T-Mobile Boss Calls for Radical Rethink. Gnarly. I Think.

[Pat Logsdon]

<div class='os_post_top_link'><a href='http://www.smartphonethoughts.com/index.php?action=expand,7629' target='_blank'>http://www.smartphonethoughts.com/i...ion=expand,7629</a><br /><br /></div><i>"The boss of one of the world's largest network operators has called for a radical, far-reaching rethink of how the industry works. T-Mobile CEO René Obermann, speaking at the 3GSM World Congress, took aim at what many consider givens - churn of customers among operators, subsidies, confusing or inconsistent tariffs, complexity and low usage of advanced services. He argued that the mobile market is not yet mature. It may be that in some European markets there is over 100 per cent penetration - multiple devices carried by end users - and there are mobile-only homes. But he pointed out that his business, for one, is keeping on acquiring customers. In the US, T-Mobile is now bigger than it is in Germany, growing 32 per cent, which he said is "not surprising, because [that market] is less penetrated". However, he said that "the current subsidy model induces churn", which is not healthy. At the same time, "bill shock is not an option"."</i><br /><br />Personally, I find it interesting that T-Mobile, while presumably growing 32% in the US market, still can't (or won't) <a href="http://www.phonescoop.com/news/item.php?n=1029">roll out high speed data service.</a> Oh, and I think they had some sort of <a href="http://www.pocketpcthoughts.com/forums/viewtopic.php?t=37897&amp;start=0">problem with hackers recently,</a> although maybe I imagined that. Also, I'm a bit confused about the last bit. Subsidies induce churn, but they can't charge more and shock customers. Eh? What exactly are the alternatives? Seems like it's one or the other to me - what do you think?

[Ken Mattern]

At the same time, "bill shock is not an option"."


Cute 8O

My wife and I simply wanted to increase the number of minutes in our account. What the T-Mobile people didn't tell us was that we were getting a new contract plan, that the prices of things we used went up drastically and that some were no longer availabe. Then they turned off my T-Zones which I used all the time to check my email. Not only that but before that they did not charge me for my incoming text messages. My next bill had a charge that I refused to pay. It took letters to the president of T-Mobile and the customer satisfaction office (and three months of wrangling) to get the charge removed.

I call that Bill shock.

Two months later they offered me free text messaging :evil:

I took it!

Needless to say we are reconsidering our options then the contract opt out comes into effect.

[surur]

1) Dont subsidies reduce churn, by tying you into a contract for 1-2 years?
2) If they remove subsidies, wont tariffs be less, as you wont have to pay for the cost of the phone also?

The only way to reduce churn without artificial barriers are cheap tariffs and good service. Else churn is just a symptom of good competition, and reducing it is anti-competitive and anti-consumer.

Surur

[TheZodiac]

You havwe to understand - altering your plan in any way usually means you are extending your contract. Simple? JUst read your guidelines and rules - the fine print.

Despite not rolling out high sped service TMobile is growing... why? amybe its their hotspot services. THey are, after all the largest. They also offer the best data plans there are currently. So, when you ask - how can they grow despite of keeping up with the jonese data speed wise?... Pricing. Pretty simple. Save me money and I will be happy. Thats the american way. Now... if only Tmobile would by MobileExxon, We would all be happy :)

[whydidnt]

Well, I just became part of the "churn". TMobile USA's do slow GPRS data connection is the primary reason for my change. I picked up a Nokia 6230 from Cingular with it's high speed EDGE goodness - surfing on my hX4700 is now almost tolerable. :wink:

TMobile always treated me well as a customer and I can't complain about their pricing, but their focus is clearly on the "young consumer' market and their phones and lack of High Speed Data drove me away. Cingular has an all-you-can-eat media.net plan that with unlimited access for 24.95/month - only $5.00/more thatn TMobile was charging me.

I thought about the XV6600 from Verizon, but "broadband" access isn't available in my market yet, and their plan and data pricing is soo much higher I decided to middle of the road it with Cingular. Now I have to debate keeping or using and selling my beloved PDA2K.

[UnnDunn]

Well, I just became part of the "churn". TMobile USA's do slow GPRS data connection is the primary reason for my change. I picked up a Nokia 6230 from Cingular with it's high speed EDGE goodness - surfing on my hX4700 is now almost tolerable. :wink:

TMobile always treated me well as a customer and I can't complain about their pricing, but their focus is clearly on the "young consumer' market and their phones and lack of High Speed Data drove me away. Cingular has an all-you-can-eat media.net plan that with unlimited access for 24.95/month - only $5.00/more thatn TMobile was charging me.

I thought about the XV6600 from Verizon, but "broadband" access isn't available in my market yet, and their plan and data pricing is soo much higher I decided to middle of the road it with Cingular. Now I have to debate keeping or using and selling my beloved PDA2K.Just FYI, but Cingular's MEdia Net plans only deliver EDGE speed to your phone.


Back to the topic, the cellphone makers need to do one thing and one thing only: quit charging for incoming calls. People do not like being shocked to learn they are paying for calls they did not initiate

[Silver5]

In the US especially, companies have themselves in a situation in which they must heaviliy subsidize mobile phone offerings, keep rate plans for voice service competitive, and offer other services which are not used by the vast majority of their customers. Subsidies make people search for the best deal on a new phone that catches their interest, because without these subsidies the phones would cost too much for most people to justify the purchase. It is not that subsidies are a bad thing, but they have led to customers expect free phones and more inexpensive rates for service. T-Mobile could raise handset prices, but they would stop gaining new customers. They could raise rates on service, but they would lose alot of their advantage against their rivals. They could offer even greater subsidies but run their profits into the ground. It is a difficult balance to acheive,

While data service is important to some people, such as those inclined to visit websites like this one, it is of little concern to most people in this country. T-Mobile will gain a limited number of customers and revenue by introducing higher speed data services. Cingular offers these services, but how many of their customers really use the service such that they benefit from anything more than GPRS speeds? Heck, how many even use the GPRS? It will absolutely be necessary to offer these services to customers in the very near future in order to remain competitive, but a few months is not that long.

Reducing churn won't be easy, but T-Mobile will have to offer incentives to customers willing to stay with their service. New customers will have to be offered competitive pricing, but to avoid losing old customer and gain new business is much better than winning new customers to make up for the loss of old ones.

[whydidnt]

Just FYI, but Cingular's MEdia Net plans only deliver EDGE speed to your phone.


Hmmm, I must have a REALLY fast GPRS connection because I was getting 90kbs last night with both my PC and PPC connected via Bluetooth. :D

Cell Phone companies already give "Free" Nights and Weekends and Free calls within their own Network. If they didn't charge for incoming calls they'd probably all go bankrupt. You have the choice of not answering the phone if you don't want to pay for the airtime. :lol:

I think it's more likely we will eventually see reasonable Unlimited Minutes charges. When dial-up ISP's first sprouted they all had either time or dl limits attached to their monthly fee, in short order they "churned" to unlimited plans. I can imagine a future where for $29.99/month or something like that you can use your phone all you want. There will be many people (myself included) who won't use the phone any more than they do now anyway.

[Janak Parekh]

Back to the topic, the cellphone makers need to do one thing and one thing only: quit charging for incoming calls. People do not like being shocked to learn they are paying for calls they did not initiate
As far as I know, the landline lobby prevents "Calling Party Pays" from happening inside the US for mobile phones. :(

--janak

[whydidnt]

While data service is important to some people, such as those inclined to visit websites like this one, it is of little concern to most people in this country. T-Mobile will gain a limited number of customers and revenue by introducing higher speed data services. Cingular offers these services, but how many of their customers really use the service such that they benefit from anything more than GPRS speeds? Heck, how many even use the GPRS? It will absolutely be necessary to offer these services to customers in the very near future in order to remain competitive, but a few months is not that long.

I agree with you on this, however most of the other cell phone companies think they will drive extra revenue with things such as on-demand video &amp; Picture Messaging by having high speed data. I don't necessarily believe that a lot of people are clammering to see a postage sized music video clip on their cell phone, but I could be wrong, and Sprint and Verizon are certainly banking on it.

The bigger question is do these companies that have high churn know why they do? In TMobile's case, maybe they could have saved substantial numbers of subscribers over the last 12 months by offering high-speed data. I doubt they know one way or the other if it's due to pricing, coverage, available phones or services. I do know that in my case they subsidized one phone in 3 years time all the while collecting $90.00/month from me &amp; I made 1 call to customer service in this time - I'm pretty sure I'm not they type of customer they want to lose.

I also think that the 18-25 crowd don't care that it's GPRS or EDGE or EvDo or whatever but they want to be able to obtain information fast. If it takes one of them 5 minutes to look up movie times, but their friend can do it in 2 minutes, they are going to want the same plan that enables the higher speed access. One thing I'm pretty sure about - those 18-25 year olds who use their phone a lot are not known for their high level of patience.

[Joe Cool]

I used to work for t-mobile. this isn't just one company it is a co!!ection of older smaller companies like omnipoint and voice stream. Their whole network is chewing gum and duct taped together. Throw in the old ma bell attitude of "If it ain't broke don't fix it". Ther company has constant infighting so nothing ever gets done. Your job is to do your best to blame someone else for your problems. They can't make high speed work because they are too busy just trying to keep their network up and running. As far as security is concerned... RSH without any password as root is the way to gain access and tranfer data. The passwords on the UNIX machines that collect data and manage the switches are either non-existant or are still set to the switch company default. All the OS that is running there is out of date near or is EOL, completely unpatched, and is wide open. Because they charge so little, yet still dump a lot of money into customer support, they skimp on the technical backend side and run VERY lean in people power both in numbers and knowledge. This means you struggle to just put out fires and never really fix anything. I garentee you that the only thing done about the recent security issue was to have a meeting about it and that is it.

[aristoBrat]

Because they charge so little, yet still dump a lot of money into customer support, they skimp on the technical backend side.
Hmmmm. According to their year-end report, T-Mobile spent $2.1B in 2004 on capital expenditures (focused on quality and capacity improvements), up from the $1.7B they spent in 2003.
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&amp;newsId=20050302006002&amp;newsLang=en

And it looks like they'll spend even more in 2005.
http://www.howardforums.com/showthread.php?s=&amp;threadid=566414

And while there's no denying it's taking them forever to turn on EDGE, they are making more money than ever off of their GPRS data network, mostly because of BlackBerrys.
Average Revenue Per User ("ARPU", as defined in the footnotes to the Selected Data, below) was $55 in the fourth quarter of 2004, consistent with $55 in the third quarter of 2004 and up from $53 in the fourth quarter of 2003. (Total ARPU for the fourth quarter of 2003 would have been $54 after adjusting for USF fees.) Excluding the impact of USF and regulatory fees, postpay ARPU has increased during the past year, due largely to the ongoing growth of data services revenue, which now comprises 6.6% of postpay ARPU, compared to 5.6% in the third quarter of 2004 and 3.5% in the fourth quarter of 2003. A major factor in the data revenue growth in the fourth quarter was a net increase of 112,000 BlackBerry customers during the quarter, bringing the end of year total to 411,000.

[beq]

Wait, so T-Mobile USA is already larger than its parent company's home operation in Germany/Europe? :)

But, is the Blue Angel (PDA2k) already obsolete thanks to missing EDGE support? That's a real bummer to think about, considering how much we just invested in these units :(

[Joe Cool]

Hmmmm. According to their year-end report, T-Mobile spent $2.1B in 2004 on capital expenditures (focused on quality and capacity improvements), up from the $1.7B they spent in 2003.
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&amp;newsId=20050302006002&amp;newsLang=en

And it looks like they'll spend even more in 2005.
http://www.howardforums.com/showthread.php?s=&amp;threadid=566414


Before Cingular bought out AT&amp;T they had no towers in the northeast and T-Mobile had no real coverage of most of the west coast south of Washington. So they had an agreement that allowed both companies to share each others network. When Cingular bought out AT&amp;T, They had a modern prebuilt digital network already in place in both places. So they sold out their old west coast network to T-Mobile for a couple billion which accounts for the money you see being spent. They basiclly spent billions to pick up someone elses old junk, then tightened there belts even more by laying people off. I know, I was one of them. As far as knowing if Cingular's old network out on the west coast is junk I am only guessing at that. Have to ask yourself why you would sell anything to your competition that would help them out. If it was me I would have kept the network and sold the service to them at astronomical prices, that is unless that netwok was so poor that it was more trouble than it was worth, in that case I would sell it to my competition at an astonomical price and laugh at how they actually bought something that is essentially a major hinderence.