T-Mobile stops charging video streaming toward data plans

There is a lot of money at stake, as carriers will take in $2.4B in overage charges this year

I have to hand it to T-Mobile: while most carriers can't wait to charge you as much as possible for data, that company seems to be going out of its way to reduce those costs. It's really not every day, or seemingly ever, that you can say something like that about a multi-billion dollar global company.

T-Mobile announced on Tuesday that, starting on November 15, it will start a new service that it's calling Binge On, which will stop video streaming from major streaming services from counting toward customer data plans. (For existing T-Mobile customer, Binge On started a few days later, on November 19).

These are not just any services, either; it includes almost all of the big ones. The complete list, for now, is Crackle, Encore, ESPN, Fox Sports, Fox Sports Go, HBO Now, HBO Go, Hulu, MLB, Movieplex, NBC Sports, Netflix, Sling TV, Sling Box, SHOWTIME, STARZ, T-Mobile TV, Univision Deportes, Ustream, Vessel, Vevo and VUDU.

That is a pretty comprehensive list, but there is one notable omission on that list: YouTube. There is no specific reason that it was left off, and a T-Mobile spokesperson told me that the company "would be happy to work to get them included as soon as possible."

T-Mobile also said that is celebrating the launch of Binge On by offering of 30% off a full year’s subscription to Sling TV’s “Best of Live TV” package, which is available to all Simple Choice customers.

This is a pretty big and bold move on T-Mobile's part, especially considering how big a chunk of data video streaming takes up.

Mobile video is now the number one way people use mobile data up 2.5X (145% growth) in the last two years, up from 0.66GB in 2013 to 1.62GB now. Data used for mobile video is projected to jump 422% by 2020.

A report by Gartner from earlier this year found that global mobile data traffic is set to reach 52 million terabytes (TB) in 2015, an increase of 59 percent from 2014. By 2018 they are estimated to reach 173 million TB.

That growth is being driven by video usage. In the U.S. alone, 47 percent of the 45 to 54 year olds surveyed by Garnet streamed 15 minutes or more of mobile video apps over cellular networks per session, while 40 percent of 18 to 24 year olds stream more than 15 minutes.

Mobile video is also showing absolutely no signs of slowing down Each year until 2020, mobile video traffic will grow by 55 percent per year and will constitute around 60 percent of all mobile data traffic by the end of that period, according to a study from Ericsson in June.

As T-Mobile itself pointed out, carriers are projected to take in a record $2.4 billion this year from overage penalties, up 60% from $1.5 billion last year. American wireless customers waste an estimated $45 billion annually overbuying wireless data they don’t use.

In fact, T-Mobile customers use more data, and video, than the industry average, the company told me.

So to say that T-Mobile is giving up a huge potential revenue source, by being able to give users bigger and bigger data plans to accomodate their growing video streaming habit, is an understatement, not to mention overage charges.

There is precedence for this from T-Mobile, though. Last year it did the same thing with streaming music, making it so that services like Pandora, Rhapsody, iHeartRadio, iTunes Radio, Slacker, and Spotify would not count toward data plans.

T-Mobile seems to want to differentiate itself from its rivals by giving it customers more perks, and that plan may be working. In its third quarter earnings, the company added 2.3 million customers, while Verizon added 1.3 million.

Maybe it does actually pay off to be nice to your customers sometimes.

(Image source: thesun.co.uk)