T-Mobile Contests Sprint’s Retention of Third Place in Wireless Market

by Matt Klassen on February 23, 2015

While the initial results of the most recent quarterly reports filed indicate that Sprint has retained its place asAmerica’s third largest wireless service provider, such results may not be quite as cut and dry. In fact, T-Mobile has started to make its own case for usurping that third spot, stating that Sprint’s numbers don’t give an accurate tally of its subscriber base, and the adjusted totals do indeed have T-Mobile overtaking its closest rival to usurp that third position.

The crux of T-Mobile CEO John Legere’s argument is the number of inactive subscribers Sprint has recorded in its financial filings with the Securities Exchange Commission, which counts 1.7 million customers through resale partners that have had inactive accounts “for at least six months.” These phantom subscribers, Legere argues, shouldn’t be part of Sprint’s tally, and without them, surprise surprise, T-Mobile would overtake Sprint for third place.

That this is even as issue between the two wireless firms is evidence of just how close the race is; a testament to T-Mobile’s strong growth over the past two years and Sprint’s precipitous decline. In fact, given T-Mobile’s strong year-over-year growth, there is little question that Legere andCo. will overtake Sprint, meaning this current controversy may be nothing more than a footnote to T-Mobile’s continued rise.

In response Sprint has maintained that it has used this particular accounting method for several years, as CNET’s Roger Cheng explains, “Following a policy to not remove a customer from its records until its resale partner officially notifies the company.” Simply put, if a customer has signed on to Sprint through a resale partner, then leaves or fails to renew the contract, Sprint will continue to count them as subscribers until it officially is notified otherwise. This means that there is a potential for Sprint counting other carriers active subscribers still as their own, inflating its customer tally.

While T-Mobile’s Legere offered little insight into how his own company records and maintains customer numbers, I would think that he would avoid such blatant hypocrisy if his firm did things the same way. With that in mind, the removal of Sprint’s inactive subscribers drops the company’s customers base to below T-Mobile, meaning Legere keeps his promise that T-Mobile would overtake its closest rival by the end of 2014.

But Legere’s ability to keep his promise or not, T-Mobile will overtake Sprint if current trends continue, it’s a question of when, not if.  “We expect to surpass them, shenanigans included,” said T-Mobile’s COO Mike Sievert.

In fact, given the trajectories of both firms it seems this current controversy is about little more than bragging rights, part of Legere’s ongoing strategy to publicly and vocally call out the confusing, vague, and sometimes shady practices of the wireless industry. Of course that means T-Mobile best have its own ship in order, as the only thing that could truly undermine T-Mobile’s UnCarrier revolution would be hypocrisy, a point the company’s competitors are fully aware of.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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