T-Mobile gets aggressive in U.S. mobile market

Executives from T-Mobile USA and the company's parent company Deutsche Telekom say that 2011 is the year that T-Mobile makes a turnaround.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
4 min read

NEW YORK--T-Mobile USA and its parent company Deutsche Telekom are getting more aggressive in the U.S. mobile market, top executives at the companies said at an investor conference here today.

T-Mobile USA CEO Philipp Humm

Rene Obermann, CEO of Deutsche Telekom, T-Mobile's parent company, said he expects the carrier to make a turnaround this year and to generate $3 billion in revenue by 2014. He also expects T-Mobile to reduce its churn, or the rate at which it loses customers, to roughly 2 percent this year and below 1.8 percent by 2012.

T-Mobile USA's new CEO Philipp Humm, who took control of the U.S. operator in 2010, has already launched an aggressive advertising campaign to rebrand the company's network as the biggest and fastest 4G network in the U.S.

"2011 is an inflection point where T-Mobile will grow again," Humm said during a presentation "We will be getting back our roots as a challenger."

Fundamental to T-Mobile's aggressive strategy is its faster wireless network, which it began calling 4G this summer. Humm admitted the company came to the 3G party late in the U.S. but he said the company has made up for it with the deployment of new HSPA+ technology.

Deutsche Telekom Group CEO Rene Obermann

With more than 200 million customers able to get the HSPA+ service, he said that the company has the largest and fastest 4G networks on the market. He also said that T-Mobile will continue to upgrade its network to get even faster speeds out of its HSPA+ technology. It has already announced plans to reach maximum theoretical download speeds of 42 megabits per second by the end of the year. And it will push even further in 2012 promising theoretical speeds of up to 84Mbps.

Humm also said that company plans to release 25 new smartphones this year that will work on its enhanced HSPA+ network, including the Google Android Samsung Vibrant 4G and a 4G version of the popular Sidekick, which will also run the Android operating system. Humm said 39 percent of its customers are already using smartphones. And that 50 percent of customers that are upgrading today are buying smartphones.

"We are the 4G market leader," he said. "And we will communicate that we have such a great network to consumers."

As part of its aggressive 4G marketing campaign, the company showed off a new TV ad that takes shots at the upcoming Verizon iPhone. T-Mobile and other carriers suffered significant customer losses when the first iPhone was introduced on AT&T's network in 2007. And all wireless companies other than AT&T, which has had the exclusive contract to offer the iPhone in the U.S., have suffered what they've called the "iPhone effect," losing some customers every time a new iPhone is introduced.

The ad that T-Mobile plans to air points out that the Verizon iPhone is on Verizon's slower 3G network rather than on its speedier 4G LTE network.

Humm said during a question and answer portion of a press conference that T-Mobile would like to carry the iPhone, but that Apple is the one that ultimately will decide. He said that the current version of the GSM version of the phone, which operates on AT&T and other worldwide carriers does not include the spectrum frequency that T-Mobile uses for its 3G and 4G networks.

Humm said that T-Mobile will continue to push the limit further on pricing, offering more smartphones under $100. The strategy is to make smartphones and the services more affordable for Americans, Humm said.

"Our mission is to make the latest services and devices affordable and easy for everybody," he said during a presentation. "That's why we have entry-level data plans that start at $10."

The executives also addressed T-Mobile's spectrum position. Humm and Deutsche Telekom CEO Rene Obermann said that the company has 54MHz of spectrum in its core markets, which is sufficient for growth today. But the company will need more spectrum for growth in the future. To help fund the purchase or partnership for more spectrum, Obermann said that T-Mobile USA will sell "non-core assets," such as wireless towers. Obermann did not provide specifics on when this would happen or how much money he expects it will raise. He simply said that the amount would be significant and the company is in no hurry to sell assets.

T-Mobile is the fourth-largest cell phone carrier in the U.S. behind Verizon Wireless, AT&T, and Sprint Nextel. Humm admitted that the company has been squeezed by lower-cost regional players, such as Leap Wireless and MetroPCS, in the prepaid market. And the company was unable to keep up with its larger competitors in deployment of 3G. But now he said that T-Mobile's strategy to aggressively push HSPA+ to its limits will help differentiate the company, as it also improves customer service and keeps pricing competitive.

The company has been rumored for years to be in merger talks with Sprint Nextel, its next closest in size U.S. operator. Obermann would not answer specific questions about a merger, but he said the company is willing to partner with other companies on a number of levels.

"I've answered the question about a merger often," he said "I can't comment. But we are looking into all various options to enhance our spectrum position and to improve scale."