T-Mobile offers customers with bad credit its top phone deals

On Sunday, T-Mobile is unveiling a program that will essentially let customers with bad credit scores to prove their worthiness to the carrier and thus qualify for financing deals that would put the newest and most expensive smartphones in their palms.

Today at [company]T-Mobile[/company], the latest and greatest smartphones aren’t available to customers. Technically anyone can buy a new iPhone 6+ or the newest Samsung Galaxy if they’re willing to pay the full cost of the device, but if you wanted to spread the cost of a $750 smartphone over two years then you need good credit — carriers call that “well qualified” — to qualify for T-Mo’s financing program.

Under the new program called Smartphone Equality, any customer on a voice prepaid or postpaid voice plan that maintains their service or pays their bill on time for 12 straight months will become eligible for all of T-Mobile’s smartphone financing deals. So even if you’re on the most basic feature phone plan, if you make 12 months worth of payments on time, you can immediately upgrade to, say, the iPhone 6+ for $0 down and monthly payments of $27.08 for two years. You can even use the program to finance a tablet.

The program is also retroactive, so if you’re already a T-Mobile customer with a year of on-time payments behind you, you’ll immediately be eligible for the program Sunday. In an interview, T-Mobile VP of customer loyalty Matt Staneff also pointed out that you don’t lose your Smartphone Equality status, so if you finance that iPhone 6 and are late on a payment two months later, T-Mobile won’t suddenly insist you pay the full cost of the device.

About 63 percent of American consumers do not have the highest credit score, which is generally the bar that T-Mobile and other carriers have applied to their most compelling offers, Staneff said, though he didn’t reveal what T-Mobile’s specific credit policies were. Smartphone Equality basically lets T-Mobile make its own internal judgments on a customer’s credit worthiness rather depend on outside reports, Staneff said.

“I wouldn’t call it a credit program,” Staneff said. “I’d say we’re building trust together with our customers.”

Though this program will qualify a lot of postpaid customers for financed smartphones they wouldn’t normally be eligible for, Staneff said he anticipates it will move a significant amount of prepaid customers into the postpaid category. While many customers prefer prepaid, he said, there are a lot who were forced into a prepaid plan because of bad credit or they refused a credit check. “This is a very simply to way to get them the product they want,” Staneff said.

T-Mobile grew by 8.3M subscribers in 2014

T-Mobile’s customer growth spurt continued into the normally busy holiday season in 2014 as it added 2.1 million new connections to its ranks. It wasn’t T-Mobile’s best quarter of the year for subscriber growth – that would be its blockbuster Q1 – but it was a good way to cap off a very successful year.

Off the back of its evolving Uncarrier strategy, T-Mobile recruited 8.3 million net new subscribers to its ranks, the carrier revealed Wednesday ahead of its official earnings next announcement next month. In a single year T-Mobile grew its customer base by 18 percent, giving it a connection total of 55 million. At the end of Q3, Sprint had 55 million subscribers as well, so if Sprint continued its customer loss streak in Q4, T-Mobile will have assumed the mantle of the country’s third largest carrier.

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T-Mobile’s gains weren’t all due to Uncarrier, though. It added 1.3 million net new postpaid customers and 266,000 net new prepaid subscribers in the quarter, but the remaining 586,000 links were comprised of wholesale connections from mobile virtual network operators (MVNOs) like Ultra Mobile, Straight Talk and Target’s Brightspot, as well as from machine to machine connections linking the internet of things. Sprint used to be king of MVNOs, but T-Mobile has become much more aggressive in attracting virtual operator customers as of late.

Get ready to bank your MBs: T-Mobile’s Data Stash goes live Jan 1

Starting tomorrow, many T-Mobile customers will start seeing a new item show up on their bills: a bank of unused megabytes or gigabytes that customers can save up for a data-intensive day.

[company]T-Mobile[/company]’s Data Stash rollover program goes into effect on New Year’s Day, and customers should start seeing their respective stashes appear in their online accounts within 24 hours of their first billing cycle in January, T-Mobile confirmed. T-Mobile is seeding all of these accounts with 10 GBs of free data, and after that data is used up any unused megabytes or gigabytes from your monthly plan will start accruing in the stash (For some inexplicable reason, T-Mobile won’t rollover any new data until that 10 GB is entirely consumed).

Announced earlier this month as part of T-Mobile’s “Uncarrier” strategy to shake up the U.S. wireless industry, Data Stash represents the first time a major U.S. carrier has let customers keep their unused portion of their monthly data buckets at the end of the billing cycle. Traditionally carriers have taken a better-safe-than-sorry approach to marketing data plans, often selling consumers more data than they need so they can avoid paying overage fees on any given month.

The Paramount Theater in Seattle played host to T-Mobile's Uncarrier 5.0 event in June.

Data Stash is definitely a move toward more consumer-friendly data pricing models, though in my opinion T-Mo could have gone further. If T-Mobile really wanted to truly level the terrain for the consumers it should have started selling data by the gigabyte. Once you use up your first gigabyte, you purchase another and so forth – similar to the way we buy gasoline. Some small virtual carriers like Karma are exploring those kinds of metered data models, but it’s safe to say not even the progressive of the major carriers is willing to take that step yet.

But give credit to T-Mobile: Data Stash will is a big step in the right direction, and it’s available at no extra charge. So do you stand to benefit from having a data stash? It depends on how you use data, and in general heavier smartphone data users will benefit from Stash a lot more than lighter users. Almost everyone with a T-Mobile tablet plan, however, will find Data Stash useful.

Who gets a stash and who doesn’t

First off, it’s important to note that the program is only available to T-Mobile’s postpaid customers on a 3 GB or 5 GB Simple Choice individual plans, so you have to buy a lot of monthly data in order to save it. Stash does little good for you if you’re on an unlimited plan, it goes without saying. And if you’re on T-Mo’s 1 GB or 500 MB plan or are a prepaid customer, your unused 4G data will expire at the end of your billing cycle just as it always has.

According to T-Mobile SVP of Marketing Andrew Sherrard, though, about 80 percent of T-Mobile’s postpaid customers are on 3 GB or greater data plan, so a good part of T-Mo’s customer base will benefit.

piggy bank

There’s also another way of looking at the figure, however: it could be a good deal of T-Mobile’s customers are over-subscribing to data each month because the next rung below the 3 GB tier is a 1 GB plan. Meanwhile the average smartphone data consumption in the U.S. is about 2.2 GBs per month, according to Chetan Sharma Consulting. T-Mobile has been doing the same thing it accuses its competitors of doing: selling customers more data than they need each month.

The big advantage of having a rollover plan is that lets you prepare for the typical month of data usage instead of always preparing for the worst-case scenario. Take my own data consumption: I lean heavily on Wi-Fi (and, sadly, rarely leave the home/office) so my data use is well under 2 GBs each month. But when I travel for work or pleasure my data usage spikes as my Wi-Fi connection gives way to cellular and I rely on my smartphone’s connection more for work and entertainment. I need a 2 GB plan or greater plan for those few months I’m spending more than a few days away from my neighborhood, and more often than not 2 GBs isn’t enough.

“Averages are really dangerous,” Sherrard pointed out. Your monthly average means nothing that one week you’re spending at a work retreat or that summer every four years when the World Cup is on and you’re streaming games every lunch break, Sherrard said. Data Stash is perfect for those types of situations, Sherrard said.

If you’re looking forward to Data Stash as a means of saving you money, you’ll probably be disappointed. While there are some people who may be able to downgrade from 5 GB to a 3 GB plan by banking gigabytes, it’s not possible to use Data Stash to downgrade to a 1 GB plan. Most people will find themselves subscribing to the same data buckets they always have. And if you have a 1 GB plan today, you would actually have to pay more money to take advantage of the program.

The advantage, however, will come when those worst-case scenarios present themselves: When Italy is paying France in the semifinal and you have to sneak out of the office to watch it in the bushes or when you’re enduring a long layover at the airport and decide to stream Lord of the Rings. These aren’t scenarios a 3 GB or even a 5 GB plan could normally handle without the help of a few stored up gigabytes in the bank.

The one big caveat is you have to use up your stored data within a year of accruing it. So any unused data banked next month will need to be consumed by January of 2016 and so forth. 

Now let’s talk tablets

For tablets, Data Stash kicks in at the 1 GB tier, which means anyone with a paid data plan (T-Mobile’s free 200 MB bare bones plan doesn’t count) can use it. That’s a pretty important point because most people aren’t using mobile data on tablets the way they use it on smartphones, at least not yet.

tablet usage generic

Because tablets consume much more bandwidth than the typical smartphone and the costs of data are still high, we tend to restrict our slates to pools of Wi-Fi and use 4G cellular as a backup. I don’t think Data Stash will change that basic pattern, but it is far better suited to deal with the tablet’s extremes. For instance, you could go two months without connecting your tablet to the cellular network and then one day consume 3 GBs in a single sitting. Even if you’re on the most basic 1 GB plan, you’re still prepared for that scenario.

In short, Data Stash could go further. This program isn’t going to revolutionize the way you buy data or slash your monthly phone bill by $20. But it will come in awfully handy at the times when you need a hefty chunk of data the most.

This post was update at 4:45 PM PT to clarify that rollover data will only kick in after customers use up their initial 10 GBs of free stash data.

T-Mobile intros Data Stash, a rollover plan for unused gigabytes

T-Mobile is flouting one of the biggest taboos of the mobile industry: The monthly data allotment. T-Mobile CEO John Legere on Tuesday announced a new program called Data Stash, which allows you to roll over unused data each month into a kind of 4G piggy bank and use it for up to a year if you exceed your normal data plan in a given billing period.

Typically you buy a mobile data plan that comes with a set number of gigabytes or megabytes each month, but whatever you have left over at the end of the billing cycle disappears into the ether. That’s left consumers with two equally unattractive propositions, Legere told Yahoo’s David Pogue in a webcast interview. Customers either lowball their monthly data usage and wind up paying overage fees or they overestimate their data use and often wind up with leftover gigabytes each month, Legere said.

Data Stash will let customers bank that unused data each month. After a year, saved data does expire – January’s unused data is good until the following January — but there doesn’t seem any limit on how much data you can store up. In fact, Legere said T-Mobile would seed every customer’s Data Stash with 10 GBs when they sign up.

“It’s your data,” Legere said. “What you don’t use, you don’t lose.”

T-Mobile US CEO John Legere at CES

T-Mobile US CEO John Legere at CES

[company]T-Mobile[/company] will launch the program in January, and it will be available at no extra charge for any customer on a Simple Choice plan with a 3 GB or more monthly data bucket and on tablet plans with 1 GB or more.

Legere spent a lot of time bashing other carriers own practices of charging data overage fees and overselling data buckets, though T-Mobile until today perpetuated the same business model for much of its recent history as well. The difference is most of T-Mobile’s plans don’t come with overage fees or additional data purchase options. Instead T-Mobile currently throttles back bandwidth to 2G speeds for any customer who exceeds their data allotment in a billing cycle. When the new billing cycle begins speeds return to normal.

Smaller virtual operators like FreedomPop have launched data rollover programs in the past, and even [company]Verizon[/company] has experimented with rollover on its prepaid plans. But no major carrier has taken a data rollover program to such a level. Selling customers more data than they can use has been a classic way of milking more money from subscribers in recent years, just as selling consumers oversized voice minute buckets was they traditional ploy of the previous decade.

The announcement is part of T-Mobile’s evolving Uncarrier strategy — technically its 8th installment — in which T-Mobile has challenged many of the established norms of the mobile carrier business, including contract and subsidy programs and international roaming fees. What will be interesting to see is if other carriers follow in T-Mobile’s footsteps as they did with its Jump upgrade program and no-contract plans.

Poll: If T-Mobile pays for you to switch carriers, will you?

Had I asked this question two or three years ago, the answer would likely have been a no. But much has changed in a short time for T-Mobile which now has fast LTE, improved coverage and more spectrum. Now it just needs more customers.