T-Mobile USA President and CEO Robert Dotson will leave the nation’s fourth-largest carrier as of May 2011 and will be replaced by Philipp Humm, who was the former CEO of T-Mobile Deutschland. Dotson has been at the helm of T-Mobile USA, which is owned by Deutsche Telekom, for the last 15 years. However, as the mobile market shifts to higher-powered devices that consume a lot of data, T-Mobile has faltered with late network upgrades and a recent quarter that showed off weakness in its once-strong prepaid offering.
Humm will take over as CEO of T-Mobile USA in February 2011, while Dotson will remain on as a non-executive board member until May of that year. But as the mobile market in the U.S. deals with the fact that most Americans already own a cell phone and that growth now has to come from machine-to-machine services and stealing customers away from the competition, things could get rough. As the new head of the smallest player in the space, here are a few things Humm will need to keep an eye on:
Transition to LTE: T-Mobile may say its rollout of HSPA+ technology across its network will offer “4G speeds,” and for the next two years or so it might, but T-Mobile can’t rest on smartphones during that time without preparing for the delivery of data. LTE is a key component of such delivery, as it not only has the potential for faster speeds but is a more efficient user of spectrum, which means it will boost T-Mobile’s capacity.
Spectrum: T-Mobile USA’s spectrum holdings limit where it can expand and how much capacity it will have for tomorrow’s bandwidth-sucking applications. The availability of 60 MHz of AWS spectrum, which will be auctioned off next year, would help, as would a deal with another player like Clearwire, which may be shopping its spectrum around.
Prepaid: T-Mobile had its lunch handed to it during the first quarter, when its prepaid net adds drop by 92 percent. More competitors are entering the prepaid market and prices are falling rapidly as those providers compete for market share. T-Mobile either has to cut costs to the bone so it can offer rock-bottom prices or differentiate (GigaOM Pro sub req’d) so subscribers will pay more for its service.
M2M: AT&T, Verizon, and even Sprint have efforts to sell their underlying network capacity to makers of gadgets and appliances. T-Mobile is no exception, although it has been quieter than the others. However, it has an agreement with Echelon to supply network capacity for smart grid services, and has also offered up its network for other devices, but it’s smaller coverage area makes it a hard sell.
So as Humm takes over T-Mobile USA the problems of stalled growth and a saturated market may be familiar to him from his time running the T-Mobile cellular network in Germany. But he will have his work cut out for him.