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How the iPhone Led To the Sale of T-Mobile
Hugh Pickens writes "Kevin O'Brien writes that Deutsche Telekom's announcement to sell its American wireless unit, T-Mobile USA, to AT&T for $39 billion ended a decade-long foray into the American market that was undermined, in part, by the advent of the iPhone (reg. may be required). Deutsche Telekom had been generating decent sales from its American operation, but after the iPhone went on sale, sold exclusively at first for AT&T in the United States, T-Mobile USA began to lose its most lucrative customers: those on fixed, monthly plans, who defected to its larger American rivals — AT&T and Verizon Wireless. 'The iPhone effect cannot be underestimated in this decision,' says analyst Theo Kitz. "Without being able to sell the iPhone, T-Mobile was in an unsustainable position and T-Mobile USA became a problem child." Ironically, AT&T's acquisition won't help T-Mobile customers get access to the iPhone anytime soon, as T-Mobile will remain independent, albeit under AT&T's stewardship, for around a year, and won't offer the iPhone to its customers during that period."
the iphone has zero to do with tmobile being sold, which, in case people haven't noticed, still has to be approved by the government. This deal actually might not be, in which case a lot of people will be happy.
What a joke of an article. It only looks at customers lost from the iphone, and not customers gained once tmobile picked up the G1, their first android phone. Talk about spin.
According to the business sites, AT&T is going after T-Mobile for their spectrum - AT&T is hoping that T-Mobile's spectrum will help them with the connection and quality issues.
It has nothing to do with the iPhone or the Android.
I switched to prepay about two years ago, having had my share of $50 plus per month cell contracts. Watching people pay $80 or more per month for their phones both amazes me and depresses me. They are still too much status symbol than need so the price doesn't have to be justified in the minds of many. Figure nearly a thousand a year just to have a 'smart' phone, for some its more.
Once you adapt to prepaid phones; this means adapting your friends to the fact you have one too; you rack up a lot of free time. By free I mean, not stuck on the phone or jumping at every e-mail/etc notification. Then to top it off with $50 or more in savings a month you start getting into the habit of looking at other expenses (monthlies) and realizing there is money to be saved everywhere, let alone time. Take that $1000 a year and put it into an IRA. You will get more from that than your cell phone could ever return.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
Just no 3G service....
The main reason of T-Mobile's problems is one product - Flexpay. They went after the "subprime" market, and then they found out later that (Surprise!) they don't pay their bills. And the horrifically buggy implementation of this product has done nothing but hurt T-Mobile. It greatly affects time-to-market for almost all projects, which really hurts the business and causes them to lose postpaid customers.
T-Mobile uses 1700Mhz 3G and AT&T uses 1900Mhz. 1900Mhz is more of the world standard but other stuff shares this band with 3G in the USA and only AT&T uses it. They both use 850Mhz for voice and Edge.
So you can use a iPhone on TMobile, but it will only be Edge. Same goes for a lot of phones bought with TMobile when trying to use them with AT&T or outside the US.
But it wasn't the whole puzzle. Sure, T-Mobile lost some customers to the iPhone over the years, but so did Verizon. The problem is that they were impacted more because they had a smaller number of customers to begin with.
T-Mobile had a particular niche that they served better than anyone else - the deaf community. Rag on the Sidekick all you want, but not only did they work better for the deaf community through pervasive TTY services, they had a specific plan for it, too. They just killed that service, effectively making enemies of some of their most fiercely loyal customers. Similarly, T-Mobile was known for not putting pressure on the handset OEMs to provide Android updates; it's among the most common complaints of Samsung owners.
T-Mobile tried competing with AT&T on the same merits that AT&T used to compete with Verizon. This was foundationally problematic, because they didn't stick to their strengths. "No data overage fees, ever" - that's all they had to say, and they would have had PLENTY of people who have had the pleasure of disputing $300-$800 of data overages. They could have implemented a spending cap to prevent outrageous bills, better advertised their international wi-fi calling, better advertised their bring-your-own-phone programs, and done something like "If you don't love us in 60 days, we'll refund every dime and help you go back to your old service, no questions asked". While I've heard a bad customer service story here and there for T-Mobile, my eight years of being a customer there have been an absolute pleasure. If they advertised that aspect of it, they might have been able to change some minds instead of trying to say "we can do what the iPhone does too"
It probably wouldn't have hurt to make it known that all the handsets they featured in their commercials run Android, just like the Verizon handsets, because lots of people think Android==Droid==Verizon Exclusive.
The fine article is correct in saying that T-Mobile couldn't compete with the iPhone at the hip-handset level. It fails to mention that there were plenty of other places where T-Mobile could have competed against AT&T and Verizon and won out, but didn't.
I wonder why the prices are so high in the U.S. when it comes to mobile phones. Currently I am on a plan for 12 €/month incl. taxes (~US$17) with 2000 minutes free.
Why would a business in this environment bother trying to do something like give people what they want when their audience has essentially no other choice when it comes to getting those services except to do without? What are you gonna do, move to Europe to get a better deal on your mobile service?
How, exactly, would a start-up that was more competitive price-wise even begin to get started and compete when they'd have to either have stupendous amounts of cash to build up their own infrastructure or have to rent it from the dominant players in the game already and deal with basically being screwed every which way imaginable if they even began to seem like they might be a threat?
Honestly, your question may as well be: "Why is it that so many people I talk to feel that they should be given a billion dollars tax free, and NONE of the politicians they elect in the US get it?"
I don't mean to be rude or anything but seriously - why would the carriers have to get it when the very laws of the nation governing their conduct are essentially paid for and written by them?
Since I can't tell them apart, I treat all ACs as the same person.
Yes, the story is hyperbole and conjecture, because most tech articles online are based on dramatic declarations rather than facts. However, your comment is also a bit hyperbolic.
Think about business here. The iPhone wasn't the sole reason but it helped a lot. In terms of subscribers and money, the carriers right now are 1) Verizon, 2) AT&T, 3) Sprint 4) T-Mobile. Verizon has differentiated itself by running on it's reputation of reliability. AT&T differentiated itself by getting the iPhone first. It remains to be seen if AT&T can remain #2 but it has done a good job of locking some people into their service by getting a boost from the iPhone. Sprint and T-Mobile are a distant 3 and 4, because they aren't differentiating themselves well, and because AT&T was stealing their high end subscribers while local smaller outfits like MetroPCS, Cricket, Boost, Amped and others were stealing their low end subscribers. So what you end up with is a smaller T-Mobile and a larger AT&T with lots of cash to start making business deals.
Now ultimately the reason why T-Mobile is being sold is because AT&T bought them. The article makes it seem like AT&T handed T-Mobile a crushing defeat and Deutch Telekom whimpered for mercey and sold their meager T-Mobile branch. Far from the truth. Deutch Telekom saw a money making opportunity, better than what they were making now. There are probably lots of business reasons surrounding it, and DT saw they were getting their asses kicked since 2007. They could continue to operate and try to come up with something new, but quite simply they cashed out when someone made them an attractive offer. DT saw they weren't as competitive as they wanted to be, so they took their money and went home. They might be able to make more money by investing that $39 in their European wireless market... or just invest it in oil futures or something.
As for the G1... seriously? Don't make me laugh. T-Mobiles subscriber base has shrunk since 2007. Period, regardless of what technology AT&T and T-Mobile are offering. You can hardly say T-Mobile gained as many customers from the G1 as AT&T did from the iPhone.
"All great wisdom is contained in .signature files"
"ironically, AT&T's acquisition won't help T-Mobile customers get access to the iPhone anytime soon"
Anyone who really cared about the IPhone, has long ago defected. Those smartphone users who stayed likely have other priorities (like having an antenna that works?).
I think it's skynet trying to achieve sentiance, little bit to go yet thankfully.
Because what are we going to do, move to Europe to get a better deal on wireless?
The have a captive audience here and the carriers have huge warchests to make sure that strong consumer protections aren't enacted.
Since I can't tell them apart, I treat all ACs as the same person.
I think AT&T was just tired of those commercials pointing out how bad AT&T is. Luke Wilson probably wasn't available to run counter ads, so it was just cheaper to buy them.
Coder's Stone: The programming language quick ref for iPad
No, I only pay for outgoing calls. And calls within the same carrier are free for me too. SMS is not included. I never got the hang of SMS anyway, so it doesn't make a difference for me. If I was interested in SMS too, I would upgrade to a 19 € plan which includes 1000 free SMS and 1 GByte of data.
In most countries in the developed world, the cellular networks, the towers and backhauls, are built by the government or a quasi-government monopoly and access is leased to retailers who then sell the SIM cards. As a condition of the lease the retailers agree to a regulatory regime that's much more stringent than in the US-- they can't bundle services, they must provide open access to the network, their ability to set prices and services are sometimes subject to legal restrictions, etc., and the system is very retail consumer friendly. In exchange for the regulation, these resellers can be very agile and operate very cheaply, because they don't have to pay any of the downside for running the antennas, which is a large fixed cost that has to be paid wether people use their minutes or not, and the government has the money resources necessary to make the network reach all kinds of out-of-the-way places that for a private company would be unprofitable, and to run the network on a non-profit basis, or worse.
In the US the network was built by private companies, the large fixed costs of the infrastructure are borne by the providers, and the government gives the providers a much freer hand to extract the costs for running their network in whatever way they see fit.
Don't blame me, I voted for Baltar.