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    T-Mobile to Announce Milestone Quarter, but Can It Last?

    Written by

    Michelle Maisto
    Published August 5, 2013
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      T-Mobile on Aug. 8 will announce the results of its fiscal second quarter. It’ll be the company’s first quarter as a publicly traded company, following its merger with MetroPCS, and its first full quarter offering the iPhone.

      The results should offer an indication of how T-Mobile’s “un-carrier” strategy is so far playing out during what’s been, even just eight months in, surely the most exciting year in the carrier’s history.

      In January, T-Mobile introduced monthly device-financing programs and no-contract unlimited 4G data plans. In March, it lit up its promised Long Term Evolution (LTE) network in seven cities.

      In April, it began—years behind its rivals—to finally sell the Apple iPhone. In May, it closed its merger with prepaid carrier MetroPCS. And on July 10, it introduced Jump—a program that allows customers to upgrade their smartphones twice a year, instead of once every two years, as with its rivals—and offered Family Plans with no credit checks.

      “Customers are really still pissed-off at very unpredictable billing, very unclear pricing, restrictive and confusing upgrades, and unfair treatment of loyal customers in this whole way that we sell them a phone and bury the costs into a long-term contract and tie them in,” T-Mobile CEO John Legere said during parent-company Deutsche Telekom’s Capital Markets Day in December 2012, where Legere first began to offer a picture of what T-Mobile had in mind—though he said much the same during a press event July 10.

      “We think there is huge room for a challenger to change some of that,” he continued, “in a way that the larger players will not be able to, or will choose not to, respond to.”

      But the larger players have responded.

      On July 16, AT&T introduced Next, a program that lets customers purchase a new smartphone or tablet every year “with no down payment, no activation fee, no upgrade fee and no financing fees.”

      And on July 18, Verizon introduced Verizon Edge, an “affordable way to upgrade to the newest device.” Edge divides up the cost of a phone over 24 months and lets users upgrade after six months—as long as they make 12 months’ worth of payments. The offer be available beginning Aug. 25.

      While T-Mobile’s Legere has talked about fixing a broken industry and setting right what customers hate most, AT&T and Verizon introduced the offers with little contextual framing.

      AT&T Mobility CEO Ralph de la Vega, in a statement introducing Next, said little more than that the deal is “hard to beat” and an “incredible value for customers who want the latest and greatest every year.”

      Verizon public relations manager David Samberg offered little more, saying in a blog post: “Technology changes fast. You purchase a phone or tablet and within a few short months, something new hits the shelves.”

      Sprint, in its way, also responded by calling attention to its unlimited data plans. On July 11, it offered the ability for customers to lock in the deal for life.

      During T-Mobile’s July 10 event, Legere said that since T-Mobile launched its un-carrier strategy, more people are switching to it. In New York City, Los Angeles, San Francisco, San Diego and Washington, said Legere, T-Mobile is number one in new net customers. Its store traffic has also doubled, and so have credit applications.

      That morning, Bloomberg, citing people familiar with the matter, reported that T-Mobile—for the first time in three years—had experienced a quarter during which it added more customers than it lost.

      Still, some are cautious about T-Mobile’s ability to keep shaking up the industry.

      Canaccord Genuity analyst Greg Miller, in an Aug. 4 research note, said that he also expects T-Mobile to announce its first growth in postpaid subscribers since its first quarter of 2011, but also that it will be difficult for the carrier to “maintain the temporary competitive edge” that’s come from its new smartphone offers and pricing model.

      “With a matching offering by Sprint for T-Mobile U.S.’s unlimited plans and with its flexible contract-term plans quickly followed by AT&T and Verizon (although at a higher price point), we believe it remains difficult to maintain a long-term advantage on pricing plans alone,” wrote Miller. “The gold standard in wireless remains the network quality enjoyed by Verizon and AT&T, which T-Mobile U.S. and Sprint are both spending billions of dollars catching up to.”

      Legere signed off on the July event by saying, “This is going to continue. [Current events are] Un-Carrier Phase 2. What I want you to know—and this should drive a bit of fear into the industry—is we already know Un-Carrier Phase 3. And we know when it’s coming.”

      The industry should brace itself for this fall.

      Follow Michelle Maisto on Twitter.

      Michelle Maisto
      Michelle Maisto
      Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University.

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