T-Mobile's Triple Threat
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"[Most] people want to have a home phone that's separate from their cell phone," says Rob Chandhok, chief product officer for SunRocket. He argues that cell-phone numbers are viewed as more personal, and people are less willing to give them out.
The @Home offering also may aid T-Mobile in competing with smaller cell carriers such as Leap Wireless (LEAP) and MetroPCS Communications (PCS), which offer unlimited calling for as little as $30 a month. During its six-month trial in Seattle, the company found that @Home users tended to sign up for lower-priced calling plans, which at T-Mobile start at $39.99 a month for 1,000 cell minutes. Yet, says Sims, those users were more satisfied with the service and less likely to switch carriers.
With wireless carriers increasingly forced to lure one another's customers to grow, user retention is key. T-Mobile says it has found that poor in-building cellular coverage was the No. 1 reason its customers switched to rivals, so the company hopes the indoor strength of Wi-Fi will ease such complaints.
Also, by offloading call traffic onto the Internet, T-Mobile will free up space on its cellular network for other advanced services, such as video downloads.
Good Pricing
For other carriers, the benefits of offering a converged cellular-Wi-Fi service are less clear. Such a service might cannibalize the landline business at AT&T and Verizon, whereas T-Mobile and Sprint Nextel (S) don't have a landline business to worry about. Sprint says it is looking at "femtocells" to improve indoor reception. A femtocell is, essentially, a mini-cellular transmitter that connects to a broadband Internet connection. Sprint declined to provide any details or the possible timing of such a service. At AT&T, "We are constantly exploring new technologies in our labs, but don't have details to share at this time," says spokesperson Fletcher Cook.
Even if they're so inclined, other carriers may have trouble following T-Mobile's lead. Rivals are six to eight months away from being able to offer an @Home lookalike, says Shiv Bakhshi, director in charge of mobility research at consultancy IDC (IDC). After all, it took T-Mobile three years to develop the service, which necessitated a network upgrade and tweaks to the Wi-Fi router to improve battery life on the phones.
"I think [this offering] will do well," says Bakhshi. "The pricing is very good."
Kharif is a reporter for BusinessWeek.com in Portland, Ore.
