T-Mobile, which has struggled in the past to lure customers away from the Big Three wireless companies, is embarking on a risky new strategy: stealing iPhone customers from its competitors without offering an iPhone of its own.
The Bellevue-based company is betting Apple iPhone owners are sick of the roadblocks other mobile providers are putting up to slow their smartphone use and are looking for another option.
T-Mobile, a struggling company whose CEO unexpectedly stepped down this summer and whose parent company is looking to offload it, just announced that it would offer unlimited data to customers, an increasingly rare benefit. To bring iPhone customers on board, the company is encouraging existing iPhone users to "unlock" their phones using software to sever ties with their current providers and then switch to T-Mobile's service.
The move follows a string of disappointments for T-Mobile in the past year, including a failed merger with AT&T, parent company Deutsche Telecom shopping around to sell its stake, a series of layoffs, and the CEO's departure.
The fact that T-Mobile, which employs more than 4,000 people in the Puget Sound region and celebrated 10 years in business last month, hasn't been able to sell the headline-grabbing iPhone has been a thorn in the company's side, even though Google's Android-based phones are much bigger sellers than Apple's phones.
"Consumers don't care much about (mergers and acquisitions) but more about the devices, the price plans, and the network speeds," says Bellevue mobile consultant Chetan Sharma.
A number of weeks ago, there were rumors that T-Mobile might actually get the next version of the iPhone, which was released late last month. But Brad Duea, T-Mobile senior vice president of product management, threw cold water on that rumor.
"With regard to selling the iPhone, we've said we're interested in it, but won't do it until we find terms that are mutually beneficial to us and to our customers," he says.
Instead, the fourth-largest wireless carrier in the nation is hoping its new campaign will entice customers to switch their provider from AT&T (which uses the same type of wireless technology as T-Mobile) and get unlimited voice, text messages, and data for $69 per month.
"Where most carriers are choosing to zig with caps on data...we're choosing to zag and offer unlimited data," Duea says.
Sharma says the unlimited-data plan could help T-Mobile hang onto customers but added that demand for the new iPhone could cut down on the number of people willing to unlock their older phones and switch providers.
"T-Mobile is good at marketing ... but it is still a distant fourth, so competition is tough. Given that the market is getting saturated, there are hardly any untouched demographic segments," he says.
When a person buys a phone, it is typically assigned to a wireless carrier. A phone assigned to AT&T won't work on T-Mobile's network unless the user "unlocks" the phone, which means running software that will then allow the phone to work on a different network. The process is legal, but requires a software download.
"We'll bring the best choice, a great line-up of Android, Windows devices, and now even support the iPhone," Duea says.
AT&T refused to comment on T-Mobile's new marketing plan, saying only that some of AT&T's customers still have unlimited data plans because they signed up when that benefit was offered. New customers don't have that option.
T-Mobile's iPhone strategy could help it deal with another looming smartphone challenge.
One of the company's cornerstone devices has been Samsung's Galaxy Android smartphones, which were involved in a recent patent infringement lawsuit between Samsung and Apple. The jury ruled in Apple's favor in late summer, and Apple is expected to seek an injunction against Samsung selling the infringing devices until they are updated.
"We're working with Samsung to make sure we minimize any impact to customers," Duea says, adding that T-Mobile is offering a free HTC smartphone with a contract.
Duea, who was president of online music site Napster before joining T-Mobile a little more than two years ago, says T-Mobile's plan is to lure customers who are frustrated with limitations enforced by the larger mobile providers. Some companies limit streaming of music, television, and video. And they force people to use Wi-Fi instead of data plans to make Internet phone calls such as those made with Skype.
T-Mobile is offering streaming of 15 television channels as part of the new unlimited data service.
In the meantime, the company is waiting to see who its parent corporation chooses for its top executive, and rumors continue to swirl about possible mergers with other mobile providers.
Duea says T-Mobile workers are focused on customers and will be, "regardless of who the particular shareholder is at the time."