T-Mobile USA faces stiff competition

Correction, 4:03 p.m. PST: This story misstated the day the company announced subscriber figures. It was Thursday.

Competition is heating up in the wireless market and it looks like T-Mobile USA is getting singed.

Deutsche Telekom, which owns the wireless company T-Mobile International and T-Mobile USA, reported earnings on Thursday citing slower subscriber growth for its U.S. wireless entity.

During the fourth quarter, T-Mobile USA, which is the fourth largest wireless operator in the U.S., added 621,000 new customers. This was down from the previous quarter when the company added 670,000 new subscribers. And it was down considerably from a year earlier when it added 951,000 subscribers in the fourth quarter of 2007.

The bulk of new subscribers came from pre-paid accounts, as the total number of customers signing up for contracts slowed compared to previous quarters. In the fourth quarter, T-Mobile USA added 267,000 contract customers, down from 733,000 contract customers a year ago. Even during the third quarter of 2008, the company managed to add 293,000 post-paid customers.

That said, T-Mobile saw an increase in prepaid subscribers as it added 355,000 of these customers in the third quarter, up from 218,000 in the fourth quarter of 2007. It added 377,000 prepaid accounts in the third quarter of 2008.

The strength of the prepaid market could be attributed to the deepening U.S. recession and stronger competition among the nation's largest wireless companies. While consumers are not getting rid of their cell phone service, some subscribers are looking for cheaper alternatives.

Based on results from AT&T and Verizon Wireless, it appears that customers looking for higher-end smartphones are gravitating toward the two biggest carriers rather than T-Mobile, which is often seen as a value player in the market.

T-Mobile has launched its 3G wireless network and it also offers the only Google Android phone on the market, the G1. It also sold the Samsung Behold during the quarter. Smartphone sales helped boost T-Mobile's contract subscriptions, accounting for 40 percent of the devices sold to contract customers in the fourth quarter.

But it appears that smartphone customers looking for a 3G network are going with AT&T and Verizon, which have larger 3G footprints and a wider variety of smartphones.

Denny Strigl, chief operating officer for Verizon, noted on the company's conference call Tuesday that 37 percent of new devices sold during the quarter were smartphones. Verizon added 1.4 million new subscribers during the fourth quarter of 2008. Adding customers from the Alltel merger, Verizon now has more than 80 million wireless customers.

During the fourth quarter, AT&T added 2.1 million new subscribers, including 1.9 million new iPhone users. AT&T now has a total of 77 million wireless subscribers, an increase of 7 million subscribers for the year. The company increased its "postpaid" (as opposed to prepaid) customers by 13.9 percent versus the same quarter last year.

Meanwhile, T-Mobile reported that its churn, or the rate at which customers dump its service, was 2.4 percent in the fourth quarter of 2008, consistent with rates from the previous quarter, but up from 1.8 percent the same quarter a year ago.

Sprint Nextel, the nation's third largest wireless operator, reports earnings next month.

[California_BadBoy_05]

In order for me to consider buying a Zune over an IPod, I want to be able to do something I will coin , "Squirt/Squirting", songs to my friend's Zune. I want to Squirt!

[solu1978]

Wrong place .. i don't see anything about Zune or iPod in the main article

[HlLLARY CLITON]

I've been happy with Verizon though they don't give me as much credit towards a new phone anymore

[8ball629]

My experience with T-Mobile has been a horrible one. For one my phone never has any reception and I live in a highly populated area. Secondly.. this may not be their problem but I've had nothing but bad experiences with the phones I've received from them... A Sidekick LX, Shadow, Nokia 5310 and that being said their phone lineup sucks.

Then of course there is the fact that they aren't supported by Facebook mobile and I suspect the reason has something to do with wanting to charge their customers for an app to access Facebook instead of just haven't direct access like all the other carriers allow.

[JCPayne]

They could always go into the Caribbean market... In many of the islands all you have is Digicel and bMobile....

[gerrrg]

Value is a good thing.

I get unlimited internet access and 1500 minutes a month for $65 on my G1. How can you go wrong with that?

[ewelch]

Guess what T-Mobile. I decided I'd rather than an iPhone than T-Mobile service. Why? Customer service. You treat customers like chattel. Your phone insurance sucks! The cost I paid over two years was more than I paid for the Blackberry to start. And when it broke, you told me it was with a $99 deductible (nowhere mentioned when I signed up). So guess what. I stuck it out with a Blackberry that wouldn't charge for two months so I could get an iPhone the day I could.

There were all sorts of reasons AT&T and the iPhone looked like a better deal. And now that I have that iPhone and paid my second bill, I couldn't be happier.

[seven7dust]

does this mean that the G1 isn't selling well ???
thats a shame considering it's a hell of a lot
better than a blackberry Storm

[nps_ca]

Hmm, numbers I've seen show G1 selling really well (this is from HTC's earnings info), alot of bunk in these posts.

The key thing T-Mobile brought to the US market was exceptionally well priced postpaid service. AT&T, Verizon, etc all had to react. If it wasn't for T-Mobile I'd be paying a lot more for the previous service I had on AT&T (Cingular back then).

In regards to coverage. That is the most subjective comment. I get great 2G and 3G coverage on T-Mobile. Sure I have a few select areas where coverage is bad, but it was no different on AT&T and on Verizon. We have one Verizon phone in our family and the coverage ironically where we live is poor. It's alll based on local and regional issues on why networks have good or bad coverage. To "blanket" one network as good or bad isn't fair. Each network is good or bad in certain areas. ALL of the major networks now have build outs with decent coverage. The old school networks like AT&T and Verizon have NO advantage as their equipment and site upgrades require adjusting the network - older generation microcells in some cases haven't been allowed to be replaced by municipalities. Want good coverage? Lobby your local city council on why they DON'T provide fair access to locations to deploy cell sites. Most carriers are fine co-locating together - but most cities don't even support that.

In regards to T-Mobile customer care? You are joking right? I've had to call them three times (local cell site issues). Contrast that to AT&T/Cingular I had to call 30-50 times to get them to correct INCORRECT billing and date outage issues. On our old Verizon account - we gave up. NEVER once was the bill correct and never once did they ever fix their billing issues on our account.

This from a T-Mobile user who has a Blackberry device and 2 G1's on a family account - WITH FULL 3G coverage (at good speeds - not AT&T 3G speeds) wherever he works and where he lives :)

[iijoanna]

I'm leaving T-Mobile as soon as my contract is up. You should only have to speak to Customer Service once; not twice and definitely not a third time to get simple things worked out. I've always bought cell phones offered through T-Mobile. Once when I could not get a phone to work right, I was told the phone was not supported by T-Mobile (they sold me the phone!) and the attitude of the rep was that she could care less and made more obvious by her gum chewing noises. I had to replace a Razr phone some time later and was told I could have the phone at a "decent" price if I would agree to a one year contract (my currect contract had just ended) - I bought the phone and then I year later I call to end the service with them ... Guess what?! - I was told, no, I could not do that as I still had another year to go! You can bet I will jump ship.

[stigmattaman]

"You should only have to speak to Customer Service once; not twice and definitely not a third time to get simple things worked out."

I wholeheartedly agree, but unfortunately that's not what happens with many carriers. In fact, I can only recall one time when my situation was resolved with one single call (verizon).

[tazphil]

You know, I have been a T-Mobile customer for sometime and I gotta say, they have really improved. Perhaps, maybe you might not get service in some areas but that is every wireless carrier. One thing i know for sure is that T-mobile has such great customer service. I mean there has no been a single time i have had to call twice to get a billing mistake corrected. As a matter of fact, recently, I realized that my monthly cycle started a daily late. I called them when my bill arrived and I for service costing $135 i had to pay $15 dollars. i don't know what people are talking about when they say T-Mobile has bad customer service cos I have had great amazing service and absolutely friendly reps. Compare that to AT&T who deactivited my acccount before the end of month because I decided to drop them. I mean and they refused to re-activate unless I paid, even though i had already paid for the last month of my contract. That was when I knew that I would NEVER use T-mobile, not even if they are the only phone company out there. nps_ca is absolutely right, AT&T by far is the worst at resolving customer issues.

[AppleSuxLeo]

The porn industry has always provided the stiffest competition.