Gigaom

Memo to T-Mobile's Future CEO: Don't Change a Thing


Memo to T-Mobile's Future CEO: Don't Change a Thing

Photograph by Akos Stiller/Bloomberg

Philipp Humm is out at T-Mobile, and we don’t know why. Maybe he really was planning to leave all along, as he claimed in an internal memo. Maybe he’s being forced out by parent company Deutsche Telekom for the failure of the AT&T-Mo merger. Or maybe he was brought on board in 2010 for the sole reason of selling the U.S. subsidiary and now that a sale is longer feasible, he’s moving on to the next project.

Whatever the reason, the move is sudden, and T-Mobile finds itself looking for a new chief executive. We have some unsolicited advice for whomever that replacement will be, as well as acting CEO Jim Ailing: Don’t mess with Humm’s work.

T-Mobile may be suffering at the hands of its much larger rivals Verizon Wireless and AT&T, but the last thing T-Mobile needs right now is the strategy shake up that a new CEO invariably brings. After the failed merger with AT&T, Humm and his team put together a solid plan to become a competitive force in the market. Here are the reasons why we think T-Mo is on the right track:

  • It has the most competitively priced voice and data plans in the market. It may not have true unlimited data like Sprint, but it has a lot more options for cheap and plentiful smartphone bandwidth. It’s also challenging the long ingrained subsidy model in the U.S., offering customers lower rates if they pay for their devices up front. As our data consumption continues to grow, those innovative pricing policies will become a key differentiator from Ma Bell and Big Red.
  • It amazingly has pulled an LTE network out of thin airwaves. T-Mobile has always been spectrum poor, but Chief Technology Officer Neville Ray has shown tremendous resourcefulness with the meager cards he has been dealt. By reshaping T-Mobile’s GSM capacity and playing musical chairs with its networks, Ray not only managed to eke out an LTE network but even found room to expand its existing HSPA+ network.
  • That future LTE network may not be as big nor as robust as its competitors, but T-Mobile is taking all the necessary steps to ensure it will become one. It wrenched the spectrum it needed from AT&T to complete its LTE network on the West Coast, and it negotiated a very shrewd pact with Verizon for the airwaves its needs on the East Coast. That deal may have been cynical, given its condemnation of Verizon in the recent past, but T-Mobile is a business. If T-Mobile is going to compete with the big operators, it will need to make the same Machiavellian choices as the big operators.
  • T-Mobile is set to get the iPhone. The same network reconfiguration that will give it LTE will also plant its HSPA+ network in the terra firma of the PCS band. That means any iPhone that works on AT&T’s network will work on T-Mobile. As I have written before, Apple isn’t stupid. When T-Mobile is iPhone-ready, Apple will jump at the chance to offer it on its network.
  • Instead of fighting off the growing cadre of mobile virtual network operators (MVNOs), T-Mobile has started to embrace them. Last year T-Mobile opened its data networks to the resellers, and since then Straight Talk, Simple Mobile, GSM Nation, and many others have all signed up, giving T-Mobile a lucrative source of revenue.

Wireless industry analyst Chetan Sharma believes T-Mobile is still weak when it comes to selling to businesses and vertical industries such as health care. Sharma also thinks it needs to come up with more services like its Bobsled VoIP calling service. But for the most part, T-Mobile is on the right track, Sharma told me in an e-mail:

“T-Mobile has done a pretty good job on the network front under the leadership of Neville Ray. They upgraded their backhaul to Fiber and moved rapidly on HSPA+. Even the LTE deal was put together in record time. Normally, these things can take many quarters. Their marketing is always edgy. They put the top 3 operators on the back foot with their 4G marketing (rightly or wrongly). They are clearly positioned well to be a good value competitor. At this point, addition of iPhone is not going to tilt the scales too favorably. It is useful to prevent churn but expect no significant defections.”

Of course, as Sharma implies, this wasn’t all Humm’s doing. Humm ran the company, but the groundwork for many of these initiatives was laid before he arrived in May 2010. As David Beren of TMoNews suggested on Twitter, T-Mobile may have accomplished what it has despite Humm’s presence:

“I believe he was brought in to prep the company for sale, which left the company distracted from strategies that should have launched a long time ago. … [While] the ‘challenger strategy’ is great, [it] should have happened 18 months ago.”

Regardless of whether T-Mobile’s current aggressive strategy is Humm’s legacy or the work of his team, we think it’s a good plan. T-Mobile’s next CEO should give it a chance to work.

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Fitchard is a writer for the GigaOM Network.

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