T-Mobile CEO John Legere took to the Internet Tuesday morning to announce his company’s latest Un-carrier initiative. In a live-streamed webcast with Yahoo’s David Pogue, Legere told the world about Data Stash, which lets T-Mobile customers roll over unused data each month.
Much of the interview consisted of Legere happily elaborating on Data Stash and blasting competitors as Pogue tossed softball questions and wondered aloud why Verizon and AT&T haven’t been as groundbreaking as T-Mobile. But Pogue did pin Legere at one point. Late in the interview, Pogue pointed out that T-Mobile is nowhere as big as AT&T or Verizon, and all these Un-carrier moves have been effective methods of stealing market share. But what does T-Mobile do when it’s a big player?
Legere balked. Rather than saying the Un-carrier will forever be a rebel or elaborating on how the company’s strategy will adjust as it grows, he just highlighted T-Mobile’s growth statistics, which has been his sole measure of success since he was named CEO in 2012.
T-Mobile has two goals: Gain market share, which it is doing quite well, and begin earning a profit, which it is doing quite poorly. Legere said Tuesday T-Mobile’s share of subscribers has grown from 11 percent when he came aboard to 17 percent (October reports list T-Mobile’s market share at 15 percent), and its share of gross subscriber additions has risen from 19 percent to 30 percent.
Tuesday’s Data Share announcement should solidify T-Mobile’s spot atop the fastest growing wireless providers. Rather than requiring a set limit on data each month, T-Mobile will let subscribers who purchase more than 3 gigabytes of data roll over their unused data for up to a year. Subscribers will also get 10 free gigabytes, which they must exhaust before their purchased data can begin rolling over.
Legere said $1.5 billion in data overage penalties was paid out last year, and $50 billion of data was left unused. He told Pogue that traditional data plans “scare the s*** out of people, so what do they do? They buy up. The average person buys 4.5 gigs and has 3 gigs left over at the end of the month.”
By pushing unlimited data and allowing rollovers, T-Mobile is hoping its customers never have to police their data usage. Data Share complements another Un-carrier move that was announced just last week: family plans with unlimited data that start at $100 a month.
“This is a philosophical approach to fix an arrogant, broken industry,” Legere said. “These are structural changes. They’re permanent.”
T-Mobile is leveraging two concepts — affordability and simplicity — to attract customers. Legere’s Un-carrier initiatives, including the elimination of two-year contracts with subsidized phones, unlimited music streaming, and Data Share, make monthly bills easier to interpret and require less decision-making from customers making the switch to T-Mobile.
It’s working. T-Mobile added 2.3 million customers in its fiscal third quarter, best in the industry. It is poised to take over Sprint as the nation’s third largest mobile carrier, but it still has about 66 million fewer subscribers than second-place AT&T.
Thus, the Un-carrier campaign likely won’t stop anytime soon, and that was clear in Legere’s bumbled answer to Pogue’s question about the company’s strategy when it rivals AT&T and Verizon in market share. Sure, Tuesday’s interview was meant to tout a new feature, not to elaborate on T-Mobile’s long term strategy. But that Legere couldn’t even provide a taste of what’s to come could be concerning to investors.
“The turning point is when T-Mobile’s pain becomes self-inflicted,” Gartner analyst Bill Menezes said last week after T-Mobile unveiled its family plan. “It, at some point, has to show profitable growth, not just growth.”
Legere’s rapid-fire Un-carrier initiatives have folks like Pogue praising the company, and it is indeed changing the industry. AT&T and Verizon both said their earnings have been affected by the price war largely started by Legere, and traditional facets of the industry like two-year contracts are going by the wayside. But this price war isn’t earning T-Mobile any money — it’s had one profitable quarter under Legere — and if T-Mobile ever does become top dog in the industry, it will have to show some black on the income statement.
Editor’s note: This story was updated at 12:40 to include information about subscribers’ free data.