T-Mobile soothes Wall Street by discussing rate hikes and rollover data cap

T-Mobile soothes Wall Street by discussing rate hikes and rollover data cap
When T-Mobile introduced Binge On this past week, smartphone users were excited by the prospect of watching tons of streaming video without using up data from their monthly allowance. While T-Mobile customers, and soon to be customers, were applauding the carrier for coming up with the feature, there was one group that was not quite as impressed.

T-Mobile investors were worried after hearing about Binge On, because they could envision the plan putting a crimp into the carrier's profitability. Lower profits usually means a lower stock price. Just days after announcing the new feature, T-Mobile's CFO Braxton Carter was in Spain, speaking at an investor conference. Because T-Mobile was looking to impress investors instead of potential customers, the focus was on different aspects of the Binge On announcement.

Instead of talking about all of the video that T-Mobile subscribers will be able to view, Carter spoke about the price increases that were also announced last week. An individual signing up for unlimited data now has to pay out $15 more a month, as the price was hiked from $80 to $95. To further placate Wall Street, Carter explained how T-Mobile's focus is moving away from unlimited data and is aimed at getting subscribers to pay for a higher data bucket. In addition, T-Mobile is limiting to 20GB the amount of unused data that a customer can rollover to the next month. Previously, a T-Mobile customer had no restriction on the amount of unused data that could be rolled over as long as each month's leftovers were used inside of a year.

With T-Mobile's CFO stating that the new changes would increase average revenue per user and average revenue per account, it appeared that T-Mobile was trying to placate two different streets. Binge On was designed to make Main Street happy, while the rate hikes and rollover data limit were introduced to make Wall Street happy. It's hard to straddle the line between the two streets, but it seems like the nation's third largest carrier has achieved this for now.

source: WSJ

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14 Comments

1. PapaSmurf

Posts: 10457; Member since: May 14, 2012

$95 for unlimited before tax is getting ridiculous.

2. Carl3000

Posts: 240; Member since: Oct 11, 2014

Exactly, they made the price so high because as the article mentioned, they're doing what Version is doing and trying to get to get people to not want unlimited data. This process is ridiculous, I agree.

3. erikiksaz

Posts: 170; Member since: Apr 22, 2010

Considering that music and video streaming is free, is there even really a need for unlimited data anymore? They're most likely setting the price higher to appease the investors. I'm sure only a ridiculously minuscule portion of subscribers was affected by this.

5. combatmedic870

Posts: 982; Member since: Sep 02, 2015

It's only for new subscribers. They haven't raised my bill.

11. tacarat

Posts: 851; Member since: Apr 22, 2013

It remains to be seen if they will let you keep the old plan the next time you change phones. If you have other folks with you, make sure to check things before they upgrade. Verizon flat out made people change out of their unlimited plans a few years ago.

13. sniper1087

Posts: 537; Member since: Dec 31, 2011

John Legere mentioned that people plans will never change unless a customer request it.

14. tacarat

Posts: 851; Member since: Apr 22, 2013

I don't doubt it, but that doesn't mean he's going to be there forever or, like the Verizon customers, you "request it" in order to be allowed to upgrade. It's a long game.

6. Carl3000

Posts: 240; Member since: Oct 11, 2014

Music and video streams aren't the biggest data devourers. Downloads are. 320kbps is the highest quality music streams have. Some have lower which uses less data but let's assume people want the best quality music and stream in 320kbps. Thats 2.40MB per minute of audio, or 115.2MB an hour. Hypothetically, if you were to stream music for a whole 8 hour workday you'd burn nearly 1GB each day. Then you can go to the Playstore and download a game like Need for Speed in 5 minutes, but it'll devour 1.6GB of data.... and that's just one app.

7. stuyjcp

Posts: 31; Member since: Apr 29, 2012

But you only need to download the app once, which can be done on WiFi. Streaming services continuously require data when in use.

9. elitewolverine

Posts: 5192; Member since: Oct 28, 2013

And if you have a 6GB of data plan, you can stream that music for free with their huge list of providers, then watch videos for free, which most people use (unless you torrent which is the only way you are using 80GB of data and not using video). NFS is a one time download as mentioned, it is also a wifi download as well. However when I leave the house and the kids are watching Netflix, wifi cuts out and data usage kicks in....

4. combatmedic870

Posts: 982; Member since: Sep 02, 2015

I signed up as soon as they offered unlimited. I think I pay 50 a month plus 30 for my line(something like that). So unlimited everything for 80. My monthly bill is 96 bucks after taxes and jump. If they ever decided to raise my bill I'd move to project fi. I use an average of 13gb a month over the last year. I'm sure if I wanted to, I could use 5gb a month. But lte is faster vs my ISP. So I download Alot on lte if I'm in a hurry. Plus I use waze.

10. elitewolverine

Posts: 5192; Member since: Oct 28, 2013

I don't think waze is a GB killer, at least not for me, though I probably don't use it as much as others or you do. Depending on how that 13GB a month is used, the 6gb or 10gb tier is probably a better option.

8. cawafuoshi

Posts: 5; Member since: Nov 14, 2015

T-mo is a business. They need to attract new customers, retain current ones all while keeping their owners happy and become profitable. Not an easy task but people have voted with their wallets during the past 10 consecutive quarters. While the new unlimited is more expensive, unless you really have the need for it, a cheaper plan with Music Freedom an now BingeOn will go a long way. If anything, Tmo has added more value to my plan over the course of more than a year without changing pricing on my plan. Since I do use hotspot, international calling and roaming, it pays off. Not sure if I need unlimited any longer now and perhaps I could save money now on the 6GB plan. Spare for two month with a lot of Netflix and Prime streaming I hardly have scratched the 21 GB soft threshold. So, I could move down the ladder, enjoying the same experience since Prime and Netflix are included and saving 15 bucks plus tax and fees. And while this won't help them generating more money from me, all new sign ups should. Win-win?

15. Sdotreznikk

Posts: 9; Member since: Oct 28, 2014

Except video streaming is SD only

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