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T-Mobile deems Apple partnership too costly despite 1.5M unlocked iPhones on network

post #1 of 23
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A T-Mobile executive said on Tuesday that becoming an Apple partner carrier would be too costly, but admitted not having the iPhone available for sale has driven away potential customers and some of the 1.5 million existing subscribers using unlocked version of the handset on the telecom's network.

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Speaking during the Morgan Stanley Annual Technology, Media & Telecoms Conference in Spain, T-Mobile USA Chief Operating Officer Jim Ailing said that his company is not willing to make the major investment of becoming an official Apple partner carrier despite losing customers to iPhone-carrying rivals, reports Fierce Broadband Wireless.

"Make no mistake about it: We would love to carry the iPhone," Ailing said at a discussion featuring executives from T-Mobile and MetroPCS. "However, we want the economies to be right for us." The Deutsche Telekom-owned T-Mobile will merge with MetroPCS in a deal expected to be completed by early 2013.

Ailing alluded to the recent deal Sprint made with Apple in October 2011, saying he would not want to sign on to such an agreement. Sprint became an Apple partner after signing onto a four-year contract that was later revealed to be worth $15.5 billion. Since the agreement, the third-largest U.S. telecom saw three straight quarters of growth, most recently activating 1.5 million iPhones in the three month period ending in October.

T-Mobile has previously attested to the iPhone's drawing power and said in February that it lost some 700,000 subscribers primarily due to the launch of the iPhone 4S.

"We recognize that it has been a point of churn for us," Ailing said, adding that the iPhone 5 release negatively impacted T-mobile and will likely continue to affect the nation's fifth-largest carrier going into the fourth quarter.

In an attempt to offset some of the burden associated with not having rights to sell the iPhone on its network, T-Mobile offers "Value Plans" that include an iPhone-ready SIM card, which has attracted some 1.5 million unlocked iPhone users. Legacy iPhones are limited to the operator's 1900MHz GSM service, however, and the new iPhone 5 isn't able to reach its LTE capabilities until T-Mobile upgrades its network. The carrier is currently building out 4G HSPA+ and LTE assets, which will cover bandwidths supported by Apple's newest handset.
post #2 of 23
The COO's last name is Ailing. I must be exhausted because I find that hilarious.

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post #3 of 23
This decision will likely cost them dearly.

How's android doing it for you?
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post #4 of 23
Quote:
Originally Posted by Flash_beezy View Post

This decision will likely cost them dearly.
How's android doing it for you?


Of course you would know if they can actually afford the debt right? Sprint has faced difficulties in that regard, and they're a larger company than T-mobile. T-mobile offers lower rates if you bring an unlocked one. I'm not sure whether they still run at Edge speeds though. If it's past that point, unlocked --> T-mobile off contract pricing is cheaper than what you'd pay for 2 years of AT&T or Verizon.

post #5 of 23

Sounds like T-Mobile can't get Apple to make them Pink and Charcoal iPhones so they are just saying they really can't afford 'em anyway.

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post #6 of 23
What's the major cost to T-Mobile? Is it the increased strain on their infrastructure or is it paying for the phones up-front?

It's never seemed to be a problem in the UK where all 5 (now 4) networks offer the iPhone. Maybe Apple offered the European networks more relaxed terms.
post #7 of 23
I think what they mean is they can't afford the subsidy like other carriers, so in negotiations with Apple I think Apple demanded that in order for them to have their phone on their network they have to order over a million phones. They can't afford that. That's why T-Mobile is refarming their network to 1900 MHz, so the current iPhones can work on their network.

I'm interested to see what happens with T-Mobile, out of the 4 major networks they seem like they're really trying to bring change in the u.s. market.
post #8 of 23
Quote:
Originally Posted by hmm View Post


Of course you would know if they can actually afford the debt right? Sprint has faced difficulties in that regard, and they're a larger company than T-mobile. T-mobile offers lower rates if you bring an unlocked one. I'm not sure whether they still run at Edge speeds though. If it's past that point, unlocked --> T-mobile off contract pricing is cheaper than what you'd pay for 2 years of AT&T or Verizon.

And it's a no brainer sometimes money will need to be spent to make it.

Either way though, they attract the unlocked customer's and are overhauling infrastructure, is it going to help the cost overall? 700,000 subscriber's is a major loss..and it's still rising..sprint may have taken a huge risk/hit but 3 quarter's of profit and growth is pretty good, considering how they were performing prior..

Think the average consumer doesn't like to pay upfront cost of a unsubsidized phone non the less...though it would be cheaper to do so initially anyway.

If t-mobile can offer comparable LTE speed's and cheaper rate's with a soft capped Data plan maybe I'll switch, though I'm enjoying my nearly 45-50MBPs down speeds on LTE currently.
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post #9 of 23
Quote:
Originally Posted by mrrodriguez View Post

I think what they mean is they can't afford the subsidy like other carriers, so in negotiations with Apple I think Apple demanded that in order for them to have their phone on their network they have to order over a million phones. They can't afford that. That's why T-Mobile is refarming their network to 1900 MHz, so the current iPhones can work on their network.

I'm interested to see what happens with T-Mobile, out of the 4 major networks they seem like they're really trying to bring change in the u.s. market.

T-Mobile is unprofitable in the US. The mother company has been trying to get rid of it for ages. They seemed never to have provided the ROI that made it an attractive long-term investment, which has caused the Deutsche Telekom Management in Germany no end of pain.

 

The LTE market is highly fragmented worldwide. Tomi Ahonen noted that there are something like 44 different "LTE" protocols worldwide and none of these is available in all markets. Its a mess. In Germany for example, the licenses for LTE were granted by the regulatory agency with the pre-requisite that rural areas which had been effectively cut off from the digital economy by lack of broadband ADSL, must be given priority before the major cities. Doesn't seem to be working out that way.

 

But anyway, LTE in Germany is ONLY available for Apple on T-Mobile which is the largest network provider in the country, and arguably the best from a purely technological perspective. HOWEVER, it is an ex-state monopoly an not particularly loved by many people who bear grudges from the past when the state monopoly blocked modern technologies and had horrendously high prices, not to mention appalling support. So for Apple the maximum "audience" in Germany is about 1/3 of the total market. LTE in Germany is becoming available, but is considered relatively unlikely to be a major service untill well into 2014, which will not help iPhone5. As far as I understand it, the problem lies with the LTE chip that Apple uses being unable to cover the LTE protocol/band used by T-Onlines competitors in this country.

post #10 of 23
Quote:
Originally Posted by Taniwha View Post

T-Mobile is unprofitable in the US. The mother company has been trying to get rid of it for ages. They seemed never to have provided the ROI that made it an attractive long-term investment, which has caused the Deutsche Telekom Management in Germany no end of pain.

The LTE market is highly fragmented worldwide. Tomi Ahonen noted that there are something like 44 different "LTE" protocols worldwide and none of these is available in all markets. Its a mess. In Germany for example, the licenses for LTE were granted by the regulatory agency with the pre-requisite that rural areas which had been effectively cut off from the digital economy by lack of broadband ADSL, must be given priority before the major cities. Doesn't seem to be working out that way.

But anyway, LTE in Germany is ONLY available for Apple on T-Mobile which is the largest network provider in the country, and arguably the best from a purely technological perspective. HOWEVER, it is an ex-state monopoly an not particularly loved by many people who bear grudges from the past when the state monopoly blocked modern technologies and had horrendously high prices, not to mention appalling support. So for Apple the maximum "audience" in Germany is about 1/3 of the total market. LTE in Germany is becoming available, but is considered relatively unlikely to be a major service untill well into 2014, which will not help iPhone5. As far as I understand it, the problem lies with the LTE chip that Apple uses being unable to cover the LTE protocol/band used by T-Onlines competitors in this country.

An early roll out with a new LTE chip may help apple reach more of these systems
post #11 of 23
T-Mobile probably had to both upgrade the frequencies and paying for iPhone upfront. Without upgrading the network, very few market can support iPhone's with high speed.
post #12 of 23
The new CEO John Legere will probably fix this. COOs are around to pinch pennies. The CEO provides the vision that will see the long-term benefits of such a deal for T-Mobile.
post #13 of 23
Quote:
Originally Posted by Flash_beezy View Post


And it's a no brainer sometimes money will need to be spent to make it.
Either way though, they attract the unlocked customer's and are overhauling infrastructure, is it going to help the cost overall? 700,000 subscriber's is a major loss..and it's still rising..sprint may have taken a huge risk/hit but 3 quarter's of profit and growth is pretty good, considering how they were performing prior..

 

What are you talking about Sprint having 3 quarters of profit?

They lost 1.3B in the 4th quarter of 2011, 863M in the 1st 0f 2012, 1.4B in the 2nd of 2012 , and 767M in the 3rd quarter. This last quarter is the first time in over 2 years Sprint has actually lost subscribers. Sprint has been losing record amounts of money since they started carrying the Iphone.

The bottom line is that Sprint bet the company on the Iphone, and it flopped.

Now Softbank is buying 70% company for 20.1B and taking control of the company.

 

In my opinion, T-Mobile is making the right decision by not taking such a risky gamble.
 

post #14 of 23
Originally Posted by hmm View Post
Of course you would know if they can actually afford the debt right?

 

Apple "couldn't afford" to buy NeXT.

post #15 of 23
Quote:
Originally Posted by SolipsismX View Post

The COO's last name is Ailing. I must be exhausted because I find that hilarious.

First name Frank?

Quote:
Originally Posted by Tallest Skil View Post

Apple "couldn't afford" to buy NeXT.

I thought NeXT bought Apple for a negative 400+M¿
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post #16 of 23
"has driven away potential customers and some of the 1.5 million existing subscribers"

Where does AI find its writers? This makes no sense. If they are existing subscribers, then they obviously have not been driven away!
post #17 of 23
Quote:
Originally Posted by RichL View Post

What's the major cost to T-Mobile? Is it the increased strain on their infrastructure or is it paying for the phones up-front?
.

Strain and yea up front cost, especially if Apple is expected to build an iPhone that would work in T-Mobile USA's variant 3G net. Apple isn't going to go to that trouble unless they get covered for the costs or at least a good chunk of them. (Something that is not an issue in the UK etc cause T-Mobile there is on the same frequencies)

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post #18 of 23
Quote:
Originally Posted by Flash_beezy View Post


And it's a no brainer sometimes money will need to be spent to make it.
Either way though, they attract the unlocked customer's and are overhauling infrastructure, is it going to help the cost overall? 700,000 subscriber's is a major loss..and it's still rising..sprint may have taken a huge risk/hit but 3 quarter's of profit and growth is pretty good, considering how they were performing prior..
Think the average consumer doesn't like to pay upfront cost of a unsubsidized phone non the less...though it would be cheaper to do so initially anyway.
If t-mobile can offer comparable LTE speed's and cheaper rate's with a soft capped Data plan maybe I'll switch, though I'm enjoying my nearly 45-50MBPs down speeds on LTE currently.


Sprint is bigger than T-mobile and they've had difficulty. As someone already mentioned, the parent company has been trying to spin off T-mobile for a long time. Their biggest appeal is cost. US phone service is relatively expensive. I wanted to switch to Verizon and the iphone, but I was irritated by the $100+ /month phone bill required to do so.

post #19 of 23
Quote:
Originally Posted by SolipsismX View Post

The COO's last name is Ailing. I must be exhausted because I find that hilarious.

The opportunities for lulz present themselves simultaneously, causing a logjam in the brain.

"Apple should pull the plug on the iPhone."

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post #20 of 23
Quote:
.....

An early roll out with a new LTE chip may help apple reach more of these systems

 

Yes indeed. That has to happen,  but it won't help early customers unless Apple offers some kind of a deal. The problem in Germany (and probably other markets) is that with the existing LTE chip you are still nailed firmly to a provider that you may not otherwise want to use. This may go some way to explain the slow market penetration of the iPhone 5 in Germany. As far as I am aware samsung uses an LTE chip that covers more LTE protocols/bands in Germany, which may also explain why samsung is doing relatively better in this market segment.

post #21 of 23
I think it's a smart position for them to take. Their money is better spent on investing in their infrastructure. The cost of entry to carry iPhone on a subsidized basis is very high. And the competition is getting better. As a long time iPhone owner, I was pleasantly surprised by how good the Galaxy III is, and to have it on MetroPCS for all you can eat at $55.00, I don't expect to switch back to iPhone anytime soon. Could happen, I just don't see it.
post #22 of 23
Quote:
Originally Posted by Flash_beezy View Post

This decision will likely cost them dearly.
How's android doing it for you?

 

Really well. My Galaxy III is my favorite phone to date.

post #23 of 23
Quote:
Originally Posted by SolipsismX View Post

The COO's last name is Ailing. I must be exhausted because I find that hilarious.

That's sick ;p
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