Blog Post

T-Mobile Loses Customers, Hopes Its 3.5G Bet Pays Off

T-Mobile today released first-quarter financial results that show a loss of both prepaid and post-paid customers, but also made clear that those who did remain with the network are increasingly using high-speed mobile broadband handsets — a key use case that T-Mobile hopes will pay off down the line.

The carrier reports 33.7 million current customers, down slightly from 33.8 million in the the last quarter of 2009. But subscriber count isn’t the game T-Mobile is playing right now. Instead, the high-stakes poker match is one of network expansion and T-Mobile is going all-in with a faster data network.

While other U.S. carriers are looking to 4G networks like LTE and WiMAX, T-Mobile’s relatively limited spectrum has the company maturing its current 3G HSPA network to one of 3.5G HSPA+. The faster data network is already available in New York City, New Jersey, Long Island, suburban Washington, D.C. and Philadelphia — see my hands-on with the 3.5G in Philadelphia — and T-Mobile plans to expand the speedier coverage to 100 metropolitan areas and 185 million people by the end of 2010. While more spectrum would allow for options beyond 3.5G, Cole Brodman, T-Mobile’s CTO, recently told us in a GigaOM interview that he believes the wireless portfolio will keep the company “competitive in the near and medium term — for the next couple of years.” Indeed, the theoretical speeds of HSPA+ are greater than 80 Mbps — T-Mobile’s current rollout supports 21 Mbps and I’ve witnessed real-world speeds approaching 10 Mbps.

With the expansion of its faster data network, T-Mobile is walking a fine line in 2010. Having launched a 3G network in September 2008, the company needs to quickly execute the 3.5G rollout so as not to lose additional customers. If T-Mobile can add existing or new ones to its faster wireless broadband platform, it can raise blended ARPU — which was down to $46 from $48 in the prior year.

Related content from GigaOM Pro (sub req’d):

Metered Mobile Data is Coming and Here’s How

Everybody Hertz: The Looming Spectrum Crisis

10 Responses to “T-Mobile Loses Customers, Hopes Its 3.5G Bet Pays Off”

  1. Once again we’re getting a lot of buzz about speed while how much gets the short shift. So does this mean in the future you can reach your monthly cap in seconds instead of minutes?

    • For smart phones, there is no limit, although T-Mo reserves the the right to reduce throughput for excessive use. Unless you’re tethering the phone on a regular basis as the primary web connection for laptops and such, I think most people would be fine.

      For laptop connect cards, there is a 5GB monthly cap, but there are no overages after that. Instead, your throughput speeds may be reduced. Hope that helps.

    • Indeed it does, but not at the full capability of the network. At the end of my hands on video, I test HSPA+ speeds using my Nexus One:

      The reason the Nexus One can’t take full advantage of 21 Mbps HSPA+ speeds is due to the radio – it’s only capable of 7.2 Mbps. However, I saw speeds that were 2 to 3 times faster over the standard 3G, or HSPA, network. And bear in mind: most of T-Mobile’s 3G phones since the release of the G1 use a 7.2 Mbps radio, so they’ll all see a speed bump on the HSPA+ network.

      • onecallednick

        If T-Mo took its 3.5G and created a unified 3g wireless plan like telefonica in Spain, we’d have a serious reason to switch.
        As more and more mobile devices of varying shapes and sizes go live, it’s a major hindrance to have to pay per device.
        I appreciate T-Mobile breaking out of the contract game with even More Plus. Now I’d say it’s time to quit nickel-and-diming us on a per-device basis.
        Here’s a good link to an article explaining how it should be:

      • I love the multi-micro SIM approach that Telefonica is offering – pay one price and use the plan with two different devices. Unfortunately, I don’t see that happening in the U.S. any time soon – if ever. :(

        Sometimes, I wonder if it’s worth canceling all of my device data plans and just buying extra batteries for my MiFi to share the one plan across everything. Not practical of course, but still…

  2. With the recent price drops from Verizon and AT&T, Verizon’s adoption of some hot phones and T-Mobile’s inferior footprint, life must be getting pretty tough for T-Mobile.

    • Yup, I think T-Mo still has the most compelling pricing, but not by much based on the recent price drops. I had plans with all 4 U.S. carriers up until a few months ago and dropped all but T-Mo. Getting unlimited everything for $79 a month — without a handset subsidy. And you’re spot on with the footprint – had T-Mo not recently upgraded my local area with 3G, I don’t think I’d be using a Nexus One.

      The question now is: will HSPA+ in that limited footprint pay off?