Monday, December 10, 2012

Is the i-T Connection It for IT?

Sorry, I just couldn't resist the puns linking the word "it" (as in, "it girl" and "Coke is it!"), the acronym IT (Information Technology), and the new agreement that will allow Apple's iPhone to be made available to customers of the wireless carrier, T-Mobile (hence i-T). Connection is also a pun in this context, but you picked up on that right away, didn't you?

And while this is not exactly an earthshaking event in the big scheme of things, and if anything, I'm a big schemer kind of guy, but, well, if someone asks, I'll tell them what I think. So when the E-Commerce Times reached out to me for a comment on this new development, I gave them my views, which they included in the article they published, written by Erika Morphy, entitled, T-Mobile May Pull Off a Painless iPhone Launch.

The article was posted on December 7th, and begins with the following subheading:

Now that T-Mobile will be getting the iPhone, speculation is centered on how it may help -- or perhaps hurt -- the company. Other carriers have faced difficult challenges in their early iPhone days. T-Mobile CEO John Legere has promised a new way of selling the device, however, that will be both easy on the company and easy on consumers' pocketbooks.

 The article begins by setting the stage with the following basic information:

Buried halfway through a wordy investment statement from Deutsch Telekom: "T-Mobile USA has entered into an agreement with Apple to bring products to market together in 2013."

Those 17 words launched a frenzy of speculation. Was this finally the agreement that T-Mobile had been waiting for? Would it soon provide the iPhone and possibly the iPad to its customers?

T-Mobile CEO John Legere confirmed to investors at a conference in Germany that the company would indeed sell the iPhone in 2013, according to reports, and said that it would be offering it with a dramatically different plan. 

 The next section has a subheading of "Be Prepared" and lays out some of the questions and concerns regarding this new development:

The big question has been answered, but many others remain. Will carrying the iPhone increase customer satisfaction at T-Mobile? Can its network handle the data-hogging devices?

As for customer satisfaction, probably not -- at least, initially -- if the experiences of AT&T, Verizon Wireless and Sprint are any guide.

For all three providers, customer satisfaction declined after the iPhone was introduced, David VanAmburg, director of the American Customer Satisfaction Index, told the E-Commerce Times.

"That was not a black eye to Apple in any way -- its products always do quite well. Rather, it was a matter of bandwidth at the network providers, and the ability of the providers to manage their networks in way that keeps satisfaction at a higher level."

In short, VanAmburg said, there were disgruntled customers at AT&T, Verizon and Sprint, and there will likely be some at T-Mobile as well. 

 So, now that the stage has been set, enter yours truly, in a section with the heading "Odd Man Out" (which does not refer to me, I hasten to add):

Still, the news can't be anything but good for the company, said Lance Strate, professor of communication and media studies at Fordham University.

"With this agreement, T-Mobile ceases to be the odd man out of the big four U.S. wireless service providers," he told the E-Commerce Times.

"T-Mobile has suffered from the absence of the iPhone option, so if nothing else, this will stop the bleeding, so to speak -- stem the loss of customers and allow them to retain their market share rather than fade away into obscurity," Strate explained.

It probably won't add much to the company's customer base, as the once-volatile market has become fairly stable, he continued, "unless they are willing to offer something significantly different from the competition in regard to data plans and pricing -- and I don't think they'll be able to."

 Now, let me interject with, "what do I know?" before continuing on with what Morphy has to report:

Yet that is exactly what T-Mobile's Legere has suggested the company will do.

Instead of offering the usual subsidy with a contract -- a model that can be a huge financial burden to carriers -- T-Mobile will sell the iPhone at full price. However, customers will be able to pay $99 down and $15 to $20 a month for 20 months to ease their out-of-pocket strain, Legere reportedly told investors.

As for T-Mobile's network, it should be able to handle the iPhone, said Strate, mainly because most of the T-Mobile iPhone users will be existing customers who switch over from Android smartphones.

So, at least I figure Legere won't contradict that last speculation, even if I'm wrong.  In any event, allow me to exit stage left, as we come to the final act, with the heading of "The LTE Issue":

T-Mobile will definitely be able to handle the traffic if the iPhone is an LTE-ready one, said Andreas Scherer, managing partner of Salto Partners.

Such a move would fit nicely with the company's overall strategy, he told the E-Commerce Times.

"As T-Mobile prepares for its merger with MetroPCS, the company is upgrading its LTE infrastructure heavily. The idea is that both companies will upgrade their existing client bases aggressively to the new network. The iPhone 5 fits perfectly in this picture," Scherer explained.

T-Mobile positioned its MetroPCS acquisition as allowing it to become a "bigger, better, bolder" provider when it was announced in October. That meant being able to provide 4G services and deeper LTE coverage in several metro areas as well as a greater choice of products -- including, we now know, the iPhone.

 So, it looks like I'm on safe ground here, even if my comments haven't fit the situation to a T, but you know it's tough to hit a mobile target.  And seriously, I do think we're moving into a period of more stability now when it comes to mobile services and wireless carriers, and that only makes sense. 

We're well past the days when there were major gaps in service areas, and you could walk down the street and step into a dead zone. So we should also be well past the days when a particular mobile device is available only through one or more particular carriers. Freedom of choice in a free marketplace is best for all concerned. It's not a substitute for democratic action, of course, but it is sound economic policy.

There is something about interpersonal media that favors monopolies or near-monopolies, like the postal service and good old Ma Bell, and the way that the internet that we know was the result of the merger of many different computer networks.  Simply put, the more individuals that are a part of a network, the greater its value, and that value increases exponentially as the network grows.  Stability and homogeneity are need to guarantee the best quality and most effective service, and the highest degree of interconnectivity.

So, that's that. If you disagree, well, by all means, say so, or in other words:  Tag! You're i-T!


Bruce I. Kodish said...

You explain these technical, business details with the greatest of ease. Thanks.

Robert K Blechman said...

Aren't you afraid that despite the iPhone infusion, T-Mobile will soon go the way of the Model T? Can the economy af-ford it in terms of reduced competition amongst mobile carriers? Maybe they can survive by changing their name to i-Mobile.