T mobile an unstoppable force case

T mobile an unstoppable force case

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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 1 T-Mobile: An UnstoppableForce Sidra Siddiqui | Atif Siddiqui 2015 Its 12:00 am and John Legere,the CEO of T-Mobile, is still sitting in his home office with a pencil in his hand, writing something and unable to sleep. His wife calls him to sleep and to take some rest but he seems restless. He is unable to answer his own questions. He is worried about the future of T-Mobile. He recalls how he got the opportunity to become the CEO of T-Mobile and how he struggled to bring the company up with the support of his colleagues and employees. He changed the meaning of competition by bringing in no contract plans, no switching cost and lower and fixed rate internet. How the ‘Un- Carrier’ strategy became their competitive edge and their corporate culture became their strength. But eventually other competitors followed and with limited spectrum and input availability, once again it became hard to compete and struggle for the top. He is unable to answer what should be the next step for his company? Even with all these good policies and practices the question once again comes is how to eliminate the major problem of spectrum and changing technology. How to stay ahead in this competitive Industry? How to differentiate? With all these questions going through his mind, he opens up his email and starts writing: Meeting: Next Thursday Agenda: Analysis of ourenvironment and challengesand how to overcome and differentiate. Ideas fromworkforce are welcome and to be submitted through my direct e-mail…..
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 2 About the Company COMPANYHISTORY: T-Mobile USA also known as the “Un-carrier” resulted from a merger between two American cellular companies in 1994. At the time when the industry was fragmented,a merger between Pacific Northwestern and General Cellular created a new company called Western Wireless Corporation, the predecessor of T-Mobile USA. In 1999, Western Wireless Corporation spun off VoiceStream Wireless which experienced major growth in both customers and market value. VoiceStream gained worldwide attention including the European giant Deutsche Telekom, a German telecommunications company. Deutsche Telekom acquired VoiceStream Wireless in 2001 and rebranded it as T-Mobile USA 10 . In 2012, T-Mobile restructured its organization and optimized its operations in order to better meet the needs of its customers and to reposition itself. T-Mobile then merged with Metro PCS and went public in 2013 4 . Today, it actively trades in New York Stock exchange under the ticker symbol TMUS. The parent company Deutsche Telekom AG(OTCQX: "DTEGY") maintains 67% ownership as common stock of T- Mobile US, Inc.9 This larger support from its parent has allowed T-Mobile to become one of the four largest wireless carriers in United States serving over 55 million customers and annual revenues of $24.42 billion 5 . BUSINESS MODEL AND RESOURCES: T-Mobile US, Inc. has its headquarters located in Bellevue Washington, employing over 40,000 employees 5 . T-Mobile USA is a national provider of wireless voice, messaging, and data services in the United States, Puerto Rico and the U.S. Virgin Islands under the T-Mobile, MetroPCS and GoSmart Mobile brands. It also offers cellular phones, smart phones and others products from various big manufacturers like Samsung, Nokia, Apple Inc., HTC, Sony and LG. Moreover, T-Mobile operates retail wireless hotspots at airports and businesses across the country. T-Mobile US, owns and operates its services on over 2000 Cellular towers within United States and neighboring territories. Utilizing its towers T-Mobile provides coverage to most of United States and parts of Puerto Rico, Canada,and Mexico. Its nationwide network reaches 96 percent of Americans through its HSPA 3G/HSPA+ 4G/4G LTE coverage. Ericsson and Nokia Siemens Networks works as T-Mobile’s primary infrastructure vendors for its LTE network. They have installed LTE Release 10-capable equipment at approximately 37,000 cell sites across T-Mobile's HSPA+ network footprint as part of the carrier's effort to increase signal quality and improve network performance 6 . T-Mobiles also expects to have approximately 55,000 equivalent cell sites in total, upon the completion of migration of MetroPCS customers,including macro sites and certain distributed antenna system (“DAS”) network nodes. In 2013 T-Mobile also purchased 10 MHz of Advanced Wireless Services (“AWS”) spectrum from United States Cellular Corporation (“U.S. Cellular”) which covers a total of 32 million people in 29 markets. T-Mobile expects to further enhance its portfolio of nationwide broadband spectrum through spectrum transfers and purchases to enable the expansion of LTE coverage to new markets5 .
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 3 Exhibit: T-Mobile CellularTower Location 2 Exhibit: T-Mobile 3G/4G Coverage 3
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 4 CURRENT STRUCTURE As asubsidiary of Deutsche Telekom, T-Mobile has its own corporate governance, which is run by a board of directors and its executive team, made up of a chief executive officer, chief operations officer and chief financial officer. Currently, T-Mobile is run by John J.Legere serving as Chief Executive Officer1 and Presidentof T-Mobile US. Legere,has previously served as an executive capacity for competitor AT&T, Dell, Global Crossing, and also serves on the CTIA Board of Directors. He was appointed as the CEO of T-Mobile US in September 2012 and has since been identified for T-Mobile's approach to contract-free wireless service or the "Un-carrier". Under his direction, T-Mobile employs J. Braxton Carter serving as the Chief Financial Officer, and James C. Alling serving as the Chief Operating Officer. CUSTOMERS AND DISTRIBUTION T-Mobile markets its services and products through its own network of approximately 8,000 retail locations, as well as through more than 62,000 third-party retail locations and online 5 . T-Mobile generates revenue from three primary categories of customers: branded postpaid, branded prepaid and wholesale. Its largest customer segment (about 70% of revenue) is postpaid subscribers. Prepaid customers account for about a quarter of revenue and wholesale clients, roaming charges,and other services generate the rest. Wholesale segment is the smallest which contains MVNO or resellers of T- Mobile Service. T-Mobile currently partners with 24 wholesale partners. Among the largest of partners are Wal-Mart Family Mobile, Straight Talk, Simple Mobile, P-Tel, etc.
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 5 FINANCIALS In 2013 T-Mobilereported about $24 billion in revenue, up nearly 25% from the prior year5 . The growth was powered by a more than $3 billion increase in prepaid service revenues because of the inclusion of MetroPCS results starting in May 2013 and a nearly $3 billion rise in equipment sales primarily on the introduction of Apple products. After multi-billion dollar impairment charges in both 2012 and 2011, the company reeked out a $35 million profit in 2013 with no impairment charges that year. Cash flow from operations was down slightly in 2013 to $3.5 billion. MISSION STATEMENT Unlike most companies T mobile does not present their mission statement in a formal business way, instead they state in a very informal and customer friendly way their reason for existence: ‘In a world full of busy and fragmented lives, we at T-Mobile USA,Inc., have this idea that wireless communications can help. The value of our plans, the breadth of our coverage,the reliability of our network, and the quality of our service are meant to do one thing: help you stick together with the people who make your life come alive. That's why we're here 9 .’ INFLECTION POINT AND CURRENT STRATEGY Evident from the Mission Statement, T- Mobile focuses and listens its customers. In 2012, Legere came in as a new CEO and crafted a strategy of Un-carrier’ to support the mission statement. In March of 2013 T-Mobile launched the first phase of this ‘Un-carrier’ strategy5 . In this 1.0 phase T-Mobile was the first one to introduced Simple Choice plans, which eliminated annual service contracts and provided customers with affordable rate plans without the complexity of caps and overage charges. In the 2.0 and 3.0 phase T-Mobile allowed its customers to upgrade their handsets and reduced international calling rates and roaming fees and data at no extra cost. In its 4.0 phase, T-Mobile offered reimbursement of early termination fees when customers switched from other carriers. Moreover,with its latest Un- carrier phase, T-Mobile has rolled out cheap and simple business plan targeted at small companies14 . T- Mobile has also upgraded their network to LTE and is currently working to expand this LTE footprint. Legere also changed the way the company expressed as “Core Values” to what he called “How We Play”. He brought in a new vision and new vocabulary for the the company. Legere embraced the magenta color as the ‘Un-carrier’ spirit and as the company’s official color, the company followed suit. T-Mobile has continued to take its transformation as it continues to encourage its employees to be bold and themselves. “The concept really was, from Day, not just to survive but to go all the way7. -John Legere, CEO in an interview with LA Times
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 6 COMPETITIVE ADVANTAGE This 'Un-carrier'strategy has become their competitive advantage and it has led T-Mobile to become the nation's fastest growing wireless company. As a result of this strategy T-Mobile share rose from $16.25 to 33.64 in the year of 2013, resulting in a return of 107% 8 . It also added 4.4 million new customers in 2013. Since 2012, T-Mobile has increased its customer count by 66 percent 13 owing to its successful strategy and customer focus and its customer base is still increasing as more and more people are switching to T-Mobile 8 . STRENGHTS AND WEAKNESS: T-Mobile has a very strong brand equity. Its family shared data plans and no annual contracts are its strength combined with 4G LTE technology which is the most recent and advanced technology right now. T-Mobile has been ranked the highest among major wireless carriers for retail-store satisfaction four years consecutively and highest for wireless customer care two years consecutively10 . However its poor network and coverage is T-Mobile’s major weakness as its customers often do complain about call drop due to weak signal. T-Mobile customers also have to pay full price for the cell phones unlike the free phone or low cost cell phone offers by its rivals. CORPORATE CULTURE: "We had to change this culture unbelievably to something that stands for who we are 7 ." - John Legere John Legere, the current CEO of T-Mobile has successfully transformed the company’s idle and listless corporate culture into a vibrant hotbed of innovation, by staying focused on purpose. With tangible returns as well as emotional engagement, T-Mobile employees has been able to show their colors, organizational pride and recognize opportunities. T-Mobile has not only used employee generated content (EGC) to bring their brand to life but also values their opinion by having an open door policy. It encourages its employees to be bold and be themselves. T-Mobile has also introduced social call-to- action- #BeMegenta, to inspire its employees to have workplace related conversation in social media 11 . All in all, T-Mobile has created a corporate culture where its employees feela part of the company, where they are respected for their views and innovative ideas and ultimately make the customers happy.
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 7 BEST PLACES TOWORK: T-MOBILE -Interview with Eirk Johnson, Director of Customer service by Birmingham Business Journal What makes your company's culture rock? If there's one thingT-Mobile does with style andflair, it's fun. Our passionforour customers andour employees provides a spiritedenvironment that is conducive to productivity, creativity and growth. What song title best sums up your company's culture? “Can't Hold Us" by Macklemore Describe your corporate culture in five words or less: Unrelenting, unrivaled and unstoppable. What's your company's strategy for retaining its rock stars? Aside from awesome benefits, T-Mobile is a reward-for-performancecompany. Our topperformers canenjoy heftymonthly bonuses, pick their work schedules and earn trips to places like Hawaii, Las Vegas and Miami. What's the one tip or best practice you would suggest for a company looking to create a better workplace? The way they communicate – T-Mobile has an open-door policythroughout the organization. Our values and culture promote open, honest dialogue, as well as direct conversations, and we provide many avenues for this dialogue to take place. Describe your company's philosophy on human resources in 10 words or less: HR exists to advocate employee satisfaction and fair business practices. What would you say are the three coolest perks about working at your company? 1) 75 percent discount on phone plan, 2) Awesome benefits including tuition reimbursement and child care assistance. 3) Month ly bonus program and recognition trips to places like Hawaii, Miami and Las Vegas. What do you think your company does best in terms of creating a great workplace? We're committedtorewardingthe people who achieveresults for our customers withbest-in-business benefits. Our products and services help our customers balance all the important things in their lives, and our benefits do the same for our employees. What's the hardest part about creating a great place to work? It takes creative ideas, exceptional executionandconsistent followup to keep T-Mobile a great place to perform.Creatinga great place to work is what we do and we love doing it! What makes your company different? While T-Mobile has grown over theyears,we clingto our entrepreneurial spirit. Individual employees canstill make a difference and they take great pride in stepping up to the challenge. They delight in going the extra mile for our customers and peers. What's something a company looking to create a great place to work should avoid? It has to be an environment where employees feel included. Our diversity and teamwork make for an atmosphere where collaboration and innovative ideas are valued. We're passionate about delighting customers, which starts with delighting our employees. What can other companies can learn from your company's culture? At T-Mobile, we put our frontlineemployees first because theycareforour customers andtouch their lives everyday. All other employees work to support the frontline to make their jobs easier. If our employees are happy, we know our customers are also. What's the biggest challenge for companies when it comes to retaining workers? At T-Mobile, we knowthat employees are our most valuable asset. Wehavelearnedthat anycompanymust appreciate their employees, reward them, recognize them but most of all LISTEN to them. If they don't, employees will go somewhere that does. Our ideal job candidate is: Unstoppable One trait we don't want in a job candidate is: Uncaring
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 8 FUTURE CHALLENGES T-Mobile hasseen an attractive upside based on its recent ‘Un-Carrier’ Strategy 5 . The company itself realizes that they have applied an untested tactic that no other competitor has done in the past. In the recent corporate 10-K filings the company has laid out certain Risk Factors that may impact the business or the industry in whole. Data Usage:T-Mobile believes that the wireless spectrum are scarce and the regulations on use are stiff in order to expand services. Based on industry trends, the customers’ average data usage will continue to rise and therefore more spectrum is required to meet demand and new technologies. Increased Competition: T-Mobile recognizes that they compete on customers based on service, device offerings, and call quality/coverage. Due to continued saturation, the customer growth may not be as positive or may even be negative. Competition may continue attract customers with new offerings and lower prices. Consolidation: Mergers and acquisition and other strategic alliances has resulted in larger competition among limited customers. The 2 of the largest competitors hold significant customers, spectrum, and other resources. T-Mobile understands that exclusive handset partnerships and access to roaming may limit company’s quality and ability to grow. Technology: T-Mobile has to take advantage of new technology changes or it can lose or fail to attract new customers. The company is on its way to deploy the latest LE Release 10 to modernize its systems. Strategy: Last but not least, T-Mobile has moved from contract based postpaid accounts to non-contract month to month accounts. If the tactics are not compatible with the needs of customers then there are no long term contracts or residual commitments. If the strategies are not useful to keep the churn down then the company may lose customers exponentially with nothing to tie them to the company. Also certain customers have up to 24 months of financing setup with T-Mobile. If these certain customers suffer credit issues then the company may suffer from bad debt and significant write-offs.
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 9 Telecommunications Industry The WirelessTelecommunication Service Industry is a part of Telecommunication sector. According to NACIS code 517210 this industry is defined as: This industry comprisesestablishmentsengaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular phone services, paging services, wireless Internet access, and wireless video services.2 INDUSTRY PRODUCTS AND ACTIVITIES: o Providing cellular voice wireless network communication service for local, long-distance and international calls o Providing messaging services, such as short message services (SMS) and multimedia messaging services (MMS) o Providing broadband Internet access and wireless internet services and other non-messaging data o Selling cell phones and other wireless devices o Renting out wireless telecommunications equipment o Wholesaling wireless infrastructure capacity to telecommunications resellers o Providing machine-to-machine M2M connections for fleet management systems, smart grid devices, vehicle tracking, home security systems, and other telematics services. o Operating and maintaining of switching and transmission facilities o Paging, advanced PCS services, and other services EVOLUTION: In 1939 Daniel Noble invented two-way FM mobile radio system. Afterwards, AT&T was the first to launch its mobile telephone service commercially in 1946 in St. Louis, Missouri, at a frequency of 150 MHz.11 In 1947 it developed the concept of cellular telephony and during the 1950s AT&T and Motorola and a few others continued their cellular technology R&D efforts. In 1958, invention of the integrated circuit contributed considerably to the ability of making portable miniaturize mobile phones. In the 1960s, the citizen band radio (CB) became popular among truck drivers and then in the 1970s, it became widespread among the general public. Meanwhile, Motorola continued experimenting with mobile communications and in 1973, Motorola’s vice president, Martin Cooper displayed the DynaTac,a 28- ounce portable telephone, on the streets of New York City. It took 10 years for the Federal Communications Commission to approve the mobile telephone and Motorola introduced it formally in 1983. Motorola’s first model called the DynaTAC 8000X, weighed nearly two pounds and cost $3995. Since then, prices and weight have come down dramatically and wireless industry has continued to grow at a breathtaking pace. Today, four major companies dominate the U.S market namely Verizon, AT&T, Sprint and T-Mobile and covers more than 90% of the U.S population.7
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 10 INDUSTRY OVERVIEW The Wirelessindustry is an extremely important part of the U.S. economy and the largest sector of the Telecommunications industry. The wireless telecommunication industry in the United States is valued at an estimated 205 billion U.S. dollars, according to 2014 statistics.4 This Industry is greater than publishing, agriculture, hotels and lodging, air transportation and motor vehicle manufacturing segments and rivals with computer systems design services and oil and gas extraction industries. The U.S. wireless telecommunications industry has seen huge growth since its inception having more than 90% of US households wireless service users and approximately 336 million mobile wireless connections today.6 This industry directly or indirectly employs 3.8 million Americans, which is 2.6 % of all U.S employment. U.S wireless industry is a highly competitive industry with these four big players generating approximately 96% of the total revenue.3 MAJOR PLAYERS: There are four major players in U.S wireless industry. These include AT&T, Sprint, T-Mobile, and Verizon Wireless. They are facilities-based mobile wireless service providers, which means these companies provide services primarily using their own network facilities. These companies are typically described as “nationwide” and all of these four providers have a network that covers significant portion of land area and population of the United States. All of these nationwide providers provide service directly to consumers and businesses and also provide machine-to-machine (M2M) services. 1. AT&T American Telephone and Telegraph Company (AT&T) was first established as a subsidiary of Bell Telephone Company in 1885 which later on in 1988 acquired the Bell Company and became independent. In 2005, SBC acquired AT&T Corp. and took the company's more well-known name as AT&T Inc. Today, AT&T is an American multinational telecommunications corporation which has its headquarters in Dallas, Texas. AT&T is the second largest provider of mobile phone service and 20th-largest mobile telecom operator in the world.12 AT&T Subsidiaries: o AT&T Corp. o BellSouth o Southern Bell o AT&T Teleholdings o Cricket Wireless o Lusacell KEY INFORMATION:12 Company Public Key People Randall Stephenson Chairman and CEO Products  Fixed Line  Mobile telephony
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 11  Broadband  Fixedline internet services  Digital television Revenue $132.447 billion (2014) No. of employees 243,620 (2015) 2. VERIZON COMMUNICATIONS Verizon Wireless is a wholly owned subsidiary of Verizon Communications which was founded in 2000 as a result of merger between Bell Atlantic and GTE. Verizon Wireless is the largest wireless telecommunication provider in U.S serving 123.5 million subscribers4 . Its headquarters are in Basking Ridge, New Jersey. The company is one of two major U.S. carriers that use CDMA2000 (Code Division Multiple Access). 13 Subsidiaries: Verizon Wireless Diamond State Telephone New Jersey Bell Bell of Pennsylvania Verizon North The Chesapeake and Potomac Telephone Company Verizon California Hughes Telematics[5] Terremark EdgeCast Networks[6] International Computer Security Association[7] CyberTrus KEY INFORMATION:13 Company Public Key People Lowell McAdam (chairman and CEO) Products Fixed line and mobile telephony Broadband and Fixed line internet services Digital television and network services Global internet protocol backbone network Revenue $127,079 billion (2014) $81 billion (2013) No. of employees 177,300 (2014)
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 12 3. SPRINT Sprint Corporationtraces its origins to the Brown Telephone Company,which was founded to deploy telephone service to the rural area around Abilene, KS. In 2005, it took the name Sprint Nextel Corporation as a result of merger with Nextel. Soft Bank acquired Sprint Nextel Corporation in 2013 for $21 billion and it has now 80% stake in the company. It is the third largest wireless telecommunication company serving 55.9 million customers as of 2015. It has its headquarters in Overland Park,Kansas.14 Subsidiaries: Sprint Communications Inc. Boost Mobile Inc. Virgin Mobile USA L.P KEY INFORMATION:14 Company type Public Key People Marcelo Claure, CEO Masayoshi Son, Chairman Products Wireless communication Internet services Long distance Revenue 35.493 billion (2013) No. of employees 36000 (2014) MARKET SHARE Verizon and AT&T are market leaders in the U.S wireless industry. They both hold 34 percent share of subscriptions in the United States. Verizon has the most wireless subscribers in the United States, with the figure standing at 123.5 million customers as of the second quarter of 2014. AT&T competing with Verizon has approximately 116 million customer followed by Sprint, with only 55 million customers. Based on subscriptions, Sprint is the third largest wireless carrier, holding a 16 percent market share in the second quarter of 2014. T-Mobile ranks fourth with only 1% behind sprint, having 15% market share.4
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 13 Exhibit: Wireless CarriersMarket Share Exhibit: Wireless Carriers Market Share (%) Q1 '12 • Verizon 34% • Leap Wireless 2% • AT&T 32% • Metro PCS* 3% • Sprint 17% • US Cellular 2% • T-Mobile 10%
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 14 M2M CONNECTIONS: Many industriessuch as healthcare, are transforming to use M2M networks to connect their various smart devices and machines. Although M2M connection are found typically in the Enterprises space,more and more providers are now launching services for the home market. The research firm “Current Analysis” estimates that AT&T had approximately 14.7 million M2M connections, Verizon Wireless had between 7 and 9 million connections, and both Sprint and T-Mobile had 3.3 million connections. M2M has gained significant interest in the past few years as providers continue to provide connectivity between devices, sensors,monitors, etc. and their networks. INDUSTRY INPUT: Mobile wireless service providers use a combination of inputs to provide mobile wireless services to their customers. These include electromagnetic spectrum to transmit signals between base stations and end users’ devices, as well as non-spectrum inputs such as cellular base stations and towers to carry transmissions. Backhaul, is another additional input required for the provision of mobile service. SPECTRUM: The spectrum is the most important input in the provision of mobile wireless services,including mobile broadband, as it affects existing service providers and potential entrant’s ability to expand capacity and deploy new networks. Spectrum bands vary in their characteristics,use and deployment. Service providers transmit their spectrum bands differently depending on the nature of the service, geography, density, or other factors in their network build-out. Low-band Spectrum below 1 GHz has distinct network transmission advantages over long distances, while also reaching deep into buildings and urban canyons. Low-band spectrum is considered to be coverage spectrum. High-band Spectrum above 1 GHz is more plentiful and possesses certain technical advantages allowing for the transmission of large amounts of information. High-band spectrum is considered to be capacity spectrum. There is significantly less low-band spectrum than high-band spectrum that is suitable and available for the provision of mobile telephony/broadband services.5 The FCC has established policies to make spectrum available to existing mobile service providers and potential new entrants through initial licensing, primarily by competitive bidding, and through secondary market transactions. These auctions are open to any eligible entity that submits an application and upfront payment, and is found to be a qualified bidder by the Commission.
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 15 NON-SPECTRUM INPUT SEGMENTS: 1.Wireless Infrastructure: Wireless infrastructure facilities hosting cellular base stations are a major input into the provision of mobile wireless services. They include towers and other tall structures for macro sites, such as lattice towers,guyed towers,monopoles, rooftops, water towers,and steeples. In addition to the use of towers and other tall structures,wireless infrastructure also include distributed antenna systems (DAS) and facilities for small cell technologies that are generally deployed to address coverage and capacity issues indoors, in densely populated areas outdoors, and even underground. A specialized communications tower industry has developed to provide and manage support structures for the cell sites required by mobile wireless service providers by leasing space to them. Independent tower operators own, operate and lease shared wireless communications and broadcasting towers, manage other high structure sites (such as rooftops, water towers) for property owners, and to a lesser extent, build and operate DAS networks and small cell facilities for mobile service providers.5 2. Backhaul: Backhaul facilities link a mobile wireless service provider’s cell sites to the mobile switching centers that provide connections to the provider’s core network, the public switched telephone network, or the Internet, carrying wireless voice and data traffic for routing and onward transmission. Backhaul connections are an integral component of a wireless service provider’s network, and the cost of backhaul is approximately 30 percent of the operating cost of providing wireless service. Backhaul services are generally provided by incumbent local exchange carriers (ILECs),competitive local exchange carriers (CLECs),competitive fiber and microwave wholesalers, cable providers, and independent backhaul operators. In some areas,the vast majority of existing wireless towers have fiber connections. High bandwidth fiber backhaul also allows wireless service providers to rapidly deploy 4G LTE services, while a lack of fiber backhaul can delay a provider’s LTE rollout.5
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 16 COMPETINGFACTORS: 1. PRICING Mobile serviceprovider majorly competes over pricing. Lately, all of these major service providers have made changes to the pricing of monthly postpaid and prepaid service plans in order to compete. They have effectively cut the price of postpaid service for customers whose data use was extensive. Both AT&T and Verizon have cut the monthly service fees on selected data tiers. In addition some providers, including Verizon, T-Mobile and U.S. Cellular, have reduced the price of postpaid service plans by increasing monthly data allowances on usage-based data plans without increasing monthly service fees. Value of existing plans have also increased by some providers using adding new features and including international text messaging and cloud storage allowances. Changes have also been made in traditional prepaid plans by wireless providers. Most have shifted their plans from unlimited data pricing to tiered, usage-based data pricing coupled with speed reductions after usage exceeds a monthly allowance for high-speed data. 2. COVERAGE: Mobile wireless service providers differentiate themselves with the speeds,reliability, capabilities and coverage of their mobile broadband networks. All of the four major wireless providers offer national coverage,using their own facilities and roaming arrangements. Based on January 2014 Mosaik coverage data,Verizon Wireless and AT&T each covers over 79 percent of US road miles and over 55 percent of U.S. land area,while Sprint covers less than 50 percent of US road miles and T-Mobile covers less than 25 percent of US land area with mobile broadband.5 3. TECHNOLOGY: Wireless service providers also differentiate their service offerings from those of rivals by becoming the first to install a particular upgrade or new network technology. Providers have upgraded and expanded their networks with technologies that enable faster data transfer speeds. Almost all of the major mobile wireless providers now offer or plan to deploy LTE. 4. WIRELESS HANDSETS AND OTHER DEVICES: In addition to competing on price and network quality, mobile wireless providers continue to compete by offering consumers a variety of different mobile wireless devices with innovative features. Major providers now offer a range of smartphones and tablets which are made by different manufacturers and run different operating systems. However,some providers offer certain devices only on postpaid plans. Mobile wireless providers also offer wireless data cards and mobile Wi-Fi hotspots to consumers seeking mobile Internet connections for laptop computers and other Wi-Fi enabled devices. Because such devices usually have similar characteristics and functionality across equipment manufacturers,providers generally differentiate their offerings of these products based on their availability on postpaid plans or prepaid plans.
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 17 THREAT OF NEWENTRY: 1. REGULATORY: The industry has several barriers to discourage new entry. Large capital investments required for deployment of the networks are an obviously major barrier. FederalCommunications Commission (FCC) offers limited number of licenses thus creating a regulatory barrier of entry. New entrants have to merge or form alliances with licensed incumbent. 2. BRANDING: The market incumbents have made large investments to establish their name brand which discourages potential entrants due to the heavy costs of developing brand recognition and to create reputation. 3. CONSOLIDATION: The industry has continued to consolidate leaving just 4 large players and absorbing most of the smaller regional players. Mergers and Acquisitions have been necessary to penetrate regions where cellular spectrum have been limited. The need to reach a wider geographical footprint is also spread fixed costs and to create economies of scale and necessity to have a nationwide coverage. This has made it unprofitable for new entrants to come to market. 4. STRATEGIC DETTERANTS: The firms of today have created naturalstrategic barriers to deter entry. Once the infrastructure has been placed, the marginal costs are negligible compared to fixed costs. The incumbents are able to turn on extra capacity with ease. Further investments into the 4G/LTE not only has a purpose of providing better technology but also increase capacity within the available wider spectrum. DEMAND DRIVER: Wireless penetration in US now exceeds 104%3 while Forty Five million Americans use their mobile phones as primary internet device 8 . Demand for wireless services is driven by consumer income and continuously innovating service offerings. The profitability of individual companies depends on marketing and customer service. Large companies have advantages in marketing and in delivering a comprehensive array of services nationally and also packages tailored to niche groups regionally. SUPPLIER POWER: The mobile data consumption has continued to rise and the lack of available spectrum has become a major bottleneck. In the United States, the absence of a large base of uninterrupted spectrum has resulted in efficiency challenges for carriers launching 4G networks. Mobile carriers are taking a number of steps to meet their capacity needs today, aside from mergers and acquisitions and network sharing alliances. A few steps include launching tiered data plans in an effort to partially control traffic loads and investing in a next-generation 4G network and backhaul technologies such as Wi-Fi and small cells. Some carriers are selling femtocells, a low power cellular base station, to their end users as signal extenders or boosters as well as exploring options such as spectrum re-farming. The recent completion of the AWS-3 spectrum auction 8 in January 2015 netted $44.899 billion in provisional winning bids also demonstrates the extreme need for spectrum. The FCC is now working on a
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 18 two-way “incentive auction”plan to buy spectrum from TV broadcasters for proceeds and allocate these airwaves to wireless carriers through forward-selling auctions. This process is expected to be lengthy and is estimated to take another five to eight years with the recent delay in the start of the auction moving to early 2016. The FCC has also recently partnered with the National Telecommunications & Information Administration (NTIA) to test spectrum sharing between commercial organizations and government in the 1695-1710 MHz and 1755-1780 MHz AWS-3 bands. This effort may enable the FCC to auction paired spectrum in the future but ultimately carriers will continue to address the lack of adequate spectrum primarily in three ways: 1) Lobbying for the auctioning of additional spectrum, 2) Working on more efficient use of their existing spectrum 3) Adopting new technologies that will enable more seamless spectrum sharing between parties. Carriers continue to own and use multiple spectrum band licenses with significant concentration in the personal communication services (PCS) (~1.9 GHz) and advanced wireless spectrum (AWS) (~2100 MHZ and 1700 MHZ) categories in North America. THE FUTURE AND THE THREAT OF SUBSTITUTION: “Our focusis on creating a global communications systemthat would be larger than anything that has been talked about to date,” -Musk Although there are no immediate threats to infrastructure based cellular service, but this may not be the case in years to come. With phone apps services such as Viber and Skype have been catering largely non domestic callings throughout the world, their wide acceptance has generally been limited due to the speed and availability of internet services. In January 2015, Elon Musk announced a new venture to put internet providing satellites on Earth’s orbit and later extending it to Mars 9 . The space internet venture intends to use hundreds to satellite to orbit 750 miles above Earth’s orbit and provide low costing high speed internet to over 3 Billion people that do not have internet access. This by definition creates a new global system where devices beyond the regular reach of home’s wifi to be in ease of reach as they connect with the internet. In an interview with Bloomberg, “The speed of light is 40 percent faster in the vacuum of space than it is for fiber,” Musk says. “The long-term potential is to be the primary means of long- distance Internet traffic and to serve people in sparsely populated areas,” said Musk. Although this may sound highly ambitious, Musk has investment backing coming from companies such as Google and Fidelity. 10 As for competition, Greg Wyler of OneWeb is looking to produce similar technological efforts and is backed by Qualcomm and Richard Branson of Virgin Group.
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 19 Issue At Hand Postswitching its acquisition strategy, T-Mobile has seen a significant growth in customer count primarily due to its new industry distributive methods. As the company takes a growth path, it continues to risk losing its newly acquired customer base due to no downs that will hold a customer to stay with the service. Besides this the company continues to suffer industry bottleneck of limited cellular spectrum available from the government. Conclusion After getting an overwhelming response via email from company employees, John Legere,sifted through his emails to discover that employees at all levels in his organization have taken time to provide feedback. He’s amazed to see responses from the front line employees discussing customers’ needs and desires to managers discussing people that will manage to bring out the desired outcomes. He continues to admire his engineers to bring to his attention regarding the latest and upcoming technologies and ideas to continue to improve process. Legere,closes out his day by connecting with his product development and Marketing to design methodologies and campaigns that will fully integrate the front line and other staff members as focus groups and to continuously engage with current and prospect customers at full lifecycle to understand what customers want. Legere understands that he has already brought in revolutionary disruptive ideas to the industry which will now require evolution to stay above the edge and hence profitable. He understands his next move will come from technology and from product catering to his end customers who ultimately decide the future path of T-Mobile.
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  ______________________________________________________________________________T-Mobile _____________________________________________________________________________________ 20 WORKS CITED Part I:Company 1. http://www.ibisworld.com/industry/default.aspx?indid=1267 2. http://www.naics.com/naics-code-description/?code=517210 3. CTIA wireless industry indices, 2004 4. http://www.statista.com/statistics/199359/market-share-of-wireless-carriers-in-the-us-by- subscriptions/ 5. https://apps.fcc.gov/edocs_public/attachmatch/DA-14-1862A1.pdf 6. http://www.ctia.org/your-wireless-life/how-wireless-works/annual-wireless-industry-survey 7. http://www.ieeeghn.org/wiki/index.php/Evolution_of_Cell_Phone_Technology 8. http://en.wikipedia.org/wiki/Spectrum_reallocation 9. http://www.bloomberg.com/news/articles/2015-01-17/elon-musk-and-spacex-plan-a-space- internet 10. http://www.space.com/28316-spacex-elon-musk-google-fidelity-investment.html 11. http://cdn.ttgtmedia.com/searchTelecom/downloads/SearchTelecom_Fundamentals_of_LTE_Cha pter_1.pdf 12. http://en.wikipedia.org/wiki/AT%26T 13. http://en.wikipedia.org/wiki/Verizon_Communications 14. http://en.wikipedia.org/wiki/Sprint_Corporation Part II: Wireless Telecommunications Industry 1. http://investor.t-mobile.com/Mobile/OfficersandDirectors.aspx?iid=4091145 2. http://www.t-mobile.com/coverage.html 3. http://www.bestmvno.com/t-mobile-mvnos.html 4. http://www.theverge.com/2013/5/1/4286622/t-mobile-us-metropcs-merger-complete-tmus 5. http://investor.t- mobile.com/Cache/1500059458.PDF?Y=&O=PDF&D=&fid=1500059458&T=&iid=4091145 6. http://www.fiercewireless.com/story/t-mobile-picks-ericsson-nsn-its-lte-vendors/2012-05-07 7. http://www.latimes.com/business/la-fi-legere-tmobile-20141029-story.html#page=1 8. http://explore.t-mobile.com/uncarrier-revolution-year-in-review 9. http://www.t-mobile.com/company/companyinfo.aspx?tp=Abt_Tab_CompanyOverview &tsp=Abt_Sub_History 10. http://en.wikipedia.org/wiki/T-Mobile_US#History 11. http://www.jwtinside.com/leaderships-purposeful-role-aligning-employees-behind-purpose/ 12. http://www.bizjournals.com/birmingham/print-edition/2014/03/21/best-places-to-work-t- mobile.html?page=all 13. http://www.bizjournals.com/seattle/blog/techflash/2015/03/much-more-than-a-marketing- campaign-how-un-carrier.html?page=all 14. http://425business.com/t-mobile-unveils-latest-big-tactic-growth/