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ReadWriteWeb DeathWatch: T-Mobile USA

The dresses in the commercials may be magenta, but the ink on the balance sheets is red. T-Mobile USA continues to slip behind its rivals. Can the rebel mobile carrier find a new CEO to bring it back to prominence before Deutsche Telekom hangs up?



The Basics

T-Mobile USA (a subsidiary of the German giant Deutsche Telekom) is the fourth-largest mobile carrier in the United States. It’s also one of the country’s most recognizable brands, thanks to a marketing push featuring model Carly Foulkes, a five-note jingle and liberal use of garish neon colors. For years, the scrappy company built a growing business on cheap minutes, cool phones and a network that was fast, if spotty.

Recent years have been tough. Deutsche Telekom’s 2011 bid to unload the company on AT&T was shut down by the feds, stoking customer uncertainty. After 10 consecutive quarters bleeding “branded contract customers” (the most valuable “post-paid” users), T-Mobile tried to spin another half million defections as a positive, since the losses were “our lowest level in seven quarters.” During the same quarter, Sprint (239,000), Verizon (501,000) and AT&T (187,000) all added contract customers. With the big two consolidating their lead, Sprint pulling away in the number three spot, and a hard Autumn ahead (more on that later), T-Mobile is foundering.

The Problem

The bungled AT&T deal left T-Mobile behind the curve, and now it’s playing catchup. Here are the four biggest reasons for its troubles:

1. Europe. Since it’s owned by Deutsche Telekom, T-Mobile is far more exposed to European unrest than other U.S. carriers. With revenue declining in Europe and more market turmoil on the way, T-Mobile may not get the network upgrades it so desperately needs. Deutsche Telekom has long made it clear that it would love to exit the U.S. market, though it has backed off on that goal since the failed sale.



2. The iPhone. According to the latest numbers from Nielsen, iPhones account for more than a third of all smartphones in use, and T-Mobile is the only major U.S. vendor that can’t sell them. iPhone envy has driven hundreds of thousands of T-Mobile users to other networks, and with the iPhone 5 expected this Fall, the bleeding is about to get much, much worse.

3. The Technology. Beyond phone selection, T-Mobile is being pressed on technology. Like AT&T, T-Mobile made the dubious assertion that its HSPA+ network (considered firmly 3G by many) was fourth-generation technology, claiming to be “the nation’s larger 4G network” as a result. Now that it is eyeing a move to a faster 4G LTE network in 2013, T-Mobile has finally dropped the claim from its marketing. The truth of the matter is that T-Mobile will be the last major American carrier to move to LTE, and that will likely cost it more subscribers.


4. The Legacy. T-Mobile can change its spokesmodel’s outfit, quote cherry-picked speed tests, and give away free phones

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