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July 05, 2007

Is T-Mobile’s @Home What iPhone Oughtta Be?

David Pogue writing in the New York Times this morning pities T-Mobile making an announcement of a new service in the same week that the iPhone becomes broadly available.  Actually, from a PR POV it worked out pretty well since T-Mobile got the NYTimes story and it’s favorable:

“…its new product may be as game-changing as Apple’s.

“It’s called T-Mobile HotSpot @Home, and it’s absolutely ingenious. It could save you hundreds or thousands of dollars a year, and yet enrich T-Mobile at the same time. In the cellphone world, win-win plays like that are extremely rare.”

Long time readers of Fractals of Change may remember a post last October about the Seattle trial of Hotspot @Home and a follow-up in May about the service going national which predicted that this new service and others like it would eventually (2013) mean the end of the copper landline. 

With HotSpot @Home you pay $10 month extra on your T-Mobile bill and get a phone which makes “free” calls to the US from some WiFi hotspots. The hotspot can be your home (so why do you need a landline?); it could be a Starbucks in Istanbul (so why do you want to pay roaming charges?).   In case you don’t get it, the URL for the website describing the service is http://www.theonlyphoneyouneed.com/.

In a generally excellent article about the pros and cons of the service, Pogue misses one point.

“Have T-Mobile’s accountants gone quietly mad? Why would they give away the farm like this?” he asks himself.

He answers himself:  “Because T-Mobile benefits, too. Let’s face it: T-Mobile’s cellular network is not on par with, say, Verizon’s. But improving its network means spending millions of dollars on new cell towers. It’s far less expensive just to hand out free home routers.

“Furthermore, every call you make via Wi-Fi is one less call clogging T-Mobile’s cellular network, further reducing the company’s need to spend on network upgrades.”

What David is missing is the significance of the fact that T-Mobile, a subsidiary of Germany’s ex-monopoly Deutsche Telekom, is introducing this product in the US and not its home country.  This is a cannibalization product; this is an “eat your competitors’ lunch because they’re afraid to do it themselves” product.  This is the kind of product that wins because the entrenched competitors – at&t and Verizon – are trapped by the need to protect their existing (but shrinking) landline revenue base so will leave the new market to those who have no vested interest in the existing market.  In the US, DT has no landlines to lose and everything to gain.  Have to wonder who may offer a similar product in Germany.

Readers chrisco and Ronald Pottol both say this is what iPhone shoulda been in comments on yesterday’s post offering a reward for an iPhone which can use VoIP over WiFi.

The comparison is apples (sorry) and oranges, of course, since iPhone is a phone and HotSpot @Home is a service but actually that’s the problem.  Phones shouldn’t be locked to specific services (iPhone is locked to at&t) and services shouldn’t be locked to specific phones.  Pogue says that the only phones the T-Mobile service is currently available on are the very basic Nokia 6086 and Samsung t409.  You should be able to get the service you want on the phone you want; some day that’ll happen.  That’s why Fred Wilson and Jeff Pulver and I are all offering small rewards for hackers (I mean inventors, of course) who find ways to open the iPhone to different networks.

A serious limitation of HotSpot @Home is that it only works at WiFi hotspots which are either in your home, completely open, or are operated by T-Mobile (including Starbucks).  The wonderful UI on the iPhone is perfect for signing on to any hotspot which you can connect to with a computer.

The iPhone could be, perhaps still will be, a key to opening the closed model of phones locked to specific services and vice versa because it is a phone which people are buying today DESPITE the network it’s limited to.  HotSpot @Home is a key to marrying voice and WiFi and eliminating the closed landline networks.  In the best of all worlds, the best of the new phone and the best of the new service come together and we all talk (and IM and send pictures and etc. etc) happily and cheaply and untethered ever after.

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