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T-Mobile doesn't want to spend billions just to get the iPhone like some competitors did

With the massive popularity of Apple's iPhone, you would think every carrier in the United States would want the device on their network. Verizon, AT&T, Sprint offer the iPhone, as do several smaller regional carriers. However, T-Mobile isn’t officially on the iPhone bandwagon yet.

A T-Mobile executive as recently stated that the carrier knows it has lost customers by not carrying the iPhone, but it's not willing to make major sacrifices just to get the device on its network.

Jim Alling, COO of T-Mobile USA, said, "Make no mistake about it: We would love to carry the iPhone. However, we want the economies to be right for us."
 
Alling also noted that T-Mobile didn't want to sign a deal similar to its competitors. Fierce Broadband and Wireless reports that Alling is making a veiled reference to a deal Sprint made to carry the iPhone in 2011 that cost $15.5 billion. Sprint doesn't expect its iPhone operations to become profitable until 2015.


Apple iPhone 5

Alling did note that T-Mobile's SIM-only Value Plans have attracted numerous iPhone owners from other networks. He said that there are 1.5 million unlocked iPhones operating on the T-Mobile network right now.

The comments were made during a discussion at the 12th annual Morgan Stanley Technology, Media & Telecoms Conference in Spain. Some comments were also made about T-Mobile and its upcoming merger with MetroPCS. That merger is expected to take place early next year and it seems both T-Mobile and MetroPCS feel the same way about offering the iPhone.

Metro PCS COO Tom Keys said last summer, "It would be harmful to MetroPCS to have to cut out part of our handset portfolio to accommodate one phone from one provider that the economics could be at risk."

Source: Fierce Broadband and Wireless



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What makes the device so expensive for Spring/T-Mobile?
By tayb on 11/21/2012 9:58:27 AM , Rating: -1
Can anyone shed some light on this? What makes a device expensive for the carrier? What is the $15 billion charge that Sprint is taking? Is it fees to Apple, subsidized phone pricing, or what?

You can jailbreak an iPhone and take it to T-Mobile right now so it's not as if Apple has to re-engineer the device for a new network. I also find it hard to believe that Apple would make carriers pay THEM for the right to sell a phone and then also charge carriers for the phone. It seems to me that Apple would just want every single carrier in the world to sell the iPhone... it's falling behind Android as it is.




By tng on 11/21/2012 10:06:02 AM , Rating: 5
quote:
I also find it hard to believe that Apple would make carriers pay THEM for the right to sell a phone and then also charge carriers for the phone.
I don't find that hard to believe at all. This is Apple we are talking about and I can see that they would have an "entitled" attitude about letting just anybody carry and sell their phone.


By othercents on 11/21/2012 10:21:25 AM , Rating: 2
T-Mobile can always provide information on how to buy an unlocked iPhone from Apple and then the person can just get a sim plan. There isn't really any incentive to sell a subsidized iPhone.


By tng on 11/21/2012 10:32:38 AM , Rating: 2
That would be a easy thing for you or me to do, but most of the people that I know that carry an Iphone do not have even the limited amount of technical expertise to go that route.


By V-Money on 11/21/2012 10:52:50 AM , Rating: 2
quote:
That would be a easy thing for you or me to do, but most of the people that I know that carry an Iphone do not have even the limited amount of technical expertise to go that route.


They don't have the technical expertise to either insert a sim card or walk into a t-mobile store and have them insert a sim card? I know most people are stupid when it comes to doing just about anything, but I don't think we have quite reached this point yet.


By tng on 11/21/2012 11:54:50 AM , Rating: 2
quote:
They don't have the technical expertise to either insert a sim card or walk into a t-mobile store and have them insert a sim card?
I did say most, but yes, most of the people that I know with Iphones have not one idea what a sim card is, unless someone at either Verizon or AT&T tells them the function and those people will not suggest that they visit T-Mobile.


By othercents on 11/21/2012 12:10:57 PM , Rating: 2
That is exactly why I said T-Mobile can provide the information on how to do it. Or even provide an in-store to help iPhone users get setup on T-Mobile with unlocked phones purchased directly from Apple.

The key here is getting the word out that to people interested in iPhones, but wanting to be part of T-Mobile can do it and T-Mobile is willing to help.


By abhaxus on 11/21/2012 1:44:52 PM , Rating: 5
Until you have worked in the mobile industry, you still have these kinds of silly notions about the technical capabilities of people and phones. I see multiple people on a daily basis that haven't set up Google sync to backup their contacts or better yet, don't know their password or even their login. I see people regularly that don't have icloud setup and don't know what it is, despite basically being forced to at multiple stages of their phone use.

People for the most part are complete morons. Never assume that the dregs of humanity know or care how to get an unlocked iphone. Most of them get angry that they have to payfolk retail to upgrade from the iPhone 4s they just bought 6 months ago.


By mindless1 on 11/21/2012 11:25:09 PM , Rating: 2
It runs deeper than that, the typical Apple customer is someone who specifically wants to NOT learn about the technology and is willing to pay more with the hopes that they don't have to.

It's not just Apple related either, you'll also find some people who would rather pay an automobile mechanic a fortune to avoid DIY while others won't let a mechanic come near their car unless it's an emergency.


By Gio6518 on 11/21/2012 10:24:26 AM , Rating: 3
quote:
Can anyone shed some light on this? What makes a device expensive for the carrier?


All devices cost the carriers more than the $200 (or whatever price) on contract...Apple charges a high premium to the carriers along with a high amount of iPhones that have to be purchased (whether you sell them or not)...


By mcnabney on 11/21/2012 11:52:16 AM , Rating: 3
Not just that. Sprint agreed to both a high price for the device (over $600) and a high quantity. So they have to buy millions of iPhones whether they can sell them or not. This is of particular concern for Sprint because the iPhone5 is LTE, not Wimax. Sprint has a very very very small LTE footprint and customers not lucky enough to be in one of those markets will be stuck using EVDO which is extremely overused on Sprint - think dial-up speeds. Sprint's deal to get the iPhone will sink the company if they can't sell every device that they have committed to buying and use those sales to attract customers.


By name99 on 11/21/2012 2:34:50 PM , Rating: 2
What you have said is true, but Sprint are their own worst enemies in this regard, because their plans have refused to adjust to this reality.

VZW plans are expensive --- but they can get away with it because their infrastructure is pretty good.
ATT know (and their customers know) that their infrastructure sucks, but they have compensated by keeping their plans (at least at the low-end) reasonably priced.

Sprint want to charge VZW prices while offering a sub-ATT network. This is not a strategy that is going to attract many users. And it hasn't.

Apple, through a move you can consider part of their always helping customers, or you can consider their always willing to screw over the carriers, made this very clear when you bought an iPhone 5. The web site explained in very clear English (vastly more clear than ATT, VZW and Sprint's pages) exactly what plans each of the three offered, what it gave you, and what it cost.


By tayb on 11/21/2012 10:31:02 AM , Rating: 2
Okay so I did a bit of research and it turns out that Sprint committed to buying 30 million iPhones and THAT is why Sprint took such a large hit. That answers the HOW for Sprint but it doesn't answer the WHY and it doesn't explain T-Mobile. Is Apple requiring carriers sign contracts guaranteeing they'll buy a certain number of phones in a given time frame?


By sprockkets on 11/21/2012 11:44:23 AM , Rating: 5
Just look at verizon and all the concesions they made to have the iphone, no 1 year contracts, no early renewals, no employee discounts, higher ETFs, etc. It practically took anything worthwhile out of Verizon.

Apple requires all sellers sell the the iphone for $200, while the cost of the phone unlocked is around $100 more than most other phones. In other words, they can screw carriers of $100, because they can. Plus those carriers get no branding on the product either.


By zilexa on 11/21/2012 10:58:50 AM , Rating: 5
This is a US-only issue.
In Europe, the mobile market works COMPLETELY different.

here a phone is a phone from its manufacturer (with some branding from the network). But you buy the actual phone, not a stupid renamed phone, renamed to the network selling it (like in the US).

In Europe you can pick a network that has the best price plan for your needs and choose almost any phone with it.

Apple did do the same, at least in the Netherlands, making the iPhone only available to the highest paying network, but that was 1 short term deal, once.

Totally agree with T-mobile here. Besides, why would anyone be satisfied with a very expensive phone that can only show a list of Apps and launch apps.. nothing more.

Anyone who played with the GUI of Android with its nice customisable widgets, notifications should look sad at their Iphone 1, wich is basically the same as the Iphone 1, just faster and thinner.


By corduroygt on 11/21/2012 11:28:24 AM , Rating: 2
quote:
ou can jailbreak an iPhone and take it to T-Mobile right now so it's not as if Apple has to re-engineer the device for a new network.

Unless you're content with 2G (EDGE) speeds in your phone, you can't really use an iPhone with T-mobile. T-mobile had this wonderful idea of building their 3G network on frequencies pretty much no other operator uses in the world. Also their "4G" isn't really the same thing as LTE.


By mcnabney on 11/21/2012 11:55:11 AM , Rating: 1
This is true. While the iPhone 5 can do HSPA+, it wasn't designed to use the frequencies that T-Mobile has.


By sprockkets on 11/21/2012 12:20:25 PM , Rating: 2
Tmob now supports the 1900mhz freq for iphones, on their HSDPA+ network. It's almost rolled out to most of their network.


By name99 on 11/21/2012 2:28:56 PM , Rating: 1
You have to understand that what is being said here is content-free posturing.

T-Mobile are doing badly --- you think they talked to ATT about a merger because they were doing well? Meanwhile iPhone goes from strength to strength, and T-Mobile is not in on any of those (higher-end) customers. Talking about jailbreaks is irrelevant. There is a technical issue (right now T-Mobile uses different frequencies so you won't get HSPA; that will change in time but is not changed yet); more importantly you don't make mass market money from the minuscule stream of jailbreakers and unlockers.

If Sprint are planned to go profitable in 2015, that's great. That's the way business works --- you make an upfront investment today, and it pays off years from now. I don't know if Shane is being willfully obtuse in ignoring this, or if he deliberately wants to mislead people. It's no different from putting a cell tower today and only having it pay off in five years.

If T-Mobile could do the same thing as Sprint, they would jump at the chance. but they have the problem that they need Apple much more than vice versa, so what do they do? How do they avoid getting a deal that is even worse than Sprint's?

One option would be substantially open up their network; for example allow (at least for those who want it) a decoupling of contracts from subsidies. They offer something like this already for Android, and my guess is Apple likes this because it reduces carrier power. (On the other hand it also reduces the incentive to upgrade after two years so... who knows?) Another such option would be to have their phones automatically GSM unlocked; none of this crap about having to wait two years for unlocking like with ATT.

The point is, Apple have T-Mobile by the balls, not vice versa. And so T-Mobile are doing all they can with the hand they have, trying to play coy and pretend "oh, we don't care if we don't have iPhones, we're perfectly happy with life as it is".

You're welcome to believe that and Shane if you want. But don't be upset when you are amazed to learn that people actually lie; and that CEOs say things to achieve a particular result, not because they great guys who want to share their wisdom with the world.


By name99 on 11/21/2012 3:01:53 PM , Rating: 2
As Horace Dediu said: "The iPhone is a broadband salesman who gets a significant commission. It gets paid well because it does its job very well. If there is no need for the job or if someone else can do it as well for less then it will not get paid as well. However, it's been getting its bonus every year for six years now."

To add to my point that T-Mobile needs Apple, not the other way round: remember Apple is STILL production constrained in how many iPhones it can sell, even though it has been doubling its production every year for the last five years. Point is, if T-Mobile aren't willing to offer Apple a good deal, Apple can find plenty of other customers for those iPhones.


By ritualm on 11/21/2012 3:18:40 PM , Rating: 2
So you wholeheartedly support TMo getting swallowed whole by AT&T just because of the iPhone? Never mind that AT&T itself is sucking off the government's warrantless wiretapping programs.

Good god you are dumber than you make yourself out to be.


By TakinYourPoints on 11/21/2012 3:36:43 PM , Rating: 2
It isn't about supporting T-Mobile being absorbed by another company, when did name99 ever say that? He's talking about something entirely different, not saying that T-Mobile should be acquired by AT&T. Numbers don't lie, T-Mobile has lost almost two million customers this year because they do not carry the iPhone, revenue has been plummeting, and statements are being made to save face. That's all.

People get so emotional and mad.


By Rukkian on 11/21/2012 5:18:52 PM , Rating: 2
Not saying it is wrong, but where do you get the info that they lost 2m subscribers due to not having the Iphone? I understand that they lost 2m, but maybe there are plenty of other factors.

US Cellular is more of a regional carrier, but they are gaining customers, and doing pretty well while having nothing to do with the iphone. This is just one example.

Beleive it or not the iphone is not the only device out there anymore (contrary to you) and the world (outside your head) does not revolve around Apple. A bunch of their subscribers actually left due to the merger, as people were afraid to sign new contracts not knowing what would happen, and with knowing that the company is not doing good could make plenty uneasy signing a contract.


By ritualm on 11/21/2012 5:55:45 PM , Rating: 2
quote:
Numbers don't lie

They don't. However, numbers can be interpreted to explain literally anything their hosts want to say.

A loss of two million customers versus making a deal with the devil that makes you lose money on every new iPhone customer... hrmph, tough choice indeed.

Apple didn't dangle a carrot in front of the carriers. It's full of industrial poison. Sprint bit it and now it's in the red. Oh but TMo should follow Sprint because OMG iPhone! So sayeth name99. Er no, I don't buy that argument at the slightest bit.


By TakinYourPoints on 11/22/2012 3:29:57 AM , Rating: 3
There is always an initial loss on hardware that is made up over the course of a contract. This is why two year contracts exist in the first place, its the same as when a company decides to buy a Samsung Galaxy S3 or whatever similarly high-end smartphone they decide to get. Hell, back in 2006 a Blackberry or even certain Nokia dumbphones cost about as much without a contract.

This initial hit on taking on new contracts is nothing new.

Verizon has done very well since taking on the iPhone, and it will pay off for Sprint in another year or two. If it wasn't a profitable business, which it clearly is, then they wouldn't accept those terms in the first place. T-Mobile is in a different boat, they're the only major carrier without the iPhone and the bleeding of customers is the result of that.


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