Why 802,000 customers left T-Mobile

Why 802,000 customers left T-Mobile

Summary: U.S. wireless carrier T-Mobile loses 802,000 customers in the fourth quarter, 616,000 more than the previous one. Why? Three words: Apple iPhone 4S.

TOPICS: Mobility

T-Mobile, the U.S. arm of the wireless carrier Deutsche Telekom, lost 802,000 customers in the fourth quarter.

I was one of them.

My reason? I finally allowed myself to purchase Apple's iPhone 4S. About 616,000 customers -- what's left if you assume it lost another 186,000 customers to expected churn, as it did in the third quarter before Apple's new product came out -- were likely with me in that purchase decision.

This post isn't about the iPhone. This is about the dynamics of customer choice. And the reality is, rightly or wrongly, most people choose their wireless carrier by which phones it offers. Not the carrier's redeeming qualities, much to their chagrin.

(It's tough being in the infrastructure business: you're either sufficient, or awful. But I digress.)

Until now, T-Mobile has resisted the raid by offering its own Google Android-based handsets. While that offering was satisfactory, it also omitted some of the most popular smartphones: Droid anything, the HTC Evo 4G and, of course, the iPhone.

Samsung's popular Galaxy S II simply can't hold the fort by itself, and it shows.

When I left T-Mobile -- a perfectly fine carrier and much more affordable than AT&T, my new provider -- the company sent me a desperate "please come back" envelope with a voucher for a free smartphone.

And in the wake of its Q4 numbers, the company promised additional investment, a focus on 4G LTE rollout and an aggressive pursuit of business customers.

The reality, however, is that none of this will make a difference to churn. Previous T-Mobile customers were happy with its affordability. They were generally pleased with its coverage. Their customer service was not bad enough to make a difference. But they wanted one thing: a new iPhone.

And that's something T-Mobile can't give to its customers.

Consumers? They either always wanted an iPhone and didn't pull the trigger, or saw that the Siri digital assistant feature somehow made a difference. Business customers? They wanted a non-BlackBerry smartphone in the enterprise, and found that the IT department was more accommodating to iOS over Android.

The one thing T-Mobile needs to swing customers back to its side it does not have in its immediate strategic roadmap. That's worrying. I don't mean to inflate the sense of the iPhone's importance; it's just one type of phone. But for whatever reason, rational or not, a lot of people want it -- and without it, T-Mobile will continue to hemorrhage customers.

At T-Mobile, the prices are good, if not the best. The customer service is good, if not the best. The coverage is good for some, and it's sufficient to those people. The handset portfolio is appealing to some, and it's sufficient to those people.

But that's not enough. For at least 616,000 people, all those things did not add up to more perceived benefit than having a new iPhone 4S. And that is, perhaps, the single biggest reason why T-Mobile will not win over the long-term against its much bigger rivals. As long as the iPhone dominates the mobile industry, an iPhone-less T-Mobile will suffer.

Earlier today, my CNET colleague Roger Cheng rhetorically asked of T-Mobile's comeback plan, "Is it enough?"

The answer is simple: no.

Topic: Mobility

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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  • RE: Why 802,000 customers left T-Mobile

    theverge.com/2012/2/23/2819103/t-mobile-spectrum-refarming-iphone<br><br>Do you think that T-mobile can win back customers by unofficially supporting unlocked iPhones on their network? I hope so but it remains to be seen if they can or will implement 1900Mhz support on their "4G" network nationwide.
    • No.

      @marbo100 It's pretty clear that American consumers have rejected the no-contract, full-price phone model. T-Mobile dabbled with it, but by its own admission the venture was not a big success.

      And aside from that, the extra step of purchasing your phone from somewhere else besides your carrier is one step too removed for the average consumer -- nevermind the business user.
      • hopefully that will change as the "full" price for these smartphones drops

        to 99-199. the sooner these carriers become dumb pipes the better
        Johnny Vegas
      • RE: Why 802,000 customers left T-Mobile

        @andrew.nusca You may be right as far as the average consumer goes but there are always people who will make the effort. If T-mobile can support the 1900Mhz frequency nationwide, AT&T iPhone users that are off contract can walk into any T-mobile store and just buy a sim card for full 3G/4G service. People won't switch over in droves but they may get some back. There's always Craigslist for buying used phones too. Maybe I'm too close to that demographic that can't necessarily afford the contract prices the other carriers want me to have.
      • huh

        I wouldn't say that at all, they reject bad service / coverage!

        In this area, there is excellent coverage for Metro PCS and people I know have actually left T-Mobile and gone to Metro PCS, prepurchased phone and all.
    • The reason TMob customers left is ATT

      Its as simple as it gets.
  • 2011 T mobile exec : we don't need iPhone, Android is Better. LOL!!

    oct 4 2011<br><br>t mobile Chief Marketing Officer Brodman:<br><br>"In many ways, Android is rivaling and even outpacing the iPhone, including consumer adoption, market share and capabilities like support for faster 4G networks. Moreover, Android offers consumers the freedom of choice. You can choose from a variety of colors, screen sizes, slide-out keyboards, price points and customization options, as well as enjoy the numerous benefits of open source innovation, cloud services and amazing apps."<br><br>How's that android working for you with it's amazing apps etc.. Brod?<br><br><br>Todays financial report from t mobile: "The sequential and year-on-year increase in customer losses is a result of intense competitive pressure from the launch of the iPhone 4S by three nationwide competitors in the fourth quarter "<br><br>lol.<br><br>Dude, just pay apple what it wants or go extinct...
  • RE: Why 802,000 customers left T-Mobile

    It may be true that everyone left for the iPhone, though what a shame for them. I guess there are just too many sheep, because if you really look at what you get with the iPhone compared to other smarth phones, you would realize that the iPhone is a mid range phone. But I digress. I would love to go with T-Mobile. I don't because they're not available where I am. If they were available here, and their coverage was good, I would jump the AT&T ship in a minute. Unlike so many of the rest of you, I also buy my phones unlocked and get what I want, not what AT&T or any other Carrier wants to sell me. And I get all the features that the vendor put on the phone, not just the ones the carrier wants me to use and not the ones they want to be able to sell to me or hit me up for a monthly charge. In my opinion, T-Mobile fails because of it's lack of presence, not because others have the iPhone. And by the way, I do get to use an iPhone through work and have chosen not to because compared to my phone, the iPhone is a red headed step child. It's camera is lacking, it's flash is lacking, it's reception is poor, it's battery life is poorer, it is super locked down, you can only put apps on it that come from Apple, unless maybe you jail break it, and they nickle and dime you to death for every conceivable cable or extra function you want out of it.
    It is also fragile which requires you to add a good case to it, and if you're buying it because of how sleek it is or thin it is, well, how sleek and thin is it after you add the case to it to protect it? I feel almost a little sorry for all those that have been convinced by Apple that they need this mediocre phone to be cool.
    • RE: Why 802,000 customers left T-Mobile

      @mgrubb@... I'm a sheep who's tried a lot of phones and I actually like my iPhone a lot. Insulting users is not a great way to attract them to your brand. In fact, I don't want to become a person like you who insults people because they use a specific brand of something instead of another. You like your phone, I like mine. End of story.
  • Id look at tmo if they had a better selection of windows phones.

    After using windows phone stepping down to an iphone is not at all desirable. I like the radar but want more storage. They need more wp and more lte
    Johnny Vegas
    • RE: Why 802,000 customers left T-Mobile

      @Johnny Vegas

      For the 5 people that use Windows Phone, yeah but for the rest of the world, WP is a non starter.
  • RE: Why 802,000 customers left T-Mobile

    Microsoft should really step in and buy T-Mobile and use the carrier to leverage its Windows phones. Yeah, it's kind of a hail mary pass for both Microsoft and T-Mobile, but that might be what those companies need. A Microsoft/T-Mobile/Nokia triumvirate might be the only hope for those three companies.
    • Nay

      AT&T had signed up to buy T-Mobile for $59 billion. That's more money than Microsoft has to spend. They could do it by issuing stock or bonds, but it would be a bet-the-company kind of deal. I don't think any sane Board would bet the company on the future of an also-ran wireless carrier. Especially when one consequence of such a move would be that the #1, #2, and #3 wireless carriers would drop Windows Phone like a hot rock.
      Robert Hahn
      • umm

        39 Billion in Stocks and Cash.
  • iPhone 4s = 80486

    Why spend a penny on the iPhone 4s when its not LTE. Its old technology. Its like buying a pc with dialup instead of using 50Mbps cable.

    Think of this, due to LTE, 3G is getting less attention, and 3G is becomming very very slow, since cell phone companies are cutting down the capaticy and bandwidth allotment for 3G services to make room for LTE.

    So anything 3G is a joke now :(. So much for my 6GB for $30 plan. Web Pages are slower then a snail, takes me back to the 80486 days of AOL. At least old computers had web browsers that used compression or requested compressed web pages, the iPhone doesn't, making it 10-100% slow then it should be as well as using more date that costs $$$. Time is money $$$. So it costs $$$$$$.

    So Why by crap old technology?

    What can i say, iPhones are data hogs, and 3G is being made to run like crap to make room for better technologies. So a 3G blackberry is not hit as much due to cell phone companies 3G tweeking.
    • non iPhone = fast!

      One last thing. Newer phones are well over 1.4Ghz dual cores now. And that speed is crazy ;)
    • simple

      Because they are Sheep and they just Don't realize that LTE isn't a gimmick, that there are better screens than the Apple products, and that iOS is severly gimped for the phone (It is now much better suited to the tablet).
  • Actually

    I took my wife off of T-Mobile due to their horrible service wherever you were. Constant dropped calls, and lousy network coverage are probably why most of those people are leaving. Why anyone would pay an ETF to go and get a mediocre iPhone and look like every other iPhone owner (aka sheep) is beyond me.

    We went to Verizon and WP7 and couldn't be happier, other than their lousy selection of WP7 phones (1). If Verizon doesn't get with it and bring in the Lumia Phones, we will move again over to AT&T to get them!
    • Same here

      My wife and I left T-Mobile due to crappy service everywhere we went and slow data service in my town. When T-Mobile launched 3G two years ago there was a 3G service 2 miles away. Over the past two years it didn't get any closer so we decided to change providers. We both now have Androids and are loving them.

      I am sure that people are leaving T-Mobile to get an iPhone, but I highly doubt the majority of the people that left T-Mobile did it for an iPhone.
  • No iphone here!

    I guess i'm just not a sheep as I just jumped ship from AT&T to Tmobile with my unlocked android phone( no apple fan boy). I got a (much) better rate for data and text with just less minutes talk time and I figure I'll save about $350. a year. That's a new, unlocked phone every 2 years without a contract. No BS from AT&T customer service, data plan gouging or slow updates, good coverage in my home area and 4g speeds( good enough for me), imho winning!