monthly data allotment. Thus, with Binge On, T-Mobile customers on 3 GB plans and higher will be able to pay for less data and still watch the streaming video services included on Binge On.
"Mobile video is now the #1 way Americans use their wireless data, growing 145 percent in the last two years to 1.6 GB per month," said T-Mobile CEO John Legere. "And watch out -- mobile video is set to grow over 400 percent to 8.4 GB per person by 2020. Cord cutting is up 60 percent since 2010. Customers are taking their video binging mobile."
T-Mobile said that 24 services are currently free to stream under Binge On including Netflix, Hulu, WatchESPN, Sling TV, Crackle and more. Noticeably absent from the list was Google's (NASDAQ: GOOG) YouTube service, which is by far the Internet's most popular streaming video service. However, T-Mobile executives said that they are open to adding any streaming service to Binge On including YouTube, but they noted that in some cases that support requires a provider to communicate with T-Mobile so that T-Mobile's proprietary streaming network technology would be able to identify the stream and add it to Binge On.
In announcing Binge On, T-Mobile's Legere made it a point to call out T-Mobile's rivals with his brash and coarse style that is standard with all of his public appearances. He described AT&T and Verizon as "dumb and dumber" and predicted the companies would eventually join T-Mobile in making streaming video free -- the two companies have mimicked several T-Mobile strategies including introducing equipment installation plans and lowering the cost of data roaming.
"Free video streaming is compelling and differentiated, though requires lower resolution to avoid congestion, with TMUS likely betting consumers will not know, or care," said the Jefferies analysts. "While other carriers may tweak data buckets, we do not anticipate much competitive reaction."
Interestingly, Legere said that "the several dozen people" who have downloaded Verizon's new Go90 service will also be included in Binge On. Legere pointed out that Verizon's strategy around Go90 is specifically built to encourage subscribers to watch more video so that Verizon can sell them more expensive monthly data buckets.
"Dumb and dumber are making this so f------ easy for me," Legere said.
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Article updated Nov. 10 to add commentary and clarify T-Mobile's new pricing