T-Mobile CEO: A Merger with Sprint Could Work...

(Photo: Reuters)

T-Mobile is on fire. For the past year, it’s been systematically eliminating the things people hate about cellphone companies. Calling itself the “Uncarrier,” T-Mobile now:

• Will pay your entire cancellation fee if you switch from another carrier.
• Does not require a two-year contract.
• Permits you to pay off your phone upfront, over two years, or at any rate you like.
• Offers free texts and free Internet when you use your phone in other countries.
• Does not charge overage fees once you’ve used up your data allotment each month (once you reach your 4G limit, you get slower speeds until the start of the next month).
• Offers 200 megabytes of cellular Internet data a month, forever, free, if you buy your tablet from T-Mobile.
• Has the fastest 4G LTE coverage of any carrier (it says).
• Has beefed up its coverage to 96 percent of the U.S. population (it says).

Today, the company revealed the results of all this: an insanely successful first quarter of 2014. In those three months, it signed up 2.4 million new subscribers. That’s by far the best quarter T-Mobile has ever had.

Read: More about T-Mobile’s latest quarter

For comparison: During that same period, Verizon and Sprint lost subscribers, and AT&T picked up only 625,000.

At this rate, T-Mobile will soon overtake Sprint in size. (T-Mo has 49 million customers; Sprint has 55 million.)

These deals cost the company money; it lost $151 million for the quarter. But unless you’re an investor, you probably don’t care. You’re delighted to pay something less than an arm and a leg for cellphone service — and even more delighted that Sprint, Verizon, and AT&T are being forced to question their own long-standing, user-hostile strategies.

After the announcement, I interviewed T-Mobile’s CEO John Legere. It was something of a follow-up to this now-immortal interview I did with him on the Yahoo stage last January (video is at the end of this story).

David Pogue: What about these Sprint takeover rumors?

John Legere: If you’re talking about the rumor about Sprint’s interest in T-Mobile, it’s been around for a long time. That’s been floating around since at least 2012. Nothing particularly new there.

On any specific deal that may or may not be going on, I really have no comment. But as a telecom professional who’s been at this game a long time, could I wake up tomorrow and use the access and capabilities of those two companies — and the economic prowess of the two owners — to create something really different and sustainable in the U.S. wireless industry? I sure as hell could.

But that’s a different type of question.

DP: But T-Mobile and Sprint are different, incompatible network types (GSM and CDMA). How would that work?

JL: We merged a year ago with MetroPCS, which is a CDMA carrier. More than half the customers have already moved over and gotten new handsets on the T-network. So rather than mash together two complicated network technologies, what we’re doing is migrating the customers from one to the other over time.

Then we’re taking those CDMA components and shutting them down. And we’re taking that radio spectrum and using it to make the T-Mobile side even better, because now you have more radio waves available for more customers. It’s a really interesting model. We’re talking about 10 million customers from MetroPCS.

DP: So what other Uncarrier initiatives are you planning?

JL: Sure. Grab a pen, and I’ll just lay out for you our next moves. [laughs]

Actually, if you had gone back and asked customers, “What are the next hot moves that someone trying to make wireless better should tackle?” it turns out our moves are not that hard to predict. It’s the things that our customers are clamoring to be made better.

And since I already know what we’re going to do next … sometimes the most innovative thing is right under your nose. It’s something consumers are already doing with their devices, a way they’re interacting, that they’re actually happy with. They’ve just never thought of it being done in a totally different way. They think that’s just the way it is.

There’s a couple we’ve stumbled on, under the heading of “Why not?” We’re not necessarily taking something that people hate, like contracts, to a different place; we’re taking something they’re OK with to “Wow, I can’t believe you’re doing that!” That’s really going to be fascinating.

DP: So it looks like these Uncarrier moves are paying off. If things keep going this way, where will you be a year from now?

JL: I think we’ll meet Verizon and AT&T halfway at 75 million [laughs].

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