Turning around its network story could have an important effect on handsets. The capabilities of some of its best smartphones cannot be as effectively leveraged on the pokey EDGE network. But T-Mobile does have a breadth of relationships across the device OS landscape, from a competitive lineup of BlackBerry models to Windows Mobile and Android phones and the unique Sidekick. It will need an iPhone or a Palm device in 2010 to remain competitive. I also think one of its best opportunities to differentiate would be to become the one U.S. carrier putting more eggs into the Nokia basket--for example offering its higher-end phones at an attractive price and building some unique offerings around Nokia's broadening "service" portfolio, including Ovi.
With penetration now hovering around 90 percent, wireless operators are becoming a lot more serious about market segmentation. The success of MetroPCS, Boost, and even smaller MVNOs such as Jitterbug are examples of companies that know their target market and have developed the right solutions and marketing message for those customers. T-Mobile's sweet spot has historically skewed toward young and urban. I think there's a good opportunity to do more for the higher end of that market, letting Metro, TracFone and others duke it out at the low-end. For this market segment I would emphasize messaging and social networking--which, by the way, are highly inter-related. Voicemail, and even email, are old and fuddy-duddy for today's urban youth. Facebook, Twitter and the like are a growing part of their universe, as social networking and messaging become increasingly intertwined. The trick: bring it all together in a meaningful way, with an integrated, elegant user experience, on a snazzy handset, at a reasonable, easy-to-understand price point.
Once the network is competitive, I think another under-tapped opportunity in the consumer space is attracting the next generation of mobile broadband users. Verizon, AT&T, and Sprint have locked up the first wave of "need to have" broadband subscribers, but the market has stalled given the prevailing $60 price point. I believe there is pent-up demand for mobile broadband among a growing part of the consumer market that needs near constant connectivity and wants a better, more affordable solution when away from where they live or work. We need lower, more flexible pricing plans for mobile broadband as we see a growing array of wirelessly enabled laptops, netbooks and tablet PCs enter the market. T-Mobile could quickly become a player in this area, which would compensate somewhat for its lack of position in the enterprise. This would be a very interesting battle with cable-backed Clearwire.
A final area to focus on is customer service. T-Mobile has been trumpeting the numerous J.D. Power awards it has won over the past couple of years for customer service. Other than continuing to execute on the daily "blocking and tackling" of customer service to maintain this position, is there an opportunity to truly differentiate? Well, given wireless industry economics, no wireless operator is going to be the next Zappos (see the excellent New Yorker piece on them). However, I do think there is an opportunity to strive for a new level of customer service excellence and differentiation with regards to data, given the growing, PC-esque complexity of smartphones and applications. Remember that real hand-holding outside of wireless often comes at a charge (Microsoft, AppleCare, Geek Squad), so data customer service requires a delicate balance between supporting customers and recognizing the costs. In addition to doing some things in its call centers, there are opportunities for improved self-service on operator Web sites and even on the device. Plus, T-Mobile could push its OEMs a little harder--look at what Apple has taken on for the iPhone, for example.
The larger question is what the longer-term operator structure in the U.S. should look like, given the struggles at Sprint and T-Mobile, and the disproportionate growth at the lower end of the market. Rumors surfaced last week about a possible Sprint-T-Mobile combination. That would be unbelievably messy from a network and back-office integration perspective. Plus, I'm not sure how it would play at the increasingly zealous FCC, unless financial duress was the principal argument. What might make more sense is some form of combining among T-Mobile, Leap, and Metro. The question is whether these three become two or one. Among the main facilities-based operators outside of Verizon and AT&T--Sprint, T-Mobile, MetroPCS, Leap, US Cellular and Clearwire-- there will be some level of consolidation over the next year or two. We also have to think about how many mobile broadband networks we really need. I'd rather have a few good ones rather than today's rather uneven 3G experience.