T-Mobile May Pull Off a Painless iPhone Launch
Dec 7, 2012 10:16 AM PT
Buried halfway through a wordy investment statement from Deutsch Telekom: "T-Mobile USA has entered into an agreement with Apple to bring products to market together in 2013."
Those 17 words launched a frenzy of speculation. Was this finally the agreement that T-Mobile had been waiting for? Would it soon provide the iPhone and possibly the iPad to its customers?
T-Mobile CEO John Legere confirmed to investors at a conference in Germany that the company would indeed sell the iPhone in 2013, according to reports, and said that it would be offering it with a dramatically different plan.
The big question has been answered, but many others remain. Will carrying the iPhone increase customer satisfaction at T-Mobile? Can its network handle the data-hogging devices?
As for customer satisfaction, probably not -- at least, initially -- if the experiences of AT&T, Verizon Wireless and Sprint are any guide.
For all three providers, customer satisfaction declined after the iPhone was introduced, David VanAmburg, director of the American Customer Satisfaction Index, told the E-Commerce Times.
"That was not a black eye to Apple in any way -- its products always do quite well. Rather, it was a matter of bandwidth at the network providers, and the ability of the providers to manage their networks in way that keeps satisfaction at a higher level."
In short, VanAmburg said, there were disgruntled customers at AT&T, Verizon and Sprint, and there will likely be some at T-Mobile as well.
Odd Man Out
Still, the news can't be anything but good for the company, said Lance Strate, professor of communication and media studies at Fordham University.
"With this agreement, T-Mobile ceases to be the odd man out of the big four U.S. wireless service providers," he told the E-Commerce Times.
"T-Mobile has suffered from the absence of the iPhone option, so if nothing else, this will stop the bleeding, so to speak -- stem the loss of customers and allow them to retain their market share rather than fade away into obscurity," Strate explained.
It probably won't add much to the company's customer base, as the once-volatile market has become fairly stable, he continued, "unless they are willing to offer something significantly different from the competition in regard to data plans and pricing -- and I don't think they'll be able to."
Yet that is exactly what T-Mobile's Legere has suggested the company will do.
Instead of offering the usual subsidy with a contract -- a model that can be a huge financial burden to carriers -- T-Mobile will sell the iPhone at full price. However, customers will be able to pay $99 down and $15 to $20 a month for 20 months to ease their out-of-pocket strain, Legere reportedly told investors.
As for T-Mobile's network, it should be able to handle the iPhone, said Strate, mainly because most of the T-Mobile iPhone users will be existing customers who switch over from Android smartphones.
The LTE Issue
T-Mobile will definitely be able to handle the traffic if the iPhone is an LTE-ready one, said Andreas Scherer, managing partner of Salto Partners.
Such a move would fit nicely with the company's overall strategy, he told the E-Commerce Times.
"As T-Mobile prepares for its merger with MetroPCS, the company is upgrading its LTE infrastructure heavily. The idea is that both companies will upgrade their existing client bases aggressively to the new network. The iPhone 5 fits perfectly in this picture," Scherer explained.
T-Mobile positioned its MetroPCS acquisition as allowing it to become a "bigger, better, bolder" provider when it was announced in October. That meant being able to provide 4G services and deeper LTE coverage in several metro areas as well as a greater choice of products -- including, we now know, the iPhone.