T-Mobile USA blames iPhone 4S for huge customer defections in holiday quarter, says 4G LTE coming in 2013

The nation’s fourth-largest wireless carrier T-Mobile USA just reported it lost 802,000 contract customers during the holiday quarter, causing revenues to dip 3.3-percent to $20.6 billion. For comparison, the company reported 186,000 net contract customer losses in the third quarter of 2011 and 251,000 in the year-ago quarter. The Deutsche Telekom-owned carrier put the blame for such a huge decline in customers and mindshare on Apple’s iPhone 4S that bypassed T-Mobile to launch last October on AT&T, Verizon Wireless, Sprint and regional carriers C Spire Wireless and Claro Puerto Rico, the largest Puerto Rican telecommunications services company.

A statement from Deutsche Telekom said:

For T-Mobile USA, the past year was characterized by significant challenges, particularly in the fourth quarter, following the market launch of the new Apple iPhone model by the three major national competitors in October. [...] However, not carrying the iPhone led to a significant increase in contract deactivations in the fourth quarter of 2011. [...] Sequentially, the decline in branded net contract customers was driven primarily by higher branded contract deactivations as a result of the launch of the iPhone 4S by three nationwide competitors in mid-October.

The Bellevue, Wash.-headquartered firm contemplated for far too long whether to invest big bucks into 4G LTE deployment, and it clung to a hopeful merger with AT&T to solve its capital investment issues. With that deal off the table now, the company is promising to launch 4G LTE service sometime next year, tapping $1.4 billion of its own investment, re-farmed frequencies, and extra spectrum acquired from AT&T.

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AT&T CEO: Recent price jacks due to AT&T’s attempt to monopolize GSM in US

AT&T has a grudge with the Federal Communications Commission, and during the mobile carrier’s quarterly earnings call today, CEO Randall Stephenson criticized the FCC over spectrum availability and the bombed acquisition of T-Mobile USA, with him further claiming that AT&T’s spectrum crux could cause jacked prices against its highest data users.

The American Telephone and Telegraph Company, founded in 1876, once held a monopoly on wired phone service in the United States, but the U.S. Department of Justice broke up Alexander Graham Bell’s company into seven “Baby Bells” with an antitrust lawsuit that turned into a settlement in 1982.

Since then, the company has slowly reassembled. Six of those seven “Baby Bells” merged into two single companies: AT&T, Inc., (Ameritech, BellSouth, Pacific Telesis, and Southwestern Bell) and Verizon Communications, Inc., (NYNEX and Bell Atlantic). The acquisition of the fourth largest wireless service provider in the U.S., Deutsche Telekom AG’s T-Mobile USA, would have poised AT&T to gain a monopoly once again, but this time through its 3G GSM service in the U.S., while garnering the No. 1 spot in the U.S. wireless market. However, the FCC stepped in this time and dashed the company’s monopolizing hopes.

The FCC requested a formal administrative hearing into AT&T’s proposed $39 billion takeover of T-Mobile USA last fall, subsequently causing the U.S. carrier to withdraw the pending approval applications in November 2011. The decision rolled into a killed bid and garnered a $4 billion pretax charge on AT&T’s Q4 2011 accountancy sheet that includes a $3 billion default payment due to Deutsche Telekom over the deal’s non-completion and an additional $1 billion in spectrum value that AT&T would have to forgo.

AT&T CEO Stephenson released his frustrations concerning the debacle at the company’s Q4 2011 financial conference call today. He set his sights on the FCC and lambasted the agency while decrying it of choosing “winners” and “losers” in regards to approving and regulating deals…

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T-Mobile will use resources and spectrum gained from failed AT&T merger to become iPhone compatible

Update: Reports that T-Mobile knows Apple’s chipset roadmap are false I’ve confirmed with T-Mobile’s PR department.  Ray only said that Apple could choose to use Chips that are AWS compatible, which is obvious.

I had a few minutes this evening between Colbie Cailat songs at T-Mobile’s CES 2012 party to talk to CTO Neville Ray on what the future holds for T-Mobile since the AT&T merger is off. T-Mobile walked away with not only $3 billion but also some AWS spectrum from AT&T.

First, Ray is excited.  He talked like someone who has been imprisoned by the merger over the past year, unable to make any long term moves. T-Mobile is still evaluating its long-term options (like LTE) but there is a buzz in the air now.  While the parent company Deutsch Telekom gets the $3 billion payoff from AT&T, it seems that there will be big investment over the next few years in the T-Mobile USA subsidy.

On Dec. 19, T-Mobile’s official AT&T breakup release stated what —besides the $3 billion— T-Mobile would get:

As part of the break-up fee, T-Mobile USA will receive a large package of AWS mobile spectrum in 128 Cellular Market Areas (CMAs), including 12 of the top 20 markets (Los Angeles, Dallas, Houston, Atlanta, Washington, Boston, San Francisco, Phoenix, San Diego, Denver, Baltimore and Seattle).

The UMTS roaming agreement for the U.S. in T-Mobile USA’s favor has a term of over seven years and will allow the company to improve its footprint significantly among the U.S. population and offer its customers better broadband coverage for mobile communications services in the future. Population coverage will increase from 230 million potential customers at present to 280 million. As a result of the agreement with AT&T, coverage will be extended to many regions of the U.S. in which T-Mobile USA previously had neither its own high-speed mobile communications network nor the associated roaming agreements.

That spectrum will allow T-Mobile to light up HSPA+ radio frequency used by the iPhone’s 3G.

I asked Ray about the reports that claimed T-Mobile networks in the Northwest were already broadcasting 1900 MHz HSPA+.

Nevada, parts of Northern California and the Pacific Northwest are also seeing some pockets of 1900MHz spectrum refarming for HSPA+. There are other parts of the country T-Mobile can refarm the 1900MHz spectrum but, the focus is on the Pacific Northwest, Nevada, Utah and California for right now from what we’re told. We should emphasize and emphasize greatly that this post does not mean that all of the aforementioned areas are seeing this refarmed spectrum, just pockets inside those areas.

Ray said those networks were not officially lit up (perhaps some tower testing or AT&T roaming confusion happened).

Nevertheless, there is good news for those who want to use an iPhone on T-Mobile’s 3G network…

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iPhone 4S can reportedly be unlocked without any hardware or software changes

Update: This only works until the TMSI is refreshed which means it won’t last very long

Michael Capozzi (via Chronic) has apparently discovered how to unlock the iPhone 4S (reportedly AT&T version only) without any software or hardware tweaking. The unlock will assist you in using your iPhone 4S on T-Mobile’s network as long as you have a T-Mobile SIM card. Before you get started, go ahead and cut down your T-Mobile SIM card to match your AT&T SIM card’s size. Go ahead and give the following directions a try:

  1. Insert original carrier AT&T SIM card
  2. Dial 611 for AT&T customer service hotline and drop the call
  3. Turn on Airplane Mode
  4. Take out AT&T SIM card
  5. Insert T-Mobile SIM card

Update: the unlock also works with the iPhone 3GS and iPhone 4, and will need to be done again if you reset your device. Continue after the break..

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China Mobile is the T-Mobile of the East with 10 million iPhone users, an incompatible high speed network and no contract

China Mobile doesn’t officially offer the iPhone yet. But it is carrying 10 Million iPhones on its network according to Reuters.

“We have not yet got agreement with Apple,” Wang said on the fringes of the ITU World telecoms fair in Geneva. “Apple promised to provide, when they develop the iPhone for LTE, that it will include TD-LTE. We are discussing the details.”

There had been rumors that Apple would offer a TL-LTE version of the iPhone 4S earlier this year with China Mobile going as far as saying:

China Mobile and Apple hope to find a solution for close collaboration. We discussed this issue with Apple. We hope Apple will produce a new iPhone with TD-LTE. We have already got a positive answer from Apple.

It appears that positive answer wasn’t for this round of devices, though the CDMA Verizon iPhone arrived off schedule in January. TD-LTE will require some separate chips which could be hard to fit inside the iPhone 4S’s enclosure. Apple however has to look longingly at that 600 million+ subscriber base, however.

While T-Mobile USA is on the opposite end of the subscriber spectrum (China Mobile has around the same amount of subscribers as the populations of Europe and the US combined), T-Mobile is the #4 carrier in the US in the midst of AT&T attempting to swallow it.

But they both don’t officially offer the iPhone, yet have a significant number of iPhones floating around on their network. Both offer a different type of high speed 4G network that stock iPhone 4Ses can’t take advantage of. Both networks do offer EDGE/GSM speeds however which some may find valuable tied with reduced fees or better coverage. T-Mobile told us earlier this year that they had over a million iPhones on their network, a figure that is likely to go up with Apple sneakily offering iPhones 4S unlocked at launch.

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