Three months after T-Mobile USA’s CEO Philipp Humm quit to move to Vodafone, the carrier finds itself welcoming its new chief. Deutsche Telekom has named former Global Crossing CEO John Legere to take over its US mobile arm.
Legere, 54, will officially change offices on Sept. 22, when interim CEO Jim Alling will return to his old job as T-Mobile’s COO. From his resume, Alling seems like an odd choice. Global Crossing, which was acquired by Level 3 Communications last year, was a submarine cable operator providing the fiber connections that link continents, not a consumer-facing wireless business. Legere had a stint at Dell Computer, but the last time he worked at a retail carrier was in 1998 at AT&T, and even there he wasn’t working in the cellular or consumer side of the house. He managed AT&T’s Asian wireline business operations and headed up corporate strategy.
But then again, someone unaccustomed to how things are usually done in the US mobile industry is exactly what T-Mobile needs right now. If T-Mobile is to succeed it will be through challenging the status quo established by AT&T and Verizon Wireless, which collectively manage two-thirds of all US mobile connections. T-Mobile started down that path after its planned merger with AT&T failed last year. As I wrote when Humm departed in June, T-Mobile’s new CEO shouldn’t change a thing about strategy. It’s not clear whether Legere is going to listen to GigaOM, but hopefully he’ll listen to the T-Mobile’s more-than-capable staff, who started laying the foundation of that challenger strategy long before DT got into bed with Ma Bell.
T-Mobile is questioning the long-accepted accepted pricing models in the US mobile market. It’s moving customers away from device subsidies and in the process eliminating the hidden device “mortgage” payments we make on our monthly bills. It’s offering data plans at a steep discount to AT&T and Verizon, and it recently rejoined Sprint in selling an unlimited smartphone plan.
On the network side, T-Mobile is taking advantage of the limited spectrum resources it has to overhaul its network, shutting down old 2G networks so it can repurpose their airwaves for an LTE network as well as eke out more 3G capacity. In the process, it’s realigning its networks bands with the major North American GSM operators, which will give it access to a greater variety of devices – including the new iPhone. (T-Mobile CTO Neville Ray will detail that transformation at GigaOM’s Mobilize Conference this Friday.)
That network overhaul, however, can’t come soon enough. As the only nationwide US operator sans iPhone, T-Mobile is suffering customer defections it can’t stem no matter how cheap it makes its data plans. T-Mobile is actually 400,000 subscribers smaller today than it was at this time last year.
Legere is going to have to figure out how to staunch that subscriber bleed, but hopefully he won’t do it by reversing T-Mobile’s course and emulating the big operators. Though T-Mobile once had dreams of mega-carrier glory, the failure of AT&T-Mo put an end to those fantasies. Whether it likes it or not, T-Mobile’s new role is that of the market challenger, and it’s not going to succeed by playing the same game as its bigger rivals.
