T-Mobile to Launch Wi-Fi-Enabled Cellphones This Summer

T-Mobile USA, the fourth largest U.S. wireless operator and a primary growth driver for parent Deutsche Telekom, will launch a cellphone service this summer across the U.S. that will allow phones to roam on Wi-Fi hotspots. The service, called Hotspot at Home, is designed to improve indoor reception and cut customers' cellular bills. Nokia and Samsung make phones that work with the service, which has been tested in Seattle for several months. When a user comes within range of a Wi-Fi hotspot, calls are transferred to the Wi-Fi network. T-Mobile will offer customers a free, proprietary wireless router that it claims will provide better service and longer battery life. The company is said to be considering modifying the router so landline phones can be plugged into it, which would put T-Mobile into competition with landline providers like Verizon and AT&T. T-Mobile is competing with AT&T's Cingular and Sprint Nextel, which are also trying to meld their cellphone networks with Wi-Fi phones. Jeffrey Nelson of Verizon Wireless says the unlicensed frequencies on which Wi-Fi technology operates preclude the placing of enough quality controls "to give our customers a guaranteed great experience." Frank Hanzlik, managing director of trade group Wi-Fi Alliance, predicts businesses rather than individuals "are going to drive this trend aggressively." T-Mobile, which has 25 million subscribers, is trying to leverage its 8,000 U.S. Wi-Fi hotspots concurrently with its upgrade of its cellular network to include "3G" broadband services.

Sources: Wall Street Journal
Commentary: Size Matters: Verizon Wireless vs. T-Mobile USA • T-Mobile to Roll Out Dual-mode Phone • T-Mobile Comes Out On Top In FCC Spectrum License Auction
Stocks/ETFs to watch: Deutsche Telekom AG [ADR] (DT), Nokia Corp. (NOK), Verizon Communications Inc. (VZ), AT&T Inc. (T), Sprint Nextel Corp. (S), Telecom Italia S.p.A. [ADR] (TI). ETFs: PowerShares Dynamic Telecom & Wireless ETF (PTE), HOLDRS Wireless (WMH)

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Comments

[Mark Welch]

You wrote: "T-Mobile will offer customers a free, proprietary wireless router that it claims will provide better service and longer battery life."

First, the router isn't entirely free, it's $50 with a promise of a $50 rebate some time later; you must still pay sales tax. But that's a minor issue.

Far more important is the REAL REASON why T-Mobile offers a "free" router: its proprietary implementation of WiFi isn't compatible with other 802.11 wireless routers. (This means that these phones can't reliably connect to 99% of the wireless routers installed in the USA.)

My wife and I switched to this service two weeks ago, and immediately experienced a very high level of dropped calls, both on WiFi and on cellular signals. It didn't take long to learn something important that T-Mobile doesn't advertise: its implementation of WiFi is non-standard; they use a proprietary variation of the WiFi standard, and they won't disclose how it works, except to licensees who make routers for T-Mobile. Without their router, connections are intermittent, at best. And like you, our experience was that calls dropped from WiFi didn't "hop" onto T-Mobile. We finally returned the phones and cancelled the service today, after we "recaptured" our phone numbers through a different carrier.

www.markwelch.com/pers...