Why 802,000 customers left T-Mobile

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.
Written by Andrew Nusca, Contributor

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.

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