T-Mobile USA Isn't Going to 'Act Like a Wireless Company'

"We're still a wireless company. We're just not going to act like one anymore." So says T-Mobile USA, in an example of the feisty attitude T-Mobile USA wants to project under CEO John Legere.

That sort of scrappy talk is not unusual for such a veteran of the competitive communications business, and clearly indicates T-Mobile USA hasn’t backed away from the effort to create a brand that is not like a mobile “carrier” in its packaging a retail approach.

The issue is whether any such strategy will allow T-Mobile USA to change its market share position compared to Sprint, the number-three provider, much less AT&T or Verizon Wireless.

Though styling itself a disruptive force, T-Mobile USA will have to face many of the same issues other would-be disruptors in the competitive local exchange carrier or IP services businesses have had to contend with – namely that disruptive innovation often requires business models so radically different that the upstarts can “destroy” existing industry pricing levels.

It isn’t enough to offer lower prices, no-contract service or other incrementally helpful policies; CLECs did that, and largely were beaten back. It has taken Skype and other over the top voice providers with radically lower operating and capital costs to really disrupt industry voice pricing.

It is not clear that T-Mobile USA can reset its operating costs in a similarly disruptive way. If history provides accurate guidance, it is firms such as Republic Wireless or FreedomPop that are likely to provide such disruptive attacks, as did Skype and other OTT VoIP suppliers.

In fact, one might argue that unless T-Mobile USA is willing to launch a “Free Mobile” style attack on retail pricing levels, it will not succeed. In fact, it still is not clear Illiad’s Free Mobile assault will succeed in France, either.

In France, Free caused competitors to drop their retail prices, in some cases, as much as 50 percent to 60 percent in some cases.

In the U.S. market, T-Mobile USA might also have to face Sprint, which under Softbank’s philosophy, is virtually certainly looking at ways to disrupt the market itself.

Different price points will help, but disruption might require a level of discounting that neither T-Mobile USA nor Sprint can stomach. So just how much action accompanies the talk is the issue at hand.