There has been all sorts of news about T-Mobile USA lately, from rumors of a Deutsche Telecom takeover of Sprint Nextel to its potential interest in spectrum currently held by Clearwire and MetroPCS. FierceWireless' Lynnette Luna wrote a piece Monday about T-Mobile potentially becoming a "dark horse in the mobile broadband race," with its announced plans to deploy HSPA+ nationwide by the end of 2010. All this has led me to think more broadly about T-Mobile's position in the U.S. market. The operator, after many years of consistent growth, has had a string of disappointing quarters. Let's examine why that is, and what some of its strategic options might be.
T-Mobile's position as the "value"-based operator has been nibbled away by MetroPCS, Leap, Virgin Mobile USA, Boost and TracFone, that are attacking T-Mobile's young, urban customer base with aggressive pricing, improved network coverage, and a more mainstream combination of handsets, features and data services. T-Mobile's MyFaves, which was innovative at first, has been eclipsed by Verizon's Friends and Family and the other "calling circle" type offerings of competitors. And its limited 3G network availability restricts its service offerings and hamstrings the performance and capabilities of some of its best devices.
Like Sprint, T-Mobile is "caught in the middle"--between Verizon and AT&T that have pulled away from the pack--and the growing number of pre-pay/advance-pay/value-centric operators and MVNOs. As for Sprint, I would argue that it has done a more effective job of late, with its support of "flank brands" (Boost, acquisition of Virgin Mobile), openness to new business models (Kindle, Clearwire) and willingness to experiment on pricing--Simply Everything, Any Mobile, Anytime, and Boost Unlimited.
What about T-Mobile? How might it differentiate over the next three years? First, I agree with Lynnette that T-Mobile has an opportunity to take a leadership role if can fulfill its pledge to offer HSPA+ to the majority of its footprint over the next year. AT&T is in the network doghouse because of the well-publicized network problems exacerbated by the iPhone. Its network improvement plan is aggressive, but longer term (going from HSPA directly to LTE). For the first time in its history in the U.S. market, T-Mobile might be able to boast publicly about its network. Parent Deutsche Telekom's reported interest in the Clearwire and MetroPCS spectrum, for the purposes of an accelerated and potentially cheaper 4G LTE build, is far more plausible than an outright takeover of Sprint (which owns part of Clearwire). I'm not sure we really need more than three national broadband wireless networks, anyway...Continued.