T-Mobile Points Way to Its Brand of 3G Evolution

Sharon Armbrust | October 07, 2006, 04:57 PM

Yesterday (10/6) T-Mobile shared with investors its plans for its UMTS/HSDPA upgrade using its newly won AWS spectrum, but it also used the occasion to brag that it hasn’t been missing the 3G boat at all, contrary to Wall Street’s concern about it not being able to match Verizon and Sprint’s race into mobile broadband and video for lack of spectrum.

Rather, T-Mobile thinks it has the timing just right and the path as well. The company will roll out its new network starting in 2007, mostly in 2008 and finish in 2009. Some of the cost, timing and strategy advantages it thinks it has:

1. It expects to be buying 3G handsets at $150-300/unit vs the $250-500/unit its rivals are currently paying. So its phone subsidy picture will be vastly different from its peers today.
2. It paid just 59 cents/MHz pop (based on 2006 pops) to double its spectrum nationally, from 26 MHz to >50MHz on average, and it will operate on just two bands, vs 3 or more for competitors.
3. It likes its ratio of successful new services vs the competition—with its Blackberry, Sidekick, TM Hotspot integration, through which its moving consumers PC functionality to mobile.

T-Mobile claims the sweet spot of 3G is taking widely used consumer services of today and moving them to mobile with no degradation of service, and that’s more feasible to do with things like email and fixed/mobile migration than with niche services like video where the consumer experience is still so inferior.

One incubator the company has for keeping track of usage patterns from the PC to the mobile phone is with its Sidekick customers. Over 500K of its 23 mil. sub base uses the trendy device. And T-Mobile has seen that fully 30% of the web pages pulled up by Sidekick users are on MySpace--a great example of a hugely popular PC service going mobile and one that T-Mobile thinks it can build on by staying tightly focused on its chosen core customer segments.