T-Mobile made an interesting statement today in response to AT&T’s recent concession to begin unlocking out-of-contract iPhones (s aapl). It invited AT&T(s t) customers to take their old iPhones to its network where they can feast upon its ultra-cheap voice and data plans.
Of course, if those customers want anything beyond slowpoke EDGE speeds they need to wait for T-Mobile to start its ambitious network overhaul, which will align its HSPA+ networks with the iPhone’s 3G frequency bands. But according to T-Mobile, that might happen sooner than you think. Here’s an excerpt from the statement, which was first reported by 9to5Mac:
… we will continue to deliver more value to customers as we expand and modernize our 4G network. Beginning this year, we will introduce HSPA+ service in our 1900 MHz PCS spectrum. When we do, our 4G network will be compatible with a broader range of devices, including the iPhone.
That’s good news for iPhone owners looking for a new network, but the news gets even better. What T-Mobile didn’t say in its statement is that once its network retooling is complete it won’t just be activating AT&T’s old iPhone cast offs, it will be selling brand spanking new iPhones.
Why T-Mo is important to Apple
As we’ve pointed out on numerous occasions, T-Mobile’s lack of iPhone love from Apple isn’t a deliberate snub. Rather, the issues are incompatible technologies and cold hard economics. Apple will give the iPhone to any carrier with a compatible network willing to pony up the dough. Tim Cook isn’t stupid. T-Mobile has more than 33 million customers. For Apple to not want to do business with T-Mobile would be like saying it doesn’t want to sell iPhones to Canadians. Once the network frequency barrier is removed, Apple will jump at the chance to get the iconic device in T-Mobile’s hands.
By the time T-Mobile completes its network overhaul in 2013, its networks won’t just be in perfect harmony with current iPhone. It will be able to handle any new version as well, including the new LTE iPhone expected to emerge this fall. It’s just a question of timing. To build LTE, T-Mo needs to first shut down a good deal of its GSM network at PCS, filling in the holes with new HSPA+ networks. That first step is what T-Mobile is getting at when it says its network will be iPhone compatible this year. The big question is whether its whole footprint will get converted this year or only segments of it.
The next step is shutting down portions of its HSPA+ network in the Advanced Wireless Services (AWS) , or 1700/2100 MHz, band and then building LTE in its place. Once that final step is complete, T-Mobile’s network will look just like AT&T’s to any Apple gadget.
T-Mobile will probably miss out on the biggest benefits of the coming 4G iPhone launch as its LTE network won’t be ready. But if it has enough of its HSPA+ network built out at PCS at the time, it could easily sell the 4G smartphone as an HSPA+ device. There’s plenty of precedent: Apple is selling the new 4G iPad internationally even though it doesn’t support a single LTE network outside of the U.S. or Canada. At the very least, Apple would make the iPhone 4 and 4S available to T-Mobile.
T-Mobile makes bank either way
T-Mobile can’t really lose once its new networks come online. Even without 3G support, T-Mobile admits to hosting more than 1 million unlocked iPhones on its network (though I suspect most of them are hacked, not officially unlocked).
Once HSPA+ is available, plenty more AT&T customers may be lured over to T-Mo by its cheaper data plans, and those that aren’t tempted could sell their newly unlocked iPhones to customers that are. T-Mobile is the only major operator that offers lower monthly rates to customers who bring their own devices rather than opt for subsidized phones. And those savings are considerable: $10 for 2 GB compared to $20 for just 300 MB from AT&T.
And when T-Mobile does become an official iPhone seller it can compound its gains. It would subsidize new iPhones and charge premium “classic” rates for voice and data, but those rates still undercut those of the two big operators. Sprint’s unlimited plans would be its major competition. Basically T-Mobile has the opportunity here to become not only the fourth nationwide purveyor of Apple smartphones, but also the destination carrier for iPhones on their second life.