Tech Life: T-Mobile announces consumer-friendly 'Data Stash'
Bacall needed Bogart. Holmes needed Watson. Cheech needed Chong. Does the wireless industry need its gotchas? Thanks to T-Mobile and its bold and blunt CEO, John Legere, we may soon find out.
Bacall needed Bogart. Holmes needed Watson. Cheech needed Chong.
Does the wireless industry need its gotchas? Thanks to T-Mobile and its bold and blunt CEO, John Legere, we may soon find out.
Legere announced T-Mobile's eighth "un-carrier" policy change this week - aiming again at a particular pain wireless carriers inflict on customers. This time, his target was use-it-or-lose-it data plans, which T-Mobile says cost wireless customers billions of dollars a year - not just in actual overages but in fear of them, which spurs people to spend needlessly on large data packages.
T-Mobile's answer? Starting next month, its subscribers will have access to a "Data Stash" - a rolling supply of their bought but unused data. To sweeten the deal, everyone who qualifies will start with a deposit of 10 extra gigabytes in the bank.
When he announced Data Stash on Tuesday, Legere took his trademark shots at the "stupid, broken, arrogant industry." But a wireless industry without fee-generating traps? Almost makes me nostalgic.
It was the wireless folks, taking a page from fine-print-happy banks, who helped teach us the meaning of a "gotcha," a contraction that translates loosely as "We've got you, sucker."
My own education began more than a decade ago - a time when T-Mobile's average customer, now 28, was a teen and "buckets of minutes" were the thing to fret over. I can't remember how many we bought. But we feared the consequences - as much as 40 cents per minute - if we went over our limit.
That had two obvious effects. One was that my wife and I overestimated our family's needs. The other was that we were still at risk if our peak blew far past our average.
And that's what happened. My mom was hospitalized in another city. Suddenly I was using my cell to stay in touch with my family, as well as her doctors and caregivers.
That phone was a godsend - it's worth recalling that, too. But our bills were hellish - sometimes hundreds of dollars more than usual. With the aid of hindsight, I realized something the carriers surely knew all along: Lots of people would have similar experiences - my carrier, Verizon, could bank on it.
Ironically, it was also the wireless folks who taught me how one company could fix a problem others create. So when Cingular Wireless, now AT&T, began offering "Rollover Minutes," we switched.
Today's overage threat is data. And Legere is right to suggest it's even more insidious. Compared with calls, data flows are inscrutable.
According to AT&T's website, I've used 1.2 gigabytes in the last week - well above my average, but no threat on a 30-gig plan. About half came from using Netflix at the gym. But I'm clueless on the rest - more than 50 discrete uses ranging from nine kilobytes to 101 megabytes.
Legere says that's typical - that 90 percent of wireless users have no idea how much data they need, and 50 percent don't even know how much they use. He says that ignorance scares people into "buying up" - buying an average of four to five gigabytes per month and losing about three gigs that are left at the end.
I can't verify Legere's math, but he estimates that at $12 per gig, customers toss away about $50 billion a year. And that's on top of $1.5 billion in data overages he said Verizon, AT&T, and Sprint have charged customers this year - fees T-Mobile no longer imposes, though it slows data speeds if customers pass their limits. If he's even a little right, he's talking a lot of cash.
His competitors would counter their pricing is designed, in part, to manage their networks, to keep data hogs from slowing down everybody else. But Legere is right to say Big Wireless profits from its customers' fears and confusion. And Wall Street expects the money to keep flowing.
"We're not addicted to slamming people with overages," Legere says.
Can he push his competitors to change? Maybe, but only if he continues to lure their customers with pain-free policies such as free overseas data. And Data Stash.