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Memo to T-Mobile’s future CEO: Don’t change a thing

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Philipp Humm is out at T-Mobile, and we don’t know why. Maybe he really was planning to leave all along, as he claimed in an internal memo. Maybe he’s being forced out by parent company Deutsche Telekom for the failure of the AT&T-Mo merger. Or maybe he was brought on board in 2010 for the sole reason of selling the U.S. subsidiary and now that a sale is longer feasible, he’s moving on to the next project.

Whatever the reason, the move is sudden, and T-Mobile finds itself looking for a new chief executive. We have some unsolicited advice for whomever that replacement will be, as well as acting CEO Jim Ailing: Don’t mess with Humm’s work.

T-Mobile may be suffering at the hands of its much larger rivals Verizon Wireless(s vz)(s vod) and AT&T(s t), but the last thing T-Mobile needs right now is the strategy shake up that a new CEO invariably brings. After the failed merger with AT&T, Humm and his team put together a solid plan to become a competitive force in the market. Here are the reasons why we think T-Mo is on the right track:

  • It has the most competitively priced data voice and data plans in the market. It may not have true unlimited data like Sprint(s s), but it has a lot more options for cheap and plentiful smartphone bandwidth. It’s also challenging the long ingrained subsidy model in the U.S., offering customers lower rates if they pay for their devices up front. As our data consumption continues to grow, those innovative pricing policies will become a key differentiator from Ma Bell and Big Red.
  • That future LTE network may not be as big nor as robust as its competitors, but T-Mobile is taking all the necessary steps to ensure it will become one. It wrenched the spectrum it needed from AT&T to complete its LTE network on the West Coast, and it negotiated a very shrewd pact with Verizon for the airwaves its needs on the East Coast. That deal may have been cynical, given its condemnation of Verizon in the recent past, but T-Mobile is a business. If T-Mobile is going to compete with the big operators it will need to make the same Machiavellian choices as the big operators.
  • T-Mobile is set to get the iPhone(s aapl). The same network reconfiguration that will give it LTE will also plant its HSPA+ network in the terra firma of the PCS band. That means any iPhone that works on AT&T’s network will work on T-Mobile. As I have written before, Apple isn’t stupid. When T-Mobile is iPhone-ready, Apple will jump at the chance to offer it on its network.
  • Instead of fighting off the growing cadre of mobile virtual network operators (MVNOs), T-Mobile has started to embrace them. Last year T-Mobile opened its data networks to the resellers, and since then Straight Talk, Simple Mobile, GSM Nation and many others have all signed up, giving T-Mobile a lucrative source of revenue.

Wireless industry analyst Chetan Sharma believes T-Mobile is still weak when it comes to selling to businesses and vertical industries like health care. Sharma also thinks it needs to come up with more services like its Bobsled VoIP calling service in order to fend off the growing threat of over-the-top service providers. But for the most part, T-Mobile is on the right track, Sharma told me in an email:

T-Mobile has done a pretty good job on the network front under the leadership of Neville Ray. They upgraded their backhaul to Fiber and moved rapidly on HSPA+. Even the LTE deal was put together in record time. Normally, these things can take many quarters. Their marketing is always edgy. They put the top 3 operators on the back foot with their 4G marketing (rightly or wrongly). They are clearly positioned well to be a good value competitor. At this point, addition of iPhone is not going to tilt the scales too favorably. It is useful to prevent churn but expect no significant defections.

Of course, as Sharma implies, this wasn’t all Humm’s doing. Humm ran the company, but the groundwork for many of these initiatives was laid before he arrived in May 2010. As David Beren of TMoNews suggested on Twitter, T-Mobile may have accomplished what it has despite Humm’s presence:

I believe he was brought in to prep the company for sale, which left the company distracted from strategies that should have launched a long time ago . . . [While] the “challenger strategy” is great, [it] should have happened 18 months ago.

Regardless of whether T-Mobile’s current aggressive strategy is Humm’s legacy or the work of his team, we think it’s a good plan. T-Mobile’s next CEO should give it a chance to work.

Photo courtesy of Shutterstock user Shawn Hempel

14 Responses to “Memo to T-Mobile’s future CEO: Don’t change a thing”

  1. Based on my experience, T-Mobile has a long way to go to match VZW on customer service. Calls to customer service reps seem to go through a bad VOIP connection to a foreign call center and multiple calls on the same issue generate multiple (different) responses. Being the low price leader doesn’t guarantee customers. Reliability, responsiveness, correct billing, accurate portrayals of service, coverage are all more crucial. T-Mobile is embracing the MVNO challenge but so are the others, especially VZW. I have moved from VZW in favor of a month-to-month plan with T-Mobile but it wasn’t easy, just cheap. I hope T-Mobile makes it, but there is still much to do to close any but the pricing gap. That and they should get rid of the pink!

    • lolamarya

      The bad thing is that T-Mo used to have exceptional customer service. Now, I get directed to an app on my phone sometimes before I can get through to 611, then when I get there, I have to say the right thing to get to a person or it hangs up on me. I HATE calling them now. They need to go back to how things were in the early 2000’s.

  2. Eric Kainer

    While I broadly agree with Kevin’s sentiments, I have to correct a common misperception: T-Mobile has vastly more spectrum, as adjusted for the size of its subscriber base, than any of its nationwide rivals. Let’s look at the numbers.

    When we account for VZW/CableCo/Cox at the end of 2011, VZW has 33.5m MHz-POPs and 108m subs; AT&T 30.7m and 101m; Sprint (ex-Clearwire) 16.7m and 53m; and T-Mobile 18m and 34m. Dividing this through, we find that Verizon has 3.22 subscribers per MHz-POP, with AT&T at 3.28, Sprint at 3.19, and T-Mobile at just 1.88.

    While this does not account for the efficiency (bits / Hz) of the protocols on the spectrum, T-Mobile clearly has much greater raw spectral capacity for its subscribers than the other 3 nationwide operators. This has important implications for pricing, service creation, and strategic planning.

    In the same way that Coach Wooden “couldn’t teach height”, mobile operators can’t create spectrum. T-Mobile is the company to watch.

    • Kevin Fitchard

      You make a very good point, Eric.

      You’re right T-Mobile has a fraction of subscribers so it only needs the same fraction of spectrum to support them — all things being equal. But as you hint at, there are some engineering and operational realities. It needs to deploy HSPA+ and LTE in 5×5 MHz carriers, it just can’t cut them in half. And it has sunken investments in older technologies. It also needs to support legacy handsets.

      But you’re definitely right. T-Mobile is able to pursue this big network reconfiguration precisely because it has the potential capacity in its airwaves due to its smaller subscriber base. Once it reconfigures it will be able to unlock that potential, giving it a significant advantage.

  3. winski

    Neville Ray should actually get the job!!!

    But if you’re only trying to maintain the same level of average you have today with Humm, hire a monkey ….

    • I am a bit apprehensive about Ray as CEO. TMo needs his resourcefulness and skill to remain focused on the the spectrum budget, and how to get/ keep the network ahead of the curve. Neville would make a killer CEO, but TMo needs an epic player to help guide it to the top of the food chain.
      -See my suggestion above.

      Kevin, great article.

  4. I agree with the article. I have been with T-Mo for 10 years for personal phone/ blackberry. Wife has reluctantly switched to ATT in order to get an iPhone and I have also had Sprint and Verizon at different times for corporate phone. T-Mo responsiveness and service is best. But they do badly need to get the iPhone. Their own devices like myTouch don’t hold a candle to iphone.

  5. “and now that a sale is longer feasible, ” Really?

    Today I had a ‘chat’ with a T-Mobile person about my inability to print a PDF of my monthly statement (paperless only). I was told that my password was incorrect. They need to hire sharper people in customer service or in programming.

    T-Mobile should have been able to provide service to straight iPhone customers long ago. In metro Atlanta, I am unable to get adequate service on T-Mobile. These are problems that need to be addressed.

    • Kevin Fitchard

      I don’t understand, Don. T-Mobile doesn’t officially support the iPhone yet. It’s 3G radios simply don’t work on T-Mobile’s bands. You’ll have to wait six months to a year, but that support will happen.

      As for a sale, who’s gonna buy it? The FCC and DOJ have pretty much said they’re not going to allow a Tier 1 to buy another TIer 1. Unless future president Romney is going to radically change policy (and gets the chance to overhaul the FCC membership), there’s not a snowball’s chance in hell T-Mobile gets bought by a U.S. carrier.