T-Mobile will allow music streaming that doesn't use up a customer's data plan. Source: T-Mobile.
Earlier this week, T-Mobile (TMUS 1.10%) launched a new uncarrier feature for its mobile customers, where the company will allow subscribers to stream music from iTunes Radio, Rhapsody, Spotify, Pandora, and other music apps without ever tapping into its data plans.
The move is one of the biggest data deals a wireless carrier has made with apps that gobble up huge amounts of data, and it could spur similar deals by other carriers in order to woo customers.
Removing the data barrier
T-Mobile isn't the first U.S. wireless carrier to strike a deal with a music-streaming app, but it is the first to make so many deals with app makers and not count their data usage against customers. This isn't just a free year, either; there are no time limits to this new service.
This matters for T-Mobile customers because the company currently has several plans that don't come with unlimited high-speed 4G data. So, giving away music streaming -- which uses a huge amount of data when streaming -- is a big deal.
Aside from the benefit for T-Mobile customers, this move may spur other carriers to take a new approach to data.
Using data deals to sell phones
T-Mobile is clearly doing this to attract new customers and keep current ones, and overall, it's a good strategy for that purpose (but likely not a good long-term plan).
This isn't the first time T-Mobile has tried this approach, though. Late last year, one of the company's brands, GoSmart, began offering free Facebook (FB +0.30%) data to subscribers -- one of the first plans in the U.S. to do so. Facebook has worked deals with overseas carriers in the past to keep its app from counting against a user's data limit, but T-Mobile's GoSmart brought that tactic home.
The fact of making so many data-consuming apps not count against a users' plan might be a new approach for the U.S. carrier industry going forward. For now, T-Mobile is the only one doing this on a mass scale, but just like other promotions the company has rolled out, it's possible AT&T and Verizon Communications may try their hand with similar services.
Currently, though, this is a carrier differentiator for T-Mobile, and it comes at a time where smartphone music streaming is red-hot. In a recent survey of 7,000 teens, both iTunes and Pandora ranked in the top 10 apps, with Pandora taking the No. 6 spot. It'll take at least a quarter to figure out whether or not T-Mobile's been successful with its new initiative, and I think investors should be looking to see how the competition responds.
