T-Mobile’s Dangerous Game

T-Mobile USA is really trying to shake things up. Now it is offering free, unlimited, international, wireless data and texts — something other carriers charge for. Feature after feature, T-Mobile seems like it is really trying to start on its recovery path. So is it recovering? Let’s take a look.

T-Mobile has been the No. 4 wireless competitor for many years. It still is. However, after years of holding its own, the company’s growth fell off the tracks several years ago. It missed the jump to smartphones and didn’t upgrade to 3G in the network along with Sprint, AT&T Mobility and Verizon Wireless.

After losing tons of customers and revenues, T-Mobile finally realized it made a big mistake. It woke up. It started investing in upgrading the network to 3G, though by that time all the competitors were already planning to start their 4G build-out.

Seeing 4G as a golden marketing opportunity, a few years ago T-Mobile jumped on the PR bandwagon after completely missing the 3G upgrade. It stuck its flag in the ground and claimed it was the first to start the 4G race. It hoped no one would remember the truth.

This sounded good, but it was heavy on the frosting and light on the cake. Over the last few years both Verizon Wireless and AT&T Mobility kept growing and upgrading and today have roughly 70 percent of the market. Sprint fell off the growth track, but is now rebuilding with the help of Softbank. And T-Mobile, with all its spit and vinegar, is still struggling for survival.

Short-Term Gains, Long-Term Pain?

Fast forward to today. T-Mobile has a new CEO and marketing executives. It has been busy rebuilding and updating the network and offerings. It has also been busy reinventing what T-Mobile is in the marketplace. In fact, it says it wants to update the entire industry, not just itself. This sounds great, because as good as the U.S. wireless marketplace is, there is plenty of room for improvement.

The numbers say both AT&T and Verizon plan on reaching 300 million people with their LTE services. Sprint is planning on reaching 200 million by the end of 2013, with more to come. T-Mobile is planning on reaching 225 million when it is finally complete. There’s no denying that 225 million is a far cry from 300 million. So that’s a big weakness for T-Mobile. The weakness is outside of city centers.

Quite often customers want coverage, even if they won’t ever use it. While T-Mobile is fast, its coverage is not as vast. This could get in the way of its growth.

In any case, T-Mobile’s “uncarrier” position seems to have struck a nerve with a slice of the consumer pie. It is doing a good job at reinventing itself, and it is growing once again. I am pleased to finally see this.

At the same time, however, while I think what T-Mobile is doing will help it grow short-term, it is also playing a dangerous game that could bite it in the rear end down the road.

Picking on AT&T

T-Mobile has not only been highlighting how it wants to fill the industry potholes, but it is also poking AT&T Mobility in the ribs at every opportunity. Why would it do this?

I think it’s because it wants to attract the attention of the media and the marketplace. Yet T-Mobile is now starting to cross over the line of good taste. If it continues, this could harm it.

Why AT&T? T-Mobile thinks AT&T has more unhappy customers. Maybe this came from five years ago, when AT&T was the only carrier offering the Apple iPhone and was totally overwhelmed with customer usage demands. No carrier at that time could have handled the pressure any better, but AT&T caught the brunt of that storm. However, it’s important to remember that even though there were complaints, customers stayed with AT&T.

Today AT&T is an excellent quality carrier and does not have to take a back seat to any other carrier. It has even been winning national awards for customer satisfaction and quality, placing it at the top of the wireless heap — even better than Verizon Wireless in many areas.

Accentuate the Positive

Rather than trying to attract media attention at AT&T’s expense, T-Mobile should be focusing on what it is doing to reinvent itself and the entire industry.

It should be focused on big ideas like reducing costs and offering innovative services at no additional charge. It should be putting focus on all the industry-reshaping things it started to talk about months ago. That would help it going forward.

While I love the wireless industry, there is still plenty that needs to be fixed from the customer perspective. That’s what T-Mobile should focus on. That’s what will get it the good kind of attention it really needs and wants.

The future of T-Mobile is in its hands. Everyone hopes it wins, including customers, workers, investors and partners, but only if it has the right attitude and lifts the industry up.

Let’s hope it gets the message in time.

Jeff Kagan

E-Commerce Times columnist Jeff Kagan is a technology industry analyst and consultant who enjoys sharing his colorful perspectives on the changing industry he's been watching for 25 years. Email him at [email protected].

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