T-Mobile just fired a warning shot at the major broadband companies by announcing a wireless plan that offers unlimited video streaming on services such as Netflix, HBO Go, and Sling TV.
The new plan is called “Binge On” and is similar to T-Mobile’s “Music Freedom” program, which made streaming services like Spotify and Pandora not count toward your data limit. With Binge On, you’ll be able to watch more than 24 streaming services to your heart’s content without it counting toward your data plan’s cap — as long as you are ok with T-Mobile’s sometimes spotty reception.
On its surface, Binge On seems like a cord-cutter’s dream. Imagine a future where you can free yourself from not just cable TV, but cable internet as well. Music and video streaming are two of the the major bandwidth hogs for most consumers, with Netflix itself accounting for more than 36% of our internet usage. T-Mobile’s implied pitch is that you might never have to deal with Comcast or Time Warner ever again. With a combination of well-picked streaming services, you could potentially fill all your entertainment needs without cable — and then watch (and listen) to it all without it counting toward your data caps. You can even “tether” and watch video on your laptop using your phone data plan.
Of course, there are some major caveats. T-Mobile is limiting the streaming to “DVD quality,” which means no HD. And good luck getting that type of reception all the time. Some streaming services like YouTube and Snapchat are also conspicuously absent.
But the question is not necessarily what this plan means today, but what it means for the future of the industry. T-Mobile’s actions could simply be a stunt by a player lagging behind in the market, or they could represent a real threat that wireless carriers could compete with broadband providers for internet customers.
The reality is, however, that T-Mobile’s strategy of discounting music and video streaming could become completely financially untenable if it scales up. The more people who use the plan to be “revolutionary,” the more it bites into T-Mobile’s bottom line. T-Mobile CEO John Legere says his company is building better optimization for digital video that uses less data and improves quality, but it’s hard to know to what extent that will cut down on costs.
And then we come to the criticism that T-Mobile is fundamentally undermining “net neutrality” by providing “free” access only to certain services. With Binge On and Music Freedom, T-Mobile is essentially deciding which data passing through its pipes should count toward your data plan, and which data shouldn’t. Open internet advocates are concerned with what happens if a streaming service or website is viewed by T-Mobile as a competitor. Some see this as a threat to the free and open web, insidiously sneaking in under the guise of giving the customer a bonus feature.
Consider this: In T-Mobile’s dreamworld, an upstart music or video streaming service that couldn’t reach a deal with the carrier would probably get penalised out of existence if subscribers prefer a streaming service that won’t chew into their data plan. Who wants to go over their data caps? And this would give T-Mobile the bargaining power to extract uneven terms from new streaming services.
But this scenario would, admittedly, only likely occur if other wireless carriers like Verizon or AT&T followed T-Mobile’s lead.
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