T-Mobile making a bid for iPhone users

By Andrea Chang and Nathan Olivarez-Giles

LOS ANGELES — IPhone users unhappy with their carriers soon will have another choice. T-Mobile USA Inc. is overhauling its network to enable customers with iPhones from any carrier to switch to its service.

T-Mobile also announced Thursday that it is spending $4 billion to upgrade its network, including building out its faster 4G LTE service — a move tech analysts called long overdue for the nation’s fourth-largest wireless carrier as it moves past a failed acquisition by AT&T Inc. and tries to catch up to larger rivals.

The plans are part of a new road map that T-Mobile hopes will help it stay competitive with rivals AT&T and Verizon Wireless, which have both launched 4G LTE networks, and Sprint Nextel Corp., which is building out its 4G LTE service and plans to launch it later this year.

4G LTE — which stands for long-term evolution — is the latest cellular network technology. It uses different cellular-tower and in-phone-chip technology to offer speeds faster than previous networks.

“T-Mobile’s looking for a future, and they clearly are going to have to invest heavily to catch up with the huge investments that have been made by AT&T and Verizon,” said Jack W. Plunkett, a telecom analyst and chief executive at Plunkett Research. “T-Mobile is trying to modernize and become relevant again.”

T-Mobile has been largely left out of the iPhone market and has seen its users defect in large numbers to AT&T, Sprint and Verizon, which all sell Apple Inc.’s hugely popular device. T-Mobile doesn’t have a deal in place with Apple to sell the iPhone itself, and that is unlikely to change this year as the company spends massive amounts of money on the network upgrades.

Still, the carrier has been vocal about wanting to carry the smartphone, and in July released an iPhone-compatible microSIM card that works with AT&T’s version of the iPhone 4 in an effort to steal subscribers.

In Thursday’s announcement, T-Mobile said it would modify its existing 3G and 4G networks to be compatible with Apple’s iPhone no matter what carrier a consumer purchased a phone from. The 4G LTE service is expected to be launched in 2013.

“Not carrying the iPhone led to a significant increase in contract deactivations in the fourth quarter of 2011,” Philipp Humm, T-Mobile USA’s chief executive, said in a statement Thursday, when T-Mobile released its quarterly earnings report. “In 2012 and 2013, T-Mobile USA will invest to get the business back to growth, including an incremental $1.4-billion investment in its network modernization initiative, which will total a $4 billion investment over time.”

As T-Mobile’s network upgrades take place, the carrier’s service will “be compatible with a broader range of devices, including the iPhone,” Humm said on Twitter.

The network improvements will enable U.S. iPhone 4 or 4S owners to bring their phones over to T-Mobile and purchase calling and data service, though the carrier didn’t specify when the new compatibility would arrive.

Although enabling mobile phone subscribers to bring their unlocked iPhones to T-Mobile isn’t as much of an advantage as offering the phone directly, Plunkett said the move will “get them in the game.”

“It’ll help them be competitive and attract the kinds of customers that everyone wants the most, and those are the customers that are willing to spend a lot of money,” he said.

To entice customers to make the switch, T-Mobile will probably have to offer compelling pricing packages with features such as unlimited data, said Mark McKechnie, a telecom equipment analyst at ThinkEquity.

T-Mobile said it lost 706,000 U.S. subscribers during the fourth quarter as its parent company, Deutsche Telekom AG, reported a loss of 1.3 billion euros, or $1.7 billion. T-Mobile also said its contract business was hurt by the launch of the iPhone 4S by its three major competitors.

Last year, Deutsche Telekom agreed to sell T-Mobile USA to AT&T for $39 billion, but the sale was called off after U.S. regulators opposed the deal.

The German parent company was paid $4 billion in breakup fees and given licenses to AT&T-owned wireless spectrum — known as AWS, or advanced wireless solutions spectrum — in major U.S. markets, and the ability to allow its customers to roam on parts of AT&T’s wireless network.


©2012 the Los Angeles Times

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