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October 24, 2006

T-Mobile, Competition, and the Thirteenth Fairy

A story in today’s NY Times confirms what Om Malik predicted would happen: T-Mobile has begun a commercial test of combination mobile phones which can connect either through WiFi or through the traditional cellular network.  They claim that the phones can even roam between the two types of network without losing calls.  The test is limited to Seattle initially.

Competitively, T-Mobile is aiming these phones directly at LANDLINE providers.  The service is called @Home and the website is www.theonlyphoneyouneed.com. Don’t go there unless you want to see some really annoying video.  I’ve watched it all on your behalf to try to figure what this offer does and doesn’t do.  What is very clear is that T-Mobile is telling you that, if you use this service, you won’t need a traditional home phone line.

To drive home the point, all US domestic calls made using a WiFi connection are “free”.  These “free” calls cost you $19.99/month added to whichever T-Mobile service you’ve subscribed to (the base service has to be at least two years and at least 39.99/mo).

This offer might be appealing if your mobile phone doesn’t work very well in your house and you want it be your only phone.  Not sure it appeals much on price, however.  If you add $20/month to your mobile bill you can probably buy enough extra minutes to cover all your calling from home.  On the other hand, if you are already making lots of calls from home and from Starbucks, maybe you can reduce the base number of minutes you buy and at least come out even.  Of course, if you us this as the last straw and get rid of your landline phone, then you’re bound to be ahead of the game.

The phone doesn’t work with ALL WiFi.  If it did, then it would really be interesting because it would let you make free calls to the US from anywhere you could find a hotspot and it would work in all the buildings which have WiFi but not good cellular coverage. The only commercial hotspots it works with are those operated by T-Mobile, which, of course, do include Starbucks and many airports and hotels.  Not clear if it works in these hotspots if they’re outside the US.

The sappy videos seem to say that you need to use the free WiFi router T-Mobile supplies in order to make the service work at home. I’ve asked T-Mobile for clarification but, to-date, haven’t received any.  My guess both from listening to the videos and from the fact that I don’t think T-Mobile is ready to provide free calls to people connecting thru random hotspots (can you say “MuniWiFi”?) is that the phone are firmly locked to work only with WiFi from the router T-Mobile provides and with T-Mobile hotspots.

This is not a bad short-term strategy for T-Mobile.  It makes the hotspots more valuable.  It offers an added value to its subscribers who have purchased unlimited use of the hotspots.  But, limiting the usable WiFi connections in this way makes the service much less disruptive to the cellular industry and much less interesting to me (and probably you) than it would be if they really opened it up.

Oh yeah; the thirteenth fairy.  She’s the one who wasn’t invited to Sleeping Beauty’s christening.  Was really pissed off and thus SB’s long snooze.  T-Mobile and its parent Deutsche Telecom don’t have any landlines in the US so they’re happy to rain on Verizon and at&t’s landline parade.

I think there’ll be a fourteenth fairy  with no existing landlines or traditional mobile lines.  She’ll start with a “free” WiFi phone which can roam to traditional cellular networks,  open it up wide wherever it can get an Internet connection.  She’ll spoil the party for all the carriers now collecting high rents for landlines or cell tower use.

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