T-Mobile USA struggles to keep up with competitors

T-Mobile USA is adding new subscribers, but the No. 4 wireless operator can't seem to catch much ground on its larger competitors.

Deutsche Telekom, T-Mobile USA's parent company, reported second quarter earnings on Thursday and gave some detail on its U.S. operations. While T-Mobile USA increased revenue for the quarter by about 14.3 percent compared to a year ago, the company is not adding as many new customers as it has in the past. Total revenues rose to $5.47 billion from $4.78 billion in the prior-year quarter.

In the second quarter, T-Mobile USA reported it had added 525,000 new subscribers. This isn't bad considering Sprint Nextel lost about 901,000 subscribers in the quarter. But T-Mobile's net additions were about 22.1 percent less than what it added in the same quarter a year ago. In 2007, the company added 857,000 new subscribers.

Management blamed the decline in net additions on the fact that some customers were not renewing their two-year fixed contracts, which started back in April 2006.

In total, T-Mobile has 31.5 million customers, putting it in a distant fourth place. Meanwhile, bigger players, such as AT&T added 1.3 million subscribers in the quarter for a total of 72.9 million subscribers. Verizon Wireless added 1.5 million new subscribers in the second quarter for a total of 68.7 million subscribers. And Sprint Nextel, which lost 901,000 subscribers, still has about 51.9 subscribers.

T-Mobile is in a tough spot when it comes to competing with these big carriers, largely because its footprint is not as big and because it's just now getting into the 3G game. It only started rolling out its 3G network this summer. And on Wednesday it just announced it had activated 3G in its second city, Las Vegas. The service launched in New York City.

So far it doesn't look like the company has been able to pick off many of the frustrated Sprint customers. But if Sprint continues to have problems, T-Mobile might be able to win some of those customers to its service if it can increase coverage and do well with its value services, such as HotSpot@Home and the MyFaves calling circle.

[Jay Two]

They just need to start getting some decent touch-screen phones and everyone will be happy!

[john55440]

In my city, Consumer Reports ranks T-Mobile and Verizon as the two best carriers. I picked T-Mobile, because they cost less. In terms of local coverage, call quality, and dropped calls, T-Mobile has been perfect.

[sevort]

The main problem is the iPhone. With the 1st generation iPhone people unlocked them and left AT&T for T-Mo. That's why T-Mobile gained so many customers last year. But T-Mobile uses odd frequences for its 3G network, so the iPhone 3G won't work on it, and people went back to AT&T.

[signal7svr]

iPhone's not the major issue, yeah it's a problem, but T-Mo's the problem. Yes, they have been fighting with the government over their 3G spectrum and slow to roll it out, but why have they been so horrible with handset introduction? There doesn't seem to be any progress in 1700Mhz smartphones, or any slick handsets with 3G worth buying. HotSpot@Home's launch was sorely botched with the first two handsets being the pride of 1992, plus wifi. The home calling thingy seems pretty lackluster also. They have lost a lot of momentum waiting to update the handsets for 3G. I haven't seen any rolling through the FCC Fridays either, which means no smartphones for a fairly long time. Are they having difficulties getting manufacturers to build w/1700Mhz? How eager are carriers going to be to make 1700Mhz phones for the fourth largest carrier, in limited markets? Android better hit big, cuz TMo seems to have bet the farm on it.

[MarkyAndy]

Uh sevort, I think you got that backwards. The rest of the world uses GSM 900/1800 while the US uses GSM 850/1900. On top of that, the rest of the world also uses the 1700/2100 band for GSM 3G, while AT&T USA piggybacks off the same 850/1900. So really, who uses odd frequencies?

BTW: According to Apple's spec site, the Iphone3g uses the 2100Mhz band, so there is no issue on using it on TMobile's 3g service. Probably need to check your facts a little better here.

On contrary to popular belief, the world does not revolve around America sometimes :P

I'm not a Tmobile fanboy, I uses AT&T myself but just like to get some facts right ;)

[sevort]

I checked my facts. You obviosly don't know what you're talking about. "The rest of the world" doesn't use 1700 (UMTS band IV) for uplink like T-Mobile?s does. That makes it "odd" frequency that iPhone 3G doesn't support.

[JRG1392]

MarkAndy your wrong about the iPhone working with T-Mobile I did some research back when it first came out because I was thinking about buying an unlocked one but it won't work with T-Mobile because it needs both the 1700 and 2100 bands, one for upload and the other for download.

[gerrrg]

It's just a guess, but on the low-priced end, I suspect that T-Mobile has competition from Cricket/Leap. The 3G might help a bit, but 3G is much slower than WiMax or LTE. Having just now set up their 3G, by the time they reach a ROI, all the other service providers will have released 4G.

They should have gone onto the bandwagon and adopted WiMax so they could get a deployment out this year and leapfrog AT&T and Verizon in the race to 4G.

[Xirphoid]

I think T-Mobile needs to also focus more on coverage areas, along with the 3G roll out. Add signal damnit.

[jayridius]

They need an IPhone competitor in the worst way. How bout the HTC Touch Diamond or SE Xperia? Come on Tmob. Make it happen

[shiberving]

no, the real problem is T-Mo's horrific customer service. being nice and friendly is only half of customer service. they have this down pretty well. it's the whole "the customer is always right" part that they are 0 for my contract on. I will never recommend them, and never renew. Only 3 more months to go!

[jbhardman]

When will these companies cater to the consumer? Drop all term agreements and give the people an open network. Let's get open network handsets with open networks with open "contracts". I put contracts in quotes because it's not really a contract. It's a terms of services agreement. Let's get this done and people will flock to it! People aren't dumb, they don't like being cornered into something.

[atish505]

Three problems with T-Mobile:

1. No efficient Data service (they are way behind both Verizon, Sprint and AT & T). their Edge network does not work in half the locations.
2. iPhone factor: Lack of good alternative device on their network. Windows Mobile based devices suck and will not hold against iPhone. They need to work with Nokia and Symbian to getan iPhone competitor that will really catch on.
3. Lack of corporate and business presence: They do not really have foot in the business market. Even for small businesses like mine where we need to buy service for 15 users they do not have easy to manage and organize business plans.
4. Coverage: Too many blind spots, patchy coverage. My phone does not work at home in half the places.

[bonesbautista]

I agree on all points by atish505. Especially No. 4 - T-Mobile's coverage in the PNW really stinks, except in the cities and along major highways. Portland and Seattle are pretty hilly, and their business service pales to the two bigger providers - that and too many holes in coverage led me to AT&T for personal and VZ for my business.

[ROPO5]

PROBLEMS:
1. thin National coverage compared with AT&T and Verizon
2. lackluster phone selections. Try Sony Ericsson, Nokia, Samsung cool phones for crying out loud.
3. no GPS
4. late 3G
5. restrictive plans

PLUSes:
1. GSM
2. Bigger cities coverage (NY, Chicago, etc) worse on smaller cities or spread out cities like L.A.
3. GREAT customer service 24/7 on 611

In this case the Negatives OUTWEIGH the Positive

[TV James]

I have AT&T for personal - I wanted the RAZR with iTunes and I do have T-Mobile for my Blackberry.

This is really silly, but I can't get past all the pink.

I haven't had too many service/coverage issues with the Blackberry in Seattle and south King County, but I rarely use it to talk on the phone, mostly just use it for data.

[highmarker]

No surprise. Without 3G and decent phones, the only reason to stay would be pricing, which is T-Mobile's strong point. I've been with them since the VoiceStream days but unless the get that 3G footprint out soon and get something like the Samsung Omnia or one of the HTC Diamond variants, I'll regrettfully be switching carriers. Pricing and customer service only go so far....it's the coverage and phone that you use every day that matters most.

[Xirphoid]

Here's an idea:

Sprint + T-Mobile = Good competition with AT&T / Verizon.

Sprint, better overall network, some cool phones (Samsung iPhone competitor), better business plans, but ****** C/S.

Wow, T-Mobile can sure give them a hand, and vice versa.

[benjaminstraight]

T Mobile just needs to take the plunge and up their game substantially because of their lack of phone offerings.

[AppleSuxLeo]

Most of the people who are ever going to own a phone already have one. So of course they won`t keep adding subscribers at the same rate. These articles are nothing but filler. No wonder Cnet is going down the crapper !

[sgornick]

I dropped T-Mobile last quarter.

After my 2-year contract expired, I was month-to-month and my bill came to 67/month for 1,000 peak minutes, including a texting plan and fees. Most months I used around 300 minutes but every couple months I travel and use 1,200 minutes or so.

With no rollover, I was throwing away about $20 of service each month, and then would see my bill more than double the couple of months I went over.

Metro PCS $40 unlimited should have been the answer but they don't cover enough cities (without getting roaming charges).

So, I went with a plan that has rollover minutes and couldn't be happier (except for the having to do business with AT&T part).