“Deutsche Telekom’s announcement over the weekend to sell its American wireless unit, T-Mobile USA, to AT&T for $39 billion ended a decade-long foray into the American market that was undermined, in part, by one big event: the advent of the iPhone,” Kevin O’Brien reports for The New York Times.
“Until Apple introduced its highly popular touchscreen device in 2007, which went on to become the world’s leading smartphone, Deutsche Telekom had been generating decent sales from its American operation, with growth in some years surpassing that achieved in Germany,” O’Brien reports. “But after the iPhone went on sale, sold exclusively at first by AT&T in the United States, T-Mobile USA began to lose its most lucrative customers, those on fixed monthly plans, who defected to its larger American rivals — AT&T and Verizon Wireless, which began selling the iPhone in February.”
O’Brien reports, “The percentage of T-Mobile USA’s contract customers fell to 78.3 percent in 2010 from 85 percent in 2006, according to the company’s annual reports. During 2010 alone, T-Mobile USA said it lost 390,000 contract customers to rivals. ‘The iPhone effect cannot be underestimated in this decision,’ said Theo Kitz, an analyst at Merck Finck, a private bank in Munich. ‘Without being able to sell the iPhone, T-Mobile was in an unsustainable position and T-Mobile USA became a problem child.'”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Lynn W.” for the heads up.]
Related articles:
Sprint concerned over AT&T’s T-Mobile USA acquisition; complains of antitrust risk – March 21, 2011
T-Mobile: No Apple iPhone just yet after AT&T deal – March 21, 2011
AT&T to buy T-Mobile USA – March 20, 2011
I dropped T-Mobile, after five years, when my Nokia phone died and the iPhone 4 arrived. On a ” family plan” with my girlfriend, my bill didn’t even go up.
I was a iPod Touch user ( for wifi net) before, so I was halo upgrader, on some level, too.
One more reason for the fandroids to hate Apple. 🙂
In a way, it’s more bloodshed for the competition. This time is not hardware, but services that got whacked.
I had been with T-Mobile for years before the original iPhone launched in late June 2007 and I’ve been with ATT ever since.
Me too. Got rid of my POS Moto Razr. How I miss browsing the web on the Razr or texting with a 9 digit keypad, or sending images to my wife that would show up 2 days later, or the pocket lint getting permanantly lodged behind the LCD glass, or…….
I wish Apple had allowed T-Mobile to sell the iPhone a few years ago. Reducing the number of telecom carriers to an oligopoly of 2 or 3 will be bad for the consumer in the long run. We can expect a slow, inexorable move to Canada-type rates and 3 year contracts.
Apple now needs to buy Sprint and show Verizon and ATT how it’s done right. Talk about blood on the sliding keyboard.
Bloodbath
But couldn’t T-Mobile sell Android instead?
They could, and they did. It did not help them, because T-mobile also uses GSM. Verizon also sold Android, but for them, it worked much better. The main reason is the difference between the two networks (GSM vs. CDMA). Due to the underlying technology, CDMA has much greater penetration through obstacles (concrete, glass, steel, etc), which allowed Verizon to obtain much more reliable signal coverage with fewer towers. Neither AT&T nor T-Mobile could effectively compete, not so much because they couldn’t afford to put up towers, but mostly because of the “Not in my back yard!” mentality around US municipalities, where everyone likes good cell coverage, but NOBODY wants to allow towers to be built on their property. Verizon simply didn’t need as many. That is the primary reason why Verizon was so much more attractive than T-Mobile with respect to Android.
I was being a bit tongue in cheek but thanks for the explnanation. Where I live (small island 221 sq miles) we have near 100% GSM coverage
I thought that obstacle penetration was a function of the wavelength of the signal, not the technology. The higher the wavelength of the signal, the penetration ability of signal degrades.
Ha Haaaaaa Haaaaaaaa. Good one. Not when they are giving away Android phones all over the place. Android is an OS, not a phone.
It must be nice to try and pin everything that is disruptive in cellular on the iPhone. This is a story that was more of an eventuallity than because of anything that Apple produced. Fact is T-Mobile was never as strong as AT&T and Verizon. The service always lagged behind unless you happened to be in a rare location that had exceptional coverage. T-mobile phones were consistently my highest returned and churned service when I was selling wireless prior to 2007. The ONLY thing they had going for them was customer service.
This is more of a spectrum purchase for AT&T than anything else. Both companies were face huge obstacles in upgrading to 4G and Sprint and Verizon were getting a nice jump on that bandwagon. AT&T was lacking spectrum and T-Mobile was lacking in resources, this deal took care of both those issues. Just look at what they were passing off as 4G in their ads, both companies needed this.
This wasn’t the first time there had been talks about merging T-Mobile and AT&T and it wasn’t the iPhone that spurred those talks either since it wasn’t even in existence yet at the time. The Sprint/Nextel deal squashed any further discussions for quite some time as some didn’t think the FCC would allow further contraction of the industry. Deutsche Telekom is worried still that this merger won’t go through, which is why they are forcing AT&T to pony up $3 BILLION if the deal doesn’t get FCC approval.
Did T-Mobile suffer from not having the iPhone? Yes. Everyone did to some degree. Did not having the iPhone lead to AT&T buying out T-Mobile? No. This was an event that was going to take place regardless if Apple ever moved into the wireless marketplace.
What part of “The percentage of T-Mobile USA’s contract customers fell to 78.3 percent in 2010 from 85 percent in 2006, according to the company’s annual reports. During 2010 alone, T-Mobile USA said it lost 390,000 contract customers to rivals.” did you not understand?
Contract customers are the money makers. iPhones and the odd crappy Android phone were essential to growth. AT&T had the iPhone and Verizon had first dibs on all the crappy Android phones. T-Mobile was screwed.
The part where even when T-Mobile was in a better position they were still a take over target. Not to mention that the merger as I stated had everything to do with upgrading to true 4G. If T-Mobile stayed at 85% this is a merger that still would have happened.
Geez! Revolutionary eh? And here I thought it was the “Revolutionary iPad”! I can’t keep all the butt kissing straight.