T-Mobile Readies New Web Phones-Hangs Up on a Star Pitchwoman

T-Mobile readies new Web phones, drops pitchwoman

T-Mobile readies new Web phones, drops pitchwoman
Tuesday, September 26, 2006

By Amol Sharma, The Wall Street Journal

T-Mobile USA is expected to launch a host of new services, including a new generation of Internet phones, to attract customers away from both wireless and land-line phone companies -- and it plans to drop its celebrity pitchwoman, Catherine Zeta-Jones.

The company plans to release cellphones as early as October that can roam onto wireless Internet connections at home and in T-Mobile's thousands of Wi-Fi hot spots, people familiar with the company's plans say. Other U.S. cellular carriers are considering offering similar products, but T-Mobile is leading the way. And it may become the first U.S. carrier to provide a Vonage-like Internet calling service, these people said. Both services could mean less-expensive monthly phone bills for millions of consumers.

The new initiatives will be followed by a major rebranding effort. The company has decided to drop Ms. Zeta-Jones from its advertising in favor of a more man-on-street approach to marketing, people familiar with the matter say. Ms. Zeta-Jones may continue to appear in some ads until her contract expires next year, but eventually she will be phased out. The amount of her contract wasn't available, but it is valued at several million dollars, the people say.

Ms. Zeta-Jones's representatives declined to comment.

These moves come after T-Mobile committed more than $4 billion for new radio frequencies during the Federal Communications Commission's recent spectrum auctions. The new spectrum is expected to be used to build a cellular broadband network that would allow customers to surf the Web on laptops and download cellphone media content such as music and video at fast speeds.

T-Mobile, a unit of Deutsche Telecom AG, declined to comment on future product announcements, network plans, or branding changes. With 23 million customers, T-Mobile is the fourth-largest U.S. cellular carrier, behind Cingular Wireless, a joint venture of AT&T Inc. and BellSouth Corp.; Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC; and Sprint Nextel Corp.

Other companies are interested in blending cellphones with wireless Internet service. Monday, France Telecom SA's mobile unit, Orange, launched a dual-mode phone that first will become available in France and later will be rolled out in other European markets. In the U.S., Cingular says it expects to begin carrying dual-mode devices next year.

Manufacturers are expected to ship more than 300 million dual-mode phones by 2011, according to a recent report by market-research firm ABI Research. Strategy Analytics, a research and consulting firm, estimates a $33 billion market by 2010 for devices that integrate cellular, land-line, and Wi-Fi Internet networks.

Sprint has said its joint venture with several leading cable providers, including Comcast Corp. and Time Warner Inc.'s Time Warner Cable, will eventually offer a dual-mode phone. Sprint's partnership with the cable broadband providers may give it leverage in providing a high-quality phone signal over the Internet. T-Mobile has no such partnership.

Eventually, Sprint and other leading carriers could choose to offer Internet-based calling over their cellular networks. But it isn't entirely clear how wireless carriers will manage the transition to less-expensive Internet calling without losing revenue from traditional cellular voice services. One option is to charge consumers for how much data capacity they use, which some carriers already do.

In addition to trying to lure customers away from other cellular carriers, T-Mobile is also courting land-line customers aggressively -- a stance it can take because, unlike the other cellular carriers, it isn't affiliated with a land-line phone company in the U.S. Consumers who have resisted giving up their land-line phones because of poor cellphone reception at home might pull the plug if, as promised, the new T-Mobile phones offer good indoor coverage.

T-Mobile is the only major carrier that has yet to deploy a wireless network capable of providing high-speed Web connections via cellphones and laptops. Until the recent auctions, the company didn't have enough radio spectrum to build such a network, so it has relied on its more than 7,000 Wi-Fi hot spots at airports and Starbucks Corp. coffee shops to give consumers Internet access for a daily or monthly fee. The new dual-mode phones will take advantage of that existing Wi-Fi network while extending its reach into homes.

After having conducted a limited pilot of its new dual-mode phones near Seattle, T-Mobile is planning to launch in a major West Coast market in the fourth quarter, probably Seattle, a person familiar with the company's plans says.

To use the new T-Mobile dual-mode phones, consumers will need to buy a Wi-Fi router for their homes and sign up for service plans that could cost a few dollars a month. Such routers usually sell for about $40 to $80. Eventually, the T-Mobile routers may be designed to include a jack for an ordinary telephone, so that consumers can use their home phones to make Internet calls, people familiar with the company's plans say. T-Mobile consumers won't be charged cellular "minutes" when they make calls over their Wi-Fi connections at home.

There are already some pure Wi-Fi phones on the market offered by companies such as eBay Inc.'s Skype and Vonage Holdings Corp. As the number of Wi-Fi access points grows -- there are already more than 40,000 hot spots in North America, and some cities are being blanketed with Wi-Fi connections -- those phones will become more useful. But for now, consumers can only use them in limited geographic pockets.

The new T-Mobile phones, by contrast, will operate on traditional cellphone networks when they aren't near a hot spot. The transition is supposed to be smooth, so if a user making an Internet call walks out of a Wi-Fi hot spot, there will be a seamless handoff by a cellphone network, and vice versa.

There are some small dual-mode players outside the major carriers. ISkoot offers an application for mobile phones that lets customers make Internet calls from anywhere to people on their Skype buddy lists, but the service uses up cellular air minutes in the process. Customers can download iSkoot onto popular phones made by Motorola Corp., Nokia Corp., Palm Inc., and Sony Ericsson, a joint venture of Telefon AB L.M. Ericsson and Sony Corp.

In addition to its dual-mode venture, T-Mobile has also started trials of a new service plan called "My Favs," which grants customers free unlimited calling to any five of their friends on any carrier, people familiar with the matter say. It is being tested in at least one market, Portland, Ore., and could soon be expanded nationally, they say. All leading cellphone carriers now offer free calling among their own subscribers, but this program, similar to the "My Circle" campaign launched by Alltel Corp. earlier this year, will let people to make free calls to people on other carriers.

T-Mobile readies new Web phones, drops pitchwoman

 

Re: T-Mobile readies new Web phones, drops pitchwoman

Well, there goes my plans of maybe going with T-Mobile, to try & get a date with Catherine.

I will miss those commercials compared to the "Man on the Street" image they are looking to go for.

 

Whoever wrote this doesn't know squat of what they're talking about...LOL!

 

bobolito - I guess you are reacting to the fact that their new radio spectrum really doesn't have anything to do with Wi-Fi.

The longer article from the WSJ is a bit more clear. It indicates that Wi-Fi capable phones are part of the T-Mobile strategy, and a high speed cellular network using the new spectrum is a complementary, but separate part of the strategy.

Did I get it right?

 

I guess so. I was commenting based on what's written on the first post.

 

Right. Whoever wrote it compressed the facts so much that it gave an incorrect impression. They left out the part about T-Mobile's "broadband cellular" effort, and it implied that the new spectrum had something to do with the dual mode cellular/Wi-Fi phones.