Can T-Mobile Get Its Groove Back?

This fall has not been kind to T-Mobile.

First, the mobile operator had to account for mountains of lost data that had been stored by Sidekick customers on the infrastructure of Danger, the Microsoft-owned company that developed the Sidekick device.

Then there was the nationwide service outage for millions of U.S. T-Mobile customers a few weeks ago.

‘An Extensive Investigation’

Now, it looks as though employees at T-Mobile UK have been selling competitors the names of customers whose T-Mobile contracts were about to expire.

“When it became apparent that contract renewal information was being passed on to third parties without our knowledge, we alerted the Information Commissioner’s Office,” T-Mobile blogger chrisw wrote on Tuesday. “Working together, we identified the source of the breach which led to the [Information Commissioner’s Office] conducting an extensive investigation which we believe will lead to a prosecution.”

Turns out T-Mobile had been asked to keep such revelations quiet, which resulted in some consternation when the UK ICO made the news public.

‘It Is Disturbing’

The spate of problems faced by T-Mobile this fall raises the specter of the company becoming the “new Sprint,” hemorrhaging customers as soon as their contracts are up.

If ‘three strikes and you’re out’ is the common prevailing wisdom, can T-Mobile survive? That is, can it make adequate amends to its customers?

“It is disturbing,” telecom and wireless analyst Jeff Kagan told CRM Buyer. “Normally, companies have to worry about competition and missing a shifting industry. In addition to that, T-Mobile keeps shooting itself in the foot, over and over.

“We have to look at this and wonder what is coming,” Kagan added. “Can they recover, or will the damage keep getting worse?”

‘The Clock Is Ticking’

AT&T and Verizon have been doing strong business, but “Sprint has struggled quite a bit over the last few years,” Kagan explained. “The wireless business is not bullet-proof — especially when the bullet comes from your own gun with friendly-fire.”

Which path will T-Mobile take going forward?

“It takes a long time and much effort to build customer confidence, but a very short time to lose it,” Kagan noted. “We don’t yet know what tomorrow looks like for T-Mobile, but the clock is definitely ticking.”

To keep customers on board, T-Mobile should offer something of value to those who were inadvertently damaged, Neil Strother, an analyst with Forrester Research, told CRM Buyer.

‘Hard to Win That Back’

The company should “be clear with customers about what went wrong, and what they’re going to do to prevent it from happening again,” Strother said.

With the Sidekick problems, “they acknowledged the issue and tried to correct it,” Strother said. “I think they were working as hard as they could.”

Nevertheless, “It’s hard to win that back,” he added. “It’s hard for customers to say, ‘yes, I trust you again.'”

‘Pretty Short Memories’

Yet “most customers have pretty short memories, and ultimately they look for two things: good coverage and cheap prices — and a good balance between the two,” Allen Nogee, a principal analyst with In-Stat, told CRM Buyer.

“Their coverage is fair to good, and their prices are on the lower end of the spectrum for large operators in the U.S.,” he explained. “Where T-Mobile sometimes [lags] the other operators is that they don’t have a phone selection ‘theme’ that customers can identify with.”

That’s not to say that the company doesn’t have a wide selection of phones, Nogee added. “It’s just to say T-Mobile hasn’t spent a great deal of marketing dollars pushing certain models of phones like the other operators have, which leaves them without a high-profile, heavily advertised phone for them to call their own.”

Still, T-Mobile “retains the value-conscious customers that want a good value, and even want a good phone, but don’t care if they have the highest-profile phone of the moment,” Nogee asserted.

‘No Way Out’

Moving forward, “I think there will be customers that won’t be happy with T-Mobile after this, no matter what T-Mobile gives them in return,” he opined.

T-Mobile also recently announced that it would start charging customers — including existing customers under contract — an additional US$1.50/month for paper bills, Nogee noted.

“This made some people very mad, to the point that T-Mobile later reversed its stance and said it would not charge extra for paper bills,” he explained. “This did some very bad damage to T-Mobile because it was intentional, and it betrayed customers’ trust because T-Mobile was basically changing its part of your contract, and existing customers had no way out.”

Of course, Nogee added, “at least T-Mobile had the sense to reverse the policy when it realized it was wrong.”