T-Mobile USA: Yes, We're Small, But We're Here to Stay

AT&T Wireless (T), Sprint (S), and Verizon Wireless (VZ) have all probably had a secret wish that German phone giant Deutsche Telekom (DT) would get sick of being in fourth place in the U.S. wireless market. Its T-Mobile USA operation has about 35 million subscribers in America compared to about 50 million for Sprint and close to 90 million each for AT&T and Verizon.

The rumors that T-Mobile and Sprint would combine to create a real competitor to the two front-runners have been around for years. But the two companies run on different technology platforms, and Sprint learned a painful lesson about trying to combine two networks when it bought Nextel. It took years of integration and poor customers service to set up one seamless system, and the legacy of the problems from that merger still plagues the Sprint brand today.

T-Mobile is a thorn in the side of its competitors because it can attract customers with new handsets and special pricing. When these programs draw subscribers, the three larger wireless companies are often forced to match its deals.

But the dream that T-Mobile might someday go away or become part of a merged company appears even less likely than ever after Thursday's interview when Deutsche Telekom CEO Rene Obermann in The Wall Street Journal. Obermann said that he has a commitment to the American market. He also realizes that the market for cellular subscribers is nearly saturated in the U.S., and feels the fight now will be for new wireless and data services. This will probably include 4G networks and the products that will work on a faster over-the-air internet.

T-Mobile's presence in the US will keep its three larger rivals honest, at least on pricing and products. The support of a huge parent like Deutsche Telekom means that little T-Mobile will have access to capital to build out its network here. The German company's commitment may be good for consumers, but for T-Moblle's competitors, it's a different matter.
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