Once upon a time, AT&T set itself apart from its wireless rivals by offering rollover voice minutes. Ma Bell marketed the feature heavily for years but pointedly decided not to give data the same treatment. Consumers have been asking for rollover data for quite some time, and T-Mobile (NASDAQ:TMUS) just delivered exactly that.
Say hello to Data Stash.
Last but not least
For those keeping score at home, this is T-Mobile's eighth initiative as part of its broader Un-Carrier strategy, addressing a laundry list of common consumer pain points. T-Mobile says that other carriers "confiscate" your unused data at the end of each month, even as those same carriers try to sell you larger data plans in order to avoid overages (and the associated fees).
Rollover minutes are nice, but data is what's driving the industry's revenue growth. Voice usage has been in a steady decline for years, so rollover minutes have effectively become little more than a marketing campaign with little practical benefit. That's particularly true as carriers aggressively migrate subscribers into unlimited talk and text plans with metered data allowances. For instance, as a former AT&T subscriber, I had thousands of accumulated rollover minutes that I would simply never use.
How it works
Starting in January, Data Stash is automatically included in any Simple Choice plan that qualifies. That includes any smartphone plan with 3 GB of data or more, and any tablet plan with 1 GB or more. To kick things off, T-Mobile will start people off with 10 GB of 4G LTE data right out of the gate. Data Stash has no cap, and accumulated data is good for an additional 12 months.
There are a few plans that don't qualify. Prepaid plans won't be getting Data Stash, nor will some of T-Mobile's other promotional plans that are currently available, such as the current offer of four lines with 10 GB of 4G LTE data for $100 (which only translates into 2.5 GB per line anyway). Naturally, Data Stash need not apply to unlimited 4G LTE plans.
It's been done before . . . sort of
T-Mobile may be the first major carrier to introduce rollover data, but technically it's not the first ever. In fact, Pure TalkUSA introduced rollover data a year ago. However, the feature was only applicable to relatively light plan that included just 150 MB of data for $10 per month.
Pure TalkUSA is a mobile virtual network operator, or MVNO, that primarily addresses the prepaid market and uses AT&T's network. In contrast, Data Stash is positioned directly at the mainstream postpaid market.
The bigger picture
Like many of T-Mobile's other Un-Carrier pushes, Data Stash foregoes a revenue opportunity but does so for the sake of the consumer. CEO John Legere has no problem eating short-term losses (such as the $100 million hit that T-Mobile took in the first quarter related to the early termination fee promotion) if he can win over customers in the long-term. T-Mobile's results also show that his strategy is working. Last quarter, branded postpaid churn was down 10 basis points to 1.6%.
AT&T and Verizon, on the other hand, are expecting customer churn to rise in the fourth quarter, even as both companies spend heavily on promotions aimed at holding onto subscribers. Legere has vowed to shake up the domestic wireless industry, and he's making good on that promise.
Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool recommends Verizon Communications, Inc. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.