T-Mobile is Finally 3G-Bound

T-Mobile USA Inc. is packing its bags for advanced wireless services. It today revealed its plans for building out a UMTS/HSDPA broadband network, scheduled to begin in the fourth quarter, go live in 2007 and be completed by 2009, all for the relatively modest price tag of $2.66 billion.

T-Mobile was the high bidder in last months auction for advanced wireless spectrum, winning 120 licenses covering the continental United States, Hawaii, Puerto Rico, U.S. Virgin Islands, Alaska and major urban markets including New York City, Los Angeles and Chicago, for about $4.182 billion. The wins gave the carrier much-needed broadband spectrum in the top 100 markets with which to roll out a 3G network and services, a necessity to compete with Cingular Wireless, Sprint Nextel Corp. and Verizon Wireless, which already have 3G capability and are deploying multimedia, broadband services nationwide.

At a press conference in New York City today T-Mobile CEO Robert Dotson said the carrier has an advantage in being late to the 3G party. While it was waiting to upgrade the network, equipment prices have come down, putting it in a better cost position to achieve profitability on advanced services than its competitors, he noted.

As far as those services go, the carrier has not revealed specific plans. However, Dotson said, generally, that the carrier will first concentrate on services people are already using, such as e-mail and social networking, and make landline displacement for voice a focus. Enhanced data services, such as mobile TV, will be more of a wait and see, he said. Executives did say that T-Mobile plans to deploy dual-mode Wi-Fi/cellular laptop cards to take advantage of the fast data access on the new cellular network as well as T-Mobiles large hotspot footprint.

On the strength of the upgrade and the ability to provide competitive services, T-Mobile has a goal of increasing its subscriber base by about 50 percent, executives said, up from todays 23 million.

This is what T-Mobile needs to do in order to remain competitive, wrote Jeff Kagan in a research note. Until the last few years their offerings were pretty close to their competitors. However, as major competitors increasingly roll out advanced services like pictures, video, live television, movie clips, music videos and more, the gap is getting wider and wider. T-Mobile needed to make a decision. They could either continue down the current path of limited services for a lower price, or to try and catch up to the competitors with advanced services, so they can participate in advanced revenue opportunities.

T-Mobile was mum on the details of the build today, such as vendor choices and deployment timelines by market, but some reports have fingered Nokia-Siemens and Ericsson as the suppliers for base stations, and Alcatel and Tellabs for backhaul. A call to T-Mobile for comment was not immediately returned.

T-Mobile USA Inc.

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