T-Mobile Has Little to Offer US Mobile Providers

Say hello to T-Orange. That is not the official name of the joint venture between T-Mobile UK and Orange UK...at least not yet. The alliance seems to create a formidable entity in the battle for mobile provider supremacy in the United Kingdom. Unfortunately, T-Mobile in the United States is languishing in fourth place with little hope of reaching a similar deal.

The United Kingdom partnership gives the new entity over 28 million combined customers and a 37 percent stake in the U.K. mobile market. In the United Kingdom, that puts ‘T-Orange' ahead of Vodafone UK, making it the leading mobile service provider in the United Kingdom.

By those standards it would seem that T-Mobile's 33 million plus subscribers in the United States should make it a dominant player. Unfortunately, 33 million customers would make it the number one provider in the UK, but in the United States it garners a meek 12 percent of the market and lands T-Mobile in fourth place, well behind Sprint.

T-Mobile's position in the United States mobile provider food chain limits Deutsche Telekom's (T-Mobile's parent company) options. It can try and compete on its own, seek a similar strategic partnership as the ‘T-Orange' deal, or put itself on the auction block and hope to get absorbed into a larger competitor.

It may not seem so in most markets, but there are other providers aside from T-Mobile, Verizon, AT&T, and Sprint. In fact, there are a lot of smaller market mobile service providers. T-Mobile could adopt a strategy of scrapping it out by buying these smaller competitors to grow its subscriber base and extend the reach of its service.

Being smaller has some benefits in terms of being more strategically agile and able to deliver innovations that larger competitors are too cumbersome to adopt. Still, fighting to grow organically can be a costly and arduous battle and it would still be a long shot to even catch Sprint, much less achieve any sort of market dominance.

If T-Mobile wanted to negotiate an arrangement similar to ‘T-Orange' in the United States, the most likely partner would be Sprint. The problem is that the deal offers little of value to Sprint. The combined subscriber base would put the alliance around 82 million, catapulting them ahead of AT&T, but barely and still #2 behind Verizon.

Sprint may be a little gun shy about such mergers as well. The merger with Nextel did not go nearly as smoothly as Sprint had hoped or planned. On the one hand, the Nextel battle scars Sprint has acquired in the trial-by-fire Nextel experience might uniquely qualify them to enter into an arrangement with T-Mobile.

T-Mobile is far behind competitors in terms of network technology though. While Sprint is working diligently to establish itself as a leader in the emerging 4G market, T-Mobile is just catching the 3G wave. The growing pains of trying to fit a round peg in a square hole and force their technologies to play nicely together is probably not worth any potential benefits to be gained.

That leaves the big boys- Verizon and AT&T. Either of them could swallow up T-Mobile. For AT&T, such a purchase would make it the largest provider. For Verizon, it would put them far ahead of the second place competitor. Aside from those bragging rights though neither has much to gain.

Verizon and AT&T are both achieving success just fine. Competing head to head with the quality and reach of their respective networks and providing original features lets the two whittle away at companies like T-Mobile. Basically, they can win the customers through attrition without spending the money to buy T-Mobile or dealing with the headaches to integrate it.

One thing that may ultimately benefit T-Mobile in the United States is the inquiry recently undertaken by the FCC. If the FCC shakes up industry practices and levels the playing field, perhaps T-Mobile may find it has more negotiating leverage than it does now. If not, the prospects for T-Mobile in the United States don't look very promising.


For comprehensive coverage of the Android ecosystem, visit Greenbot.com.

Subscribe to the Best of PCWorld Newsletter