T-Mobile's rebrand: will it move the wireless needle?

T-Mobile's rebrand: will it move the wireless needle?

Summary: T-Mobile's new advertising campaign touts the speed of the wireless carrier's network. It's going to need a lot more than that to siphon customers from Verizon, AT&T and Sprint.

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TOPICS: Mobility, Wi-Fi
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This morning, I read a nice little article in Ad Age about T-Mobile and its efforts to rebrand, reassert itself and re-take the U.S. wireless market.

And I couldn't help but think: there's no way this is going to work.

A bit of background first. Smarting (celebrating?) after the AT&T's failed bid to acquire the company, T-Mobile is, like a spurned lover, moving to dust itself off and return to fight another day.

To do so, the No. 4 U.S. carrier is turning its latest batch of ad spots -- pink, white and all-around cheery, thanks to Carly Foulkes' cute-as-a-button turn as the "T-Mobile girl" -- dark. The new spots replace the white with black, the A-line skirts with leather jackets and the girl-next-door smile with an I'll-leave-you-in-my-dust scowl that says, "The only pink I see around here is the embarrassment in your flushed cheeks, kiddo."

True, there's no denying the age-old adolescent male appeal of a model in skin-tight biker leathers. But the campaign -- which will appear nationwide on TV and in print -- smacks of self-reassurance. Consumers don't need another look for T-Mobile; T-Mobile does.

Make no mistake; a change in a recognizable ad campaign will certainly get consumers to notice. But T-Mobile's problem was never storytelling. It was closing the sale.

FINDING THE RIGHT TALE TO TELL

The new campaign's motorcycle imagery intends to equate T-Mobile with "fast," a.k.a. 4G. T-Mobile wants you to know that it's spending $1.4 billion on next-generation wireless infrastructure. But I don't think any consumers care. Speed is a story carriers want to tell, but consumers don't want to hear.

I left T-Mobile for AT&T last year, upon upgrading to an iPhone. Speed had nothing to do with it; both networks were sufficient for me. (And in fact, AT&T a step down only because I'm in New York, land of still-balky connections.) Coverage for both was sufficient for me. Customer service for both was sufficient for me. AT&T was demonstrably more expensive. But it had the iPhone.

This isn't about Apple; this is about seeing things from the consumer's point of view. Consumers have three primary interests: the phone, the coverage and the price. T-Mobile has been losing customers -- me, among the 802,000 it lost in 4Q11 -- because it doesn't have the hardware that many consumers want. It's not customer service. It's not good girl-versus-bad girl. Surprisingly, it's not even the price. And it's definitely not network speed.

FINDING LEVERAGE

Part of T-Mobile's frustration, rightly justified, is that it continues to offer hardware that's no better or worse than the best on the market. Android phones? Check. 4G? You got it. Still, the offerings fail to draw consumers' attention.

Why? That's a difficult question to answer. Quarterly reports on U.S. market share for mobile devices show that, iPhone aside, most consumers are keen to preserve the status quo and stay with their carriers, just upgrade to a different phone. (Note: don't confuse that with loyalty. This isn't a matter of affinity.) T-Mobile's problem is that most of those people have historically been its rivals' customers.

In other words, T-Mobile has been mostly successful in keeping up with its rivals -- but it's never quite gotten ahead of the pack for long enough to sap customers from them. And so it's stuck in gear: T-Mobile may get the most advanced smartphone for a couple of months, but with customers locked into contracts, few see the need to jump. Their carrier will have something by the time they need to re-up.

It's clear that T-Mobile needs to offer something so ahead-of-the-game that consumers can't help but switch. Which would take the appetite to agree to an enormously lopsided deal with a hardware manufacturer -- much like AT&T and Apple in 2007 -- and may no longer be possible, given the cutthroat nature of the rapidly maturing smartphone market as a whole.

(Perversely, you've got to feel for the company: it offers infrastructure, not hardware. It is, by definition, a middleman. And it's getting squeezed on both sides.)

AD SUCCESS: AWARENESS, OR ACCOUNTS?

T-Mobile's new ad campaign will get consumers' attention because of its novelty, ubiquity and clarity of message. But I'll wager that message won't be enough, and will fail to spur consumers to open their wallets to the company unless T-Mobile's actual offerings change. That could be an iPhone; that could be something else. Whatever it is, it's got to be what consumers wan -- and there needs to be enough leverage over rivals, for a long enough duration, to get consumers to defect.

Oddly, T-Mobile's current ad campaign -- the pink, cheery one by Seattle's Publicis -- has done a great job putting a face on the company, but not a phone in consumers' pockets. We remember T-Mobile's ad spots and forget AT&T's, Verizon's and Sprint's -- yet we remember the phones those carriers offer, and forget those offered by T-Mobile. In succeeding to brand the company, T-Mobile has failed at branding its hardware lineup. Which from T-Mobile's point of view makes sense: why would it spend money to give its partners all the glory? Alas, here we are.

It certainly hasn't helped that T-Mobile has courted the price-sensitive consumer. Usually that's a sound business strategy, risky only because the lowest price wins, turning the market into a race to the bottom, with ever-thinning margins on commoditized products. (See exhibit A: Windows-based laptops.) But the mobile market has been a different beast: much like with cable television or electricity, consumers have demonstrated that they're willing to pay premiums for service, even when the product offerings from rivals are largely the same and priced more competitively. The status quo is a powerful thing.

NEXT STEPS

What should T-Mobile do? It will certainly proceed with this ad campaign, but without the most popular handset, the iPhone -- which would at least bring it in line with its rival carriers -- it will continue to bleed customers. A competitive product lineup will only stem the bleeding and keep current customers happy; it won't be a source of growth. (To wit: if T-Mobile offered an iPhone tomorrow, would I go back? Probably not, short of a major price difference -- I'm already entrenched with AT&T, at least for the remainder of my two-year contract.)

If Deutsche Telekom really wants to play ball in America, it's going to have to tilt the market (and sustain it) in such a way that consumers -- at least the millions in urban areas that T-Mobile serve best -- would be dumb not to switch. It's going to take a combination of price, hardware and pink steel cojones -- the kind of market-undercutting suicide gamble that would push the company to the brink in the short-term but set it up for success in two to three years.

With billions in the bank and additional spectrum from AT&T's failed bid, now is T-Mobile's chance to get truly aggressive: make the kind of deals with OEMs its profit-protecting rivals will not; offer prices that consumers can't refuse; and acquire some smaller players to replenish the ranks.

And perhaps hire Steven Tyler. "Yeah pink, it's like red but not quite..."

Topics: Mobility, Wi-Fi

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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11 comments
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  • Agreed

    I don't think I could tell you the name of a single T-Mobile phone that's worth paying attention to (Sidekick? Do they still do that?). And I write about this stuff.
    Ricardo Bilton
    • They do have the Samsung Galaxy S II...

      ...but they certainly haven't rallied attention around it.
      andrew.nusca
    • Which tells me

      you are only interested in a top-of-the-line product. I would imagine most of T-Mobile's customers are looking for value rather than power, and I think their lineup offers plenty of value while still offering good smart phones on their fast network.

      I think their biggest issue is coverage. On the East Coast that's not so much a problem, but everywhere else it's spotty. Since I rarely leave the East Coast, that's not a problem for me, but I can understand that being a problem for others.
      Michael Kelly
      • But does T-Mobile offer enough value relative to MetroPCS and Leap Wireless?

        That's the other problem.
        andrew.nusca
      • Indeed

        And that, sir, is the problem.

        They shouldn't be targeting only budget customers!!
        zeth06
  • Play to their strengths: customer service

    1.) a "you pick two" situation: phone down payment, monthly payment, contract duration. Let the customer pick two in order to best suit their needs. Galaxy S2 with $50 down and $50 a month for a kitchen sink 4G data plan? If you're willing to stay for 3 years, awesome! $350 down and $80 a month? You can swap in six months. ETFs are prorated on a monthly basis.

    2.) Where coverage sucks, provide femocells.

    3.) market the heck out of "no data overages, ever".

    4.) Give the CSR's as much power to help customers and give them what they want as possible.

    5.) Wi-Fi calling takes half the cell minutes.

    6.) If a call drops, it's free.

    7.) SIM unlock phones for people switching from AT&T for free.

    If they start doing stuff like this, they'll make AT&T really scramble.

    Joey
    voyager529
  • Coverage and Speed is grossly overtated for most market's I've been in

    T-Mobile as a company is great - however as a primary cellular provider, not so much. Keeping in mind I'm in rural America on the east coast (T-Mo is really only effective in urban areas it seems), being stuck in Edge and even GPRS (more often than not I'd actually be without data, but have OK voice signal) felt like I was back in the 1990s and not the 21st century. The best thing for T-Mo would be to have Google buy them and use them as a direct arm to the market and invest the capital to put UMTS/HSDPA everywhere -then, and only then, would they become competitive. Currently I have Verizon Wireles, am I thrilled with them? No. Do they provide the best coverage AND technology (read LTE)? Yes. That is important - the handset is a non-issue.
    JT82
  • Thoughts

    If T-mobile would offer unlimited data and tethering without jumping though hoops in it's plans, I believe it would be a differentiator. They should also embrace unlocked phones as much or more than they did in the past.
    Also, I believe they now have AT&T roaming rights so I believe their network coverage just got better for those of us who don't live in top 50 American city.
    Add those things up and I think they have a recipe for at least getting back some of their customers they have been shedding.
    jkohut
  • Predjudice

    Predujice means making a statement/decision without obtaining the facts. No good phones...The Dell Venue Pro is a great phone if you like the WIndows O/S version of phones, so don't say NO GOOD Phones!
    Coverage...There is not a carrier in the world that doesn't have black spots, NONE. From entire neighborhoods to small areas the size of a small block or less. I have seen disruption in an area as small as a house (based on convergance and propagation survey). When signals are disrupted, it is not always coverage.
    Speed...Even at 4G, if it aint TMobile, it doesn't mean you are getting the bandwidth. Go to a competitor and see what happens when you have to live on their OVERFULL 3G network even when they have 4G.
    Customer Service...I do not think there is better C/S than TMobile. Sure everyone slips, falls, stumbles and even trips over themselves but on a mass basis, they cannot be beat.
    Price...match up your plans apples to apples. Unless you are going to someone like Metro or new Virgin mobile, no one has better prices
    mike@...
  • let's see...

    your service would cost me more for the same or less service. Your coverage area is dismal. How much LTE was that you have deployed? Why do you think I should switch to you again?
    timspublic1@...
  • yeasss

    My personal favourite Apple product is Iphone 4 , i win one at http://winfreewithus.tk , i don't know if the offer is still alive but , i do the following i go to http://www.winfreewithus.tk after i clik on a button , after a complete a survey it was simple 1 minute , and i submit my email and i wait like 2 days , and yes i WIN a iphone 4 . If you do the same and win one of that just give a little thanks. And one more thing don't consider me a spammer if you think is fake just pass away.
    ucozer123