June 03, 2013, 12:46 PM — T-Mobile may not have deployed its new LTE network in many areas yet, but in the seven cities where we recently tested the service, we found great speeds and coverage--adding another highlight to an already impressive T-Mobile story this year.
T-Mobile launched its LTE network in February, adopted an entirely contract-free plan structure in March, and began selling a $100-down-payment iPhone 5 in April. But May was arguably its biggest month, as the carrier acquired regional player MetroPCS and also debuted as a publicly traded company on the New York Stock Exchange.
What's not to like?
T-Mobile is making some good moves, but in our experience its Achilles' heel has always been (and still is) the quaility, reliability, and breath of its network service. The carrier can blast out impressive data speeds and decent voice service in certain parts of town, but often it isn't able to match the consistency and coverage of its larger competitors.
T-Mobile's new LTE network could go a long way toward fixing those problems, and it could bring the carrier's quality of service into parity with AT&T's and Verizon's if deployed correctly.
TechHive and testing partner OpenSignal evaluated the new T-Mobile LTE network during March and April in seven U.S. cities. We expected to find some high speeds, but we also found some reasonably good network availability.
T-Mobile has been selling HSPA+ as "4G" service for the past couple of years, but in April the company finally launched its own LTE network in seven cities: Baltimore, Houston, Kansas City, Las Vegas, Phoenix, San Jose, and Washington, D.C. We were able to test the service in all of those cities except Baltimore. In addition, we were able to test T-Mobile LTE in San Francisco, where it has yet to launch officially.
The company says that it plans to grow out its LTE network to many more cities by the end of this year, coming within range of 200 million people. To offer a viable alternative to AT&T and Verizon, it will need to deploy enough cell-tower density in inner cities to produce download speeds in the midteens, and to establish enough towers in the suburbs to produce download speeds in the upper single digits.
On March 26, T-Mobile launched its new Simple Choice plans, which completely eliminate the two-year contract model that has so enriched the coffers of the big wireless carriers over the past ten years. The contract model lures subscribers with the chance to get a fancy smartphone at a very low price, and then locks them into a contract in which the subscribers continue paying not only monthly service charges but also the money that the carrier fronted for the phone, plus interest--and not just until the phone is paid off, but indefinitely.
Under the Simple Choice plans, T-Mobile finances the new phone at no interest. The subscriber makes payments on the phone as part of the monthly bill, but only until the cost of the phone is paid off.
Target: iPhone users
With the new Simple Choice plans, T-Mobile hopes to attract customers from AT&T and Verizon, especially iPhone owners and would-be iPhone owners. The T-Mobile iPhone 5, which went on sale April 12, sells for a down payment of $100 and $20 per month (over 24 months).
The device is fully compatible with the LTE network, which will allow for some 20-mbps or better speeds for buyers lucky enough to live in a T-Mobile LTE city. T-Mobile has sold more than 500,000 iPhone 5 handsets as of May 8.
A cost study by Flannery Morgan Stanley shows that multi-iPhone families can save a considerable amount by choosing T-Mobile instead of selecting a family or shared-data plan from AT&T or Verizon. A T-Mobile plan with three iPhones saves a customer $660 or more over 24 months versus a similar plan from AT&T or Verizon, and $300 versus one from Sprint. The savings increase substantially if the customer brings his or her own iPhone.
Shoring up the 'device gap'
The iPhone is just one of many hot new devices that are now available to T-Mobile customers. Nowadays T-Mobile usually gets popular new handsets at about the same time as AT&T and Verizon do. The list includes the Google Nexus phones, the HTC One, and the Samsung Galaxy S4. T-Mobile doesn't have the same depth in Windows Phone and BlackBerry options, but that won't be a deal breaker for most people.
Also, T-Mobile allows new customers to bring any unlocked GSM-compatible smartphone to its network, a practice that AT&T is hostile towards.
Subscribers might be starting to buy into the T-Mobile story. Subscriber losses have slowed way down since last year, when the company lost 510,000 customers in the first quarter of 2012. It lost only 199,000 contract customers in the first quarter of 2013. It lost 515,000 contract customers as recently as the previous quarter.
However, Verizon Wireless added 677,000 subscribers in the quarter, and second-ranked AT&T added 296,000. T-Mobile still has a steep hill to climb.
The Metro PCS acquisition will enlarge T-Mobile's LTE reach to Atlanta, Boston, Dallas/Fort Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco, and Tampa/Sarasota. MetroPCS will contribute about 9 million prepaid subscribers to the combined company, taking T-Mobile's total U.S. wireless subscriber share from 10.5% to 13.3%.
T-Mobile will also benefit greatly from the MetroPCS spectrum it will be getting, which could give it the holdings it needs to build out a national LTE network that will rival those of AT&T and Verizon. "MetroPCS spectrum is a just-as-important part of the story; with it, T-Mobile moves from having a hit-and-miss mix of HSPA+ and LTE service to being able to roll out a 2x20MHz LTE offering that will rival any operator in the next few years," says Yankee Group analyst Rich Karpinski.