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Summary:

T-Mobile is making changes to help redefine itself amidst tough competition above from three larger carriers in the U.S. and below from national prepaid providers and smaller regional carriers. It’s not the Saks of cellular, but not a Sears either. So who, then, is T-Mobile?

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T-Mobile is making changes that could help redefine itself, amidst tough competition above from three larger carriers in the U.S. and below from national prepaid providers and smaller regional carriers. Some of the repositioning takes place next week with new prepaid handset and mobile broadband plans, and yesterday, the company shifted its stance on 3G data caps, reiterating a policy first announced in April of this year. Customers using more than 5 GB of data in a given month won’t pay overages, but will see data speeds reduced after the 5 GB limit is reached. With such changes and challengers in a competitive market, where exactly does the fourth-largest carrier fit in?

Above T-Mobile, the “Saks Fifth Avenue” type of carriers are clearly Verizon and AT&T. The two largest U.S. carriers account for more than 180 million mobile subscribers. Both offer far greater coverage area than T-Mobile, and since a cellular device is only as good as the network coverage allows, both carriers can command a price premium for their services. On the other hand, where T-Mobile does have coverage, it offers comparable or better service. With its rollout of a 21 Mbps HSPA+ this year, T-Mobile typically offers faster mobile broadband speeds than either Verizon or AT&T currently provide, although few handsets can take full advantage of such speeds. Of course, the competitors are stepping it up: Verizon is launching LTE service in over 38 markets this year, and in 2011, AT&T will start offering its own LTE service.

With 48.2 million subscribers, Sprint, too, is larger than T-Mobile, but chunks of the CDMA carrier’s subscriber base are made up of prepaid brands owned by Sprint as well as wholesale customers. Boost Mobile and Virgin Mobile, for example each resell Sprint services, and along with Assurance Wireless and Common Sense Mobile help add more than 11.2 million prepaid customers to the Sprint network. This mashup of prepaid and post-paid customers is akin to a nationwide convenience store chain, allowing Sprint to match up different customer types among many plans while balancing demand on its network. T-Mobile doesn’t have the luxury of strong prepaid branding, but does reward no-contract customers like myself; my monthly bill would be $20 higher if I had purchased a subsidized phone from T-Mobile, for example.

A number of smaller regional carriers follow T-Mobile’s 33.6 million subscriber count. Companies such as MetroPCS, U.S. Cellular, and Cincinnati Bell Wireless, which have roughly 23 million customers combined, come to mind. These are akin to “Sears:” plenty of aisles stocked with everyday needs and all at prices people can afford. You won’t see a vast array of smartphones on these shelves, because such devices are expensive and are best used on 3G networks. When you do see a smartphone here, it was likely already offered by the bigger players 6 to 12 months ago and isn’t the latest and greatest.

So where does that leave T-Mobile? I’d line it up as the “Target” of the U.S. cellular industry: walking the finest of lines between inexpensive everyday goods with some premium products while trying to offer value at the same time. It’s not the biggest carrier in terms of geographical coverage, but it does tout a cellular signal for 293 million Americans. Although it was late to the 3G game by being the last of the four major carriers to offer 3G data services, it now offers the fastest 3G speeds in areas with HSPA+ coverage. The data network is slightly less restrictive by comparison; instead of limited data buckets like AT&T offers or hard-capped limits like Verizon uses, T-Mobile allows for no-cost data overages. Lastly, T-Mobile has no prepaid brand to speak of, but new prepaid plans show that it can compete with the Virgin Mobiles of the world.

In a market where competitors appear focused on brand perception, T-Mobile is quietly combating everyone with pragmatic strategies appealing to the widest variety of consumers. Will such a war on fronts pay off, or might the no. 4 carrier in the U.S. be better suited to bunker down with one main focus? Given that it has neither sub-brands nor an inexpensive way to boost its coverage areas, the Target approach may be the best: good service at reasonable prices and the ability to turn on a dime.

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  1. Kevin, love the development of the retail theme but, for a lot of reasons, “high end call girl” is probably a better metaphor than Saks for Verizon and AT&T.

    1. Or Crate and Barrel.

      Because ATT drops calls, and Verizon’s data currently leaves a lot to be desired. They command a premium on coverage alone.

      The “premium” brands are successful for sure, but not because they’re great at everything they do.

    2. Appreciate the thought and while you may be right, I don’t follow the “high end call girl” market, so I can’t comment. ;)

  2. I’ve been using T-mobile after moving from AT&T and I must say the service is a lot better. Plus, not having to pay extra when not on contract is clearly a win. All in all, my family and I are paying half of what we shelled out to AT&T.

  3. T-Mobile just recently started to offer data on it’s prepaid lines. It will allow more people who prefer prepaid to take advantage of it at rates better than AT&T. International travelers and others with part-time usage.

    I’m sure with the pentaband 3G phones that are coming people can switch from AT&T without a loss in data speed on their phones…perhaps even with an increase in speed. They have wifi calling and UMA on some phones at no extra cost so coverage not as much of an issue and internationally it also can be much cheaper. But they will have to promote themselves as that…the best value.

  4. If TMO offered a MiFi device that ran on their faster 21Mbps network, they could sure differentiate themselves from Virgin Mobile. TMO’s usage caps, however, still sucks!

  5. T-Mobile is fine until it’s not. Every time I travel I lose coverage. Duck, NC – lose coverage. VA Beach, lose coverage. Mount Vernon in Alexandria, VA – lose coverage. At office in San Jose, lose coverage. All no signal situations.

    Basically you’re fine until you slip into one of their no coverage areas – and there are a lot of them.

    With that said, they offer unlimited domestic calling over wifi (UMA) for $10/month. This allowed me to keep the calling plan affordable – I have a blackberry with the cheapest (600 minute) plan, most of the time I am calling from next to a router. I typically use 1500min UMA and less than 100 actual minutes a month.

  6. T-Mobile’s customer service is generally very good, and their prices are lower than sleazy Verizon and AT&T.

    Coverage is rough, though, and their HSPA+ service seems to be way short of advertised speeds and areas.

    RE data maximums – T-Mobile currently gives their customers no way to know when they are approaching the dreaded limits. Sure, you can see a highly detailed log of data pulls, but nowhere (not on their Android app, not on the customer account section of their website) can you find a total for the current billing period. They should fix this if they plan to keep screwing down the data cap (from really unlimited, to 10GB before throttling, to the current 5GB-before-throttling limit, to…. yeah, there will be a next drop).

    1. Carriers need to learn that people don’t want to count geebee’s. Screwing people with overage charges may win them revenue in the short term, but it will also hit them in the long-term when they realize the money they have lost by failing to offer what the customer really wants. Kind of ironic when it comes to voice minutes, they seem to have learned from that same mistake.

  7. Paul I am confused by your comment about no way to know how much data you are using. While the Android app doesn’t have the data, their my.t-mobile website tells you data usage. Login and click on ‘Monitor Usage’ On this page click on data tab. It will tell you how much you have used. While the detail log follows they use a nice graph bar to show usage along with a numeric usage in Megabytes. Pretty straight forward. This site is also available via android and means you can check it anytime you want.

    Android does allow you to see how much data is being consumed, there are also some great apps that tell you this information as well.

  8. Given the retail theme of the article I am surprised that there was no mention of T-Mobile’s MVNO deal with Walmart!

  9. T-Mobile Getting Scrappy, Calling Out iPhone 4 | TmoNews – Unofficial T-Mobile Blog – News, Videos, Articles and more Saturday, October 16, 2010

    [...] to showcase the strength of their devices versus that of the competition. Just days after a GigaOM article caught my eye discussing how T-Mobile wants to be the “target” of carriers (which also happens [...]

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