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John Legere, CEO of T-Mobile US.  (Source: T-Mobile US)
T-Mobile shakes the establishment with impressive results, becomes the force AT&T tried to stop

The biggest mobile market winner in the third quarter of 2013 wasn't America's top carrier Verizon Wireless, which added 927,000 new net customers in the quarter.  It wasn't AT&T Inc. (T), which added 363,000 new net customers.  And it certainly wasn't Sprint Corp. (S), which lost 313,000 net customers for the quarter.

I. And the Winner is... T-Mobile USA

The biggest winner was in fact the smallest of America's "big four" of the mobile carrier sector -- T-Mobile USA.

The Deutsche Telekom AG (ETR:DTE) subsidiary had already seen a strong Q2, adding subscribers and returning to profitability following its merger with prepaid carrier MetroPCS.  Q3 was yet another major success as T-Mobile boosted new net subscriptions by 1.0 million, including 672,000 postpaid customers (643,000 of which were in the T-Mobile USA brand).

T-Mobile uncarrier
T-Mobile USA's "uncarrier" strategy isn't just saving customers money -- it's a frightening threat to the AT&T-Verizon duopoly status quo. [Image Source: Digital Trends]

T-Mobile has now been the fastest growing carrier in the U.S. for two straight carriers (Verizon beat T-Mobile in Q2 in total net adds, but T-Mobile saw more branded growth).

T-Mobile has finally found success acting as a budget carrier who reduces its own expenses to turn a modest profit.  Verizon, by contrast turns larger profits by charging customers much more for their equivalent contracts, while offering them phones up front -- sort of like the mortgage broker of the phone world.

II. Anatomy of the Success: How T-Mobile's Rebellion Against Interest-Ridden Subsidized Phones is Paying Off For Customers and Brand

By not subsidizing phones, T-Mobile avoids paying inflated fees to devicemakers, while passing along those savings to customers at lower rates.  T-Mobile even softens the blow of hardware costs via a clever financing strategy, by giving customers phones with only a small upfront cost (similar to its subsidized competitors) with the remain cost spread out over monthly payments (customers are also free to buy the devices in full up front).

Its customers are not bound by their monthly contracts and are free to leave at any time, yet have the convenience of a normal postpaid contract.

Perhaps best of all, T-Mobile's recently announced "JUMP" program allows users to pay a $10 USD monthly fee that both offers free device replacement, and a free trade-in upgrade every six months.  AT&T, for example, only offers yearly upgrades and forces you to pay your remaining installation payments on the device that you traded in; T-Mobile voids the remaining payments on your old device, potentially saving you hundreds of dollars.

T-Mobile wordl
T-Mobile's world (free) data plan offers customers relief from the massive overages some experience while travelling.

This quarter T-Mobile also added another unique perk leverage its relationship with German parent Deutsche Telekom and an alliance of global carriers to offer a "Simple Choice global data", which kills roaming fees in 115 destinations.  The only caveat is that you're capped at speeds of 128 kbps, but T-Mobile USA offers even more options by offering affordable "passes" so customers can add full speed data to their plan anywhere from a week to a month.  Once you run over the allowance from these extra packages, there are no additional charges; you just kick back to the free, lower speed connection.

T-Mobile USA's LTE expansion is also proving highly successful.  Like AT&T, T-Mobile USA came into the LTE game late, trying to bide its time as long as possible by rebranding HSPA+ "3.5G" technologies as "4G".  Marketing gimmicks and semantics aside, though, it's clear that T-Mobile is doing its homework while other late comers like Sprint are struggling to keep up.

In Q3 T-Mobile's new LTE network reached 203 million Americans in 254 metro areas.  Contrast that with Sprint, who only currently covers 230 million markets, and hopes to hit 200 million by the end of 2013.  In other words Sprint -- the other budget carrier -- is in a very bad spot in many ways.  Traditionally the logic was that among budget carriers T-Mobile USA was more affordable in terms of plans, but Sprint had better coverage.  Now that equation has shifted with both the coverage and price advantage being owned by T-Mobile USA.

T-Mobile LTE
T-Mobile has dramatically accelerated its LTE coverage (bright pink) deployment, as Sprint has struggled at a more sluggish pace.

T-Mobile is looking to leverage this lead to accelerate subscriber adds by tapping into the burgeoning LTE tablet PC market. T-Mobile and various tablet providers are offering 200 MB of free data per month to T-Mobile subscribers who also have an LTE tablet, and offering the same installment payment plans for a variety of popular tablets as it has for smartphones. While 200 MB clearly is just the tip of the iceberg for users who stream music or download a lot of apps, it'll be enough for some who use a tablet lightly.  And T-Mobile's paid tablet plans are among the most affordable in the nation, much like its smartphone plans.

III. Customers Flock to T-Mobile as it Guns for Third Place

It's clear that American customers are appreciating the value that T-Mobile USA is bringing.

Even T-Mobile USA's small, struggling branded prepaid business returned to growth, with 24,000 net additions.  T-Mobile's brand churn -- a measure of how many customers jump to another carrier -- was at a relatively good 1.7 percent (lower is better), compared to 2.0 for Sprint, 1.07 for AT&T, and 0.97 for Verizon.

T-Mobile's churn may look weaker compared to the "big boys" of the telecom market -- Verizon and AT&T -- but it's actually highly impressive given that T-Mobile USA encourages customers to migrate from its platform if they find a better deal elsewhere, where as AT&T and Verizon generally try to make it as hard as possible to leave.

T-MobileT-Mobile doesn't try to stop customers from leaving.

With 45 million customers, T-Mobile is plodding ever closer to Sprint's current total of 54 million customers.  We could see T-Mobile pass Sprint as early as Q4 2014 or Q1 2015, if the carriers continue on their current trajectories.  The wild card of course is Sprint's majority owner, Japan's Softbank Corp. (TYO:9984).

Despite declaring "survivalist" mergers "not ideal", Sprint CEO Dan Hesse was eventually forced to give a survivalist merger with the successful Softbank his thumbs up.

Softbank is a ruthless competitor in its home nation, and likely will look to dramatically shift Sprint's failing strategy.  It was unable to do so last quarter as its purchase only completed midway through the quarter.  Looking ahead to 2014, don't be surprised if Sprint makes big changes, and steps up spending on its LTE rollout -- the question will be whether these efforts can turn around its falling brand and steal any steam from a red (or pink?) hot T-Mobile USA.

Sprint (CEO Dan Hesse pictured) has thus far failed to put the brakes on its downward slide.
[Image Source: The Verge]

T-Mobile reports that its own new partner -- MetroPCS -- is already delivering synergies as the brands' LTE network holdings boosted each others' customers in Q3.  T-Mobile writes that key landmarks for the partnership include:
  • Rapid progress with the integration of MetroPCS – already expanded MetroPCS brand into 15 new markets
    • More than 1.5 million MetroPCS customers on the T-Mobile network
    • Expanding the MetroPCS brand into an additional 15 markets on November 21
Those synergies also helped to propel T-Mobile to net earnings before tax interest and depreciation (EBITDA) to $1.344B USD, up over 6 percent on a quarter-to-quarter basis.

IV. T-Mobile Raises its Own Outlook Aggressively 

Where as Sprint posted a gloomy outlook for the rest of 2013 in terms of finances and subscribers, and Verizon/AT&T largely held steady, T-Mobile's results were so good that it in a bullish turn actually raised its modest outlook.  T-Mobile raised its yearly profit forecast and bumped its subscriber expectations from growth of 1.0 to 1.2 million branded postpaid customers to 1.6 to 1.8 million.  So far T-Mobile has seen (branded post-paid subscriptions):
  • Q1: -199,000
  • Q2:  688,000
  • Q3:  672,000
So this indcates that T-Mobile USA expects between 441,000 and 641,000 branded postpaid customers in Q4 2013, a modest goal.  T-Mobile USA could pass this target, but be aware that budget carriers like T-Mobile typically see subscriptions dip in Q4 as holiday splurging tempts customers to pricey "exclusive" devices on Verizon and AT&T, like the Lumia 929.

T-Mobiles store
T-Mobile's upped its estimates of subscriber adds for Q4.

For now T-Mobile CEO and President John Legere is content with the ruckus he raised in Q3, remarking:

T-Mobile’s Un-carrier approach is resonating with consumers. We added more than 1 million customers and led the industry with 643,000 branded postpaid phone additions because we are fixing the things that drive customers crazy.  Part of our customer momentum comes from the MetroPCS acquisition. With MetroPCS we are making great progress, including the planned additional expansion of the MetroPCS brand into another 15 additional markets by November 21. Our momentum is great and we have confidence that we can continue to deliver sustainable and profitable growth.

It looks like AT&T's claims that swallowing T-Mobile  -- a move that it admitted would cause "some harm" to U.S. consumers -- was justified has proven patently false.  Verizon also didn't fight the deal very hard.  Both carriers falsely claimed that if T-Mobile wasn't taken off the market then, it would fail.  Now those claims are looking more and more fallacious by the quarter.

AT&T tried to blow up T-Mobile USA before its rebellion gained ground -- but the attempt failed.
[Image Source: TMONews]

In retrospect it increasingly appears that AT&T was hoping to knock out a potential challenger before it got too far.  And Verizon was willing to stand back and let that happen, as ultimately less competition was good for it as well.

Neither AT&T nor Verizon is terribly interested in the dying, debt-ridden Sprint brand.  But T-Mobile USA had potential.  AT&T had hoped to gobble it up now before it became dangerous, stepping one step closer to regaining the monopoly it once held on the U.S. phone market.  Instead, T-Mobile USA found other allies to allow it to stay independent yet aggressive.  And now it's the hottest carrier on the U.S. market, a nightmare scenario for the Verizon and AT&T -- inheritors of the American Telephone and Telegraph/Bell hegemony, which the government long helped to create and protect, yet fatefully chose to destroy in the late 1970s.

Source: T-Mobile USA [on Business Wire]

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Do they bloat up their phones?
By jimbojimbo on 11/5/2013 2:44:21 PM , Rating: 2
I haven't played with a TMobile phone in a while since work pays for my Verizon but how much bloat does TMobile put in their Android phones? Verizon is the absolute worst with bloat and blocking premium features so I'm thinking of getting a phone through them instead even if I have to pay for it.

RE: Do they bloat up their phones?
By EasyC on 11/5/2013 2:48:19 PM , Rating: 2
They mostly put on their account related apps. You can disable the apps through settings so that they don't show up in the app drawer and don't start up. They also include wifi calling which allows you to use your internet. I use it even though I have good coverage. It saves a lot of battery life.

RE: Do they bloat up their phones?
By othercents on 11/5/2013 4:07:09 PM , Rating: 2
Same here.. my T-Mobile HTCOne only has these extra apps.

T-Mobile My Account
T-Mobile Name ID
T-Mobile TV
Visual Voicemail

Wi-fi Calling is built into the OS, so it can't be uninstalled, however if you don't like it you can always disabled it.

By jimbojimbo on 11/5/2013 5:52:14 PM , Rating: 2
When I lived in a highrise the reception was horrible so I loved having the wifi calling. Without it I had to literally stand still otherwise my calls would cut in and out.
Let's see... no NFL Mobile? Looks good!

By pixelslave on 11/13/2013 11:47:48 PM , Rating: 2
Wi-fi Calling is built into the OS, so it can't be uninstalled, however if you don't like it you can always disabled it.

If you do a search in XDA, you will find that there's a bounty to hack T-mobile's Wi-fi calling into the Nexus phones -- yes, Android purists actually complain that a carrier branded feature isn't available in a Nexus.

RE: Do they bloat up their phones?
By LBID on 11/5/2013 2:52:09 PM , Rating: 2
Most people going to T-Mobile tend to either bring their phone with them from AT&T, or else they're buying their own unlocked phones and going with the unsubsidized plans (usually a Nexus 4 to this point, but the new Nexus 5 is going to be super sweet). In those scenarios, bloatware isn't an issue.

RE: Do they bloat up their phones?
By Rukkian on 11/5/2013 2:58:27 PM , Rating: 2
With TMobile, you can pretty much get any device you want (as long as it has the correct frequencies), and use it, completely unlocked. This includes new devices like the just released Nexus 5.

I am not sure about the phones you purchase directly from tmobile, however.

I would love to switch to Tmobile, but here in the sticks (Iowa) they have nothing outside of Des Moines yet. I hope that by the time the contract on my G2 from verizon (2 years) goes by, they will have expanded. Even their hspa+ would be fine, but most of it is 2g, or partner coverage.

By dgingerich on 11/5/2013 6:14:32 PM , Rating: 2
My HTC One S has a few extra apps. I like their anti-malware app. The visual voicemail is simple and easy to use. However, their T-Mobile Mobile Life app imports contacts from Facebook, bloating up my contacts list with a bunch of stuff I don't want. It's now hard to find my parents on my contact list because of that app. That's been the only annoying one.

RE: Do they bloat up their phones?
By Nutzo on 11/5/2013 6:36:58 PM , Rating: 2
Bought a couple Google Nexus 4 phones when they where on sale for $250 that work great with t-mobile. Pure Android, no bloat. Only added the t-mobile voice mail app.

Upgaded to the T-mobile family plan, $90 for 3 lines, unlimited calling, unlimited text & 500MB/data per line.
We are usually on WiFi, so rarely get close to the 500MB, and even if I do, they don't charge extra, they just slow down the connection.

RE: Do they bloat up their phones?
By Samus on 11/5/2013 11:29:24 PM , Rating: 2
Ting costs us between $48-$63/month for 3 lines (one is a tablet)

It isn't good for data hungry people (we use like 1GB/month) but if you're usually on WIFI at work/home/etc it can be very competitive.

Contrary to popular belief, Sprint has substantially more spectrum, coverage and network infrastructure than T-mobile. Also contrary to popular belief, Sprint's LTE is faster, and has virtually the same geographical coverage, as T-mobile's. The coverage between the two is just in different markets.

For example, in New York, T-mobile has better LTE coverage than Sprint, but in Chicago, Sprint has LTE coverage when T-mobile doesn't at all.

RE: Do they bloat up their phones?
By Nutzo on 11/6/2013 10:45:34 AM , Rating: 2
Really depends on your area, as I've found Sprint's coverage to be worse. My wife was on a pre-paid phone that used Sprint, while I was on T-mobile the last few years.

During that time we took a few long driving vacations up the coast and around the south west. There where many more times that she didn't have coverage, while I did. That's one of the reasons we went with t-mobile.

Well, yea...
By EasyC on 11/5/2013 2:08:47 PM , Rating: 5
One company appears to care what their customers think, while the other probably has a secret panel whose sole purpose is to find ways to screw customers.

On another note. I love how desperate Verizon has become with their commercials. They show vastly incorrect maps on one with very little coverage for their competitors "4G", while they show entire coverage (2G/3G/4G) for theirs. LOL.

RE: Well, yea...
By dsx724 on 11/5/2013 2:13:47 PM , Rating: 2
I jumped on TMO's $45 unlimited plan when it first came out for business customers because it made sense.
Verizon's strategy of milking their customer base for FIOS and Wireless is bound to backfire. I'm already paying too much for FIOS and about to drop it next year. Too bad fixed line isn't as competitive as wireless. They got all the territories divvy up.

RE: Well, yea...
By EasyC on 11/5/2013 2:27:56 PM , Rating: 2
I tend to bounce back and forth between FIOS and Comcast depending on who's got the cheaper promotion. Once the promotion ends, I call them and offer them the chance to keep me. If they say no, I switch. Sure it's a pain, but it's well worth the savings to make a couple phone calls.

RE: Well, yea...
By dgingerich on 11/5/2013 6:22:19 PM , Rating: 2
I know. Their coverage map shows "Very Strong" for the area where my employer is, but I get almost no signal. Also, at home, they show the same, but I barely get 3 bars. I use wireless calling at home, so it isn't as big of a deal there, but I can't receive calls at all at work. That's really annoying when looking to change employers.

By jeffbui on 11/5/2013 2:31:51 PM , Rating: 4
Article has two glaring errors:

"T-Mobile has now been the fastest growing carrier in the U.S. for two straight carriers (Verizon beat T-Mobile in Q2 in total net adds, but T-Mobile saw more branded growth)."

"In Q3 T-Mobile's new LTE network reached 203 million Americans in 254 metro areas. Contrast that with Sprint, who only currently covers 230 million markets, and hopes to hit 200 million by the end of 2013. "

I'd love to switch to T-Mobile but (from what I've seen) their coverage still isn't on par with AT&T and Verizon in the Greater Los Angeles area. I might pick up an iPad Air from them to test their LTE network.

RE: Errors
By Dr of crap on 11/6/2013 12:22:26 PM , Rating: 2
And we care because??

By macmuchmore on 11/6/2013 12:21:24 PM , Rating: 2
I started out with the AT&T unlimited plan on an iPhone "1". I switched to Verizon when AT&T "limited" that plan by slowing down my data rates. Horrible choice - Verizon's data transfer speeds were very slow and I got horrible coverage in NYC. I canceled my contract - eating almost $300, which is another reason I hate Verizon. I went to T-Mobile and what a difference! Great prices, got a new iPhone, and my coverage & data speeds in NYC are spectacular. I also have great coverage and data speeds in TX, where I live. They have a great selection of top-tier phones and I cannot wait to get an iPad with them!

By sorry dog on 11/7/2013 12:43:09 PM , Rating: 2
Been using T-mobile for 8 years or longer, and things don't seem too different, but they do seem have a bit different marketing spin. Only downside as of late is "normal" plans have data cap of 2.5gig, down from 5gig....or you can spend $10 to get it back to 5.

If you "buy" the phone up front you seem to pay 10-25% of it's initial cost with the rest in monthly fees, but you do pay a premium on the phone. Most phones there could be bought somewhere else on sale for 20% less, so it really just like financing your phone. But all in all I still prefer that over subsidized deals. I do wish things in the U.S. would go totally like overseas where you can buy a SIM card in vending machine and in China there was one on every corner.... and the prices were about half compare to the U.S. market. Sorta funny that in Communist China it is a hell of a lot easier to have an anonymous phone than in the freedom loving U.S.

The biggest downside to T-Mobile is the rural data connections. The roaming agreements will give you comparable voice coverage to the Verizon/ATT, but data speed will be luck of draw. At least 6 months ago, my roaming data was capped at 100mb and usually only had it at 2g speed (or worse) anyway. If your on the HSPA network then speeds are impressive except in real major city areas like Chicago or Houston, but even then not too bad on throughput...just some wait lag.

The caps are my biggest complaint, but that still beat the Verizon strategy of sending you bill only the government would accept if you go a few gigs over...with nary a warning either.... And anyway, for the price of 5 gigs with Verizon you can have 4 plans from Tmob with 2.5 gig each.

Tmobile's coverage map
By DanNeely on 11/5/2013 2:39:59 PM , Rating: 2
Prodded by this story I took at a look at their map. Even more than the surge in LTE coverage, I have to give them credit for realizing I'm browsing on PC with a screen that's more than 3 or 4 diagonal inches in size size; and actually giving a map that is able to use the other 90% of my monitor.

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