T-Mobile Introduced This Game Changer, And You Should Be Thanking Them

By Markets Fool.com

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When T-Mobile introduced the industry's first data rollover plan in last month's Un-carrier 8 program, I wondered aloud whether the company weren't starting another industrywide trend. Less than a month later, AT&T has announced its own data rollover policy. Now it seems like a foregone conclusion that Verizon and Sprint want to follow suit, since customers will expect no less from a modern wireless carrier.

Starting on Jan. 25, all AT&T customers -- new and existing -- signed up to the popular Mobile Share Value plans will automatically see their unused data rolling over to the next month. In a prepared statement, AT&T Mobility CEO Glenn Lurie called it "an added benefit of being an AT&T Mobile Share Value customer."

AT&T's shareholders may not appreciate the damage this change might do to the company's lucrative data overage fees, but you'll hear no complaints from its customers.

The nitty-gritty details
There are some differences between the AT&T plan and T-Mobile's so-called data stash feature. Ma Bell will only preserve your unused data allotment for one month, while T-Mobile will keep it for a full year.

Let me show you how this works out for a fictitious customer, using a 3-gigabyte data plan but using a bit more or less than that each month. Starting with a fresh plan and no surplus data in February, this user treads lightly for a couple of months. Then there's a binge of high-definition video watching on smartphones in April.

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Here's how that somewhat reckless usage pattern sets our test user up for the following month, under each of the four major wireless carriers:

AT&T

T-Mobile

Verizon or Sprint

February: 1 GB

+2 GB = 5 GB

+2 GB = 5 GB

3 GB

March: 1 GB

+2 GB = 5 GB

+4 GB = 7 GB

3 GB

April: 6 GB

-1 GB = Pay overage fees

+1 GB = 6 GB

-3 GB = pay overage fees

Starting with the simplest example, Verizon or Sprint users will simply lose their unused data at the end of each month. That April binge will exceed their 3 gigabyte data allowance by another 3 gigabytes, triggering overage fees.

Sprint would charge $0.15 per additional megabyte, which would add up to a bloodcurdling $450. This user would have been much happier with Sprint's unlimited data plan. Verizon's overage fees stop at $15 per additional gigabyte, or $45 for that freewheeling April. Big Red doesn't offer all-you-can-eat unlimited plans, but a 5 gigabyte option might work out better for this user.

At AT&T, our test user saves 2 gigabytes from February and applies it to March. Another spendthrift month uses up 1 gigabyte of March's brand new allowance -- the rollover data is only touched after chewing through the regular plan. And since February's saved data wasn't touched, it simply expires at the end of March. A grand total of 2 gigabytes roll down to the April bill, so that video binge in the spring eats up the regular 3 gigabytes, destroys the 2 gigs rolled over from March, and steps over into another 1 gigabyte of overages.

Now, I'll admit that this particular example is a little but more fictitious than the rest because AT&T doesn't actually have a 3GB data plan. These plans start at 4 gigabytes per month, which is a size that no other carrier matches exactly. So making true apples-to-apples comparisons isn't easy.

The larger point still stands, though -- your unused February data won't be available in April no matter how little you use that plan in March.

And that's not how T-Mobile works. Instead, the 2 gigabytes saved in February will stack on top of the 2 gigabytes of unused March data, adding up to 7 usable gigabytes in April. So the 6 gigabyte video binge doesn't cost anything extra, and our user still rolls that last gigabyte over into May.

What's next?
So there are subtle differences between the two data rollover options, but both are far more flexible than the strict month-by-month allotments still in use at Verizon or Sprint. Always ready for a show, T-Mobile CEO John Legere was quick to highlight AT&T's shorter expiration dates in his social media accounts. You should expect to see Legere and T-Mobile's official marketing messages hammering this point home.

And with high-profile marketing assaults from both AT&T and T-Mobile to support their new data conservation policies, you'll see pressure building to get similar solutions in play at Verizon and Sprint as well. Sprint may shrug it off and point to its completely unlimited rate plans, but Verizon has no such option on the table. Big Red may have to make a choice soon enough -- start rolling over unused data like the majority of its large rivals, or put together a Sprint-style unlimited plan.

Either way, it's the same old story we've seen a thousand times before -- the lumbering giants dominating a market are forced to bring consumer-friendly features to market only because smaller and hungrier competitors did it first. If T-Mobile is out to change the game in wireless subscriptions, it's doing a pretty good job so far.

The article T-Mobile Introduced This Game Changer, And You Should Be Thanking Them originally appeared on Fool.com.

Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends Verizon Communications. 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.