T-Mobile and ConvergenceWednesday, June 27, 2007
T-Mobile announced and launched a new service today called HotSpot @Home. It is a convergence play, wide-area GSM along with home and hotspot Wi-Fi. A couple of days ago, our company was briefed on today’s announcement and launch and we had a chance to ask questions and to probe this offering a little deeper than it is explained in the press release.
First, for all of you VoIP (Voice over IP) fans out there, this offering does NOT use VoIP. Instead, T-Mobile has “wrapped” GSM voice and data services inside an IP envelope. Once the voice reaches the network, it is “unwrapped” and processed as a standard GSM call. In T-Mobile’s assessment of technologies, they determined that VoIP over Wi-Fi was not ready for prime time and since its wide-area network is based on GSM, this seems to be the logical approach to providing voice services at home and wherever there are T-Mobile hotspots (and in some cases, where there are non-T-Mobile hotspots as well).
At launch, there are two phones available: the Samsung t409 and Nokia 6086. Both of these are capable of GSM/GPRS/EDGE and Wi-Fi, have Bluetooth, a music player, picture caller ID and voice dialing, and the phone pricing starts at $49.99. T-Mobile told us there will be other phones hitting the market. We also were just briefed by the world’s largest supplier of smartphone/email devices and they indicated they will soon have a device for this converged network.
The T-Mobile secret sauce for this system is the fact that years ago they upgraded their network operations center and since then they have had the ability to view both networks and, in reality, brought the networks together. They have also extensively upgraded their wide-area network to make this GSM/Wi-Fi convergence possible. While customers can use their own router (the voice and data services are backhauled over the Internet via an existing DSL or cable connection), T-Mobile is also offering two routers that have been optimized for their network and are essentially free (after a $49.95 rebate). The optimizations include the prioritizing of voice traffic, improvements to extend phone battery life, easy set-up and synchronization with the phones and full encryption for both voice and data services. In addition, these routers include remote management software to make it easier for T-Mobile to manage the connection.
When questioned about 911 calls, T-Mobile claimed they were able to handle emergency calls and route them to the closest PSAP (Public Safety Answering Point) using their existing network determination as well as their network operations center to verify that calls are handed off properly. Two issues T-Mobile is aware of and working on have to do with backup power and situations in which if there is a guest in the house who does not have a Wi-Fi-capable phone they will have no access to phone service. T-Mobile is working on fixes for both issues. Perhaps they will incorporate battery backup (if I were going to install this service, I would purchase one of the inexpensive UPSs on the market) and though T-Mobile did not say so, I suspect we will see a very inexpensive Wi-Fi-only phone that can be left in the house for guests, babysitters, etc.
The cost for this new service seems reasonable enough at $19.99 per month for a single line and $29.99 for a family plan, which is, of course, over and above a standard wide-area T-Mobile plan. The service is being kicked off by offering the plans for $9.99 and $19.99 in order to build an installed base quickly.
The phones are capable of syncing to a Hotspot @Home, and the router is capable of syncing with five different phones. In addition, the phones will work on any T-Mobile hotspot and automatically lock onto the access point. If a customer wants to add a non-T-Mobile hotspot, this can be done in certain cases (depending on sign-in requirements).
While I have not tried the service, T-Mobile claims hand-offs are fast and you don’t even know they have occurred. In our briefing, we were told that there have been demos for analysts who walked in and out of a Starbucks numerous times with no call drops or indication of a hand-off.
If the system works as advertised, I think a number of existing subscribers will sign up. T-Mobile has spent a lot of time and effort going after the 15-25 year old or so market, which is increasingly a wireless phone-only crowd. Market research it provided says 12.9% of households rely solely on wireless phones for communications and 30% of wireless phone customers cite lack of coverage in their home for their continued reliance on wired telephone services.
T-Mobile told us they are looking at supporting other backhaul solutions including satellite and even Clearwire’s WiMAX network. I think the latency in a satellite Internet connection might cause some problems, and most of you know what I think of Clearwire’s chances for success. Still, T-Mobile is trying to provide this service to as many customers as possible.
In-building connectivity is a big deal for all of the wireless operators. There are a number of different solutions being tried such as in-building repeaters from the likes of Spotwave, passive antenna systems and micro, pick and terra cells deployed by the networks. We don’t have great in-building coverage in the United States because it is becoming harder and harder to deploy cell sites. Most sites cost more than ever, take longer to be approved and are fought at every turn by city and county governments as well as citizen groups. I have attended numerous meetings for cell site permit approval where citizens stood up and expressed concerns about unsightly towers, supposed health hazards and even problems with birds flying into towers. Yet these same people complain bitterly when they don’t have wireless phone coverage. It is a never-ending battle and it is only going to get worse.
T-Mobile believes they have come up with a way to fix its in-building or at least in-home coverage. Other network operators are working to come up with their own solutions. T-Mobile was able to put this together only because they have an extensive hotspot network (Starbucks, Admiral Clubs, airports, etc.), they have already integrated their wide-area and local-area networks, they made a decision to use UMA (Unlicensed Mobile Access) technology and they made a large investment in network upgrades.
I think T-Mobile will be successful if the system really works as claimed, and as an added bonus, it will help unload their wide-area network. There are a lot of wireless calls made from inside homes simply because it is cheaper than using a landline (at least for long distance calls). My concerns are the lack of backup power for the home access points, the baby sitter and guest problem (having no phone available) and, finally, the fact that I still don’t believe the Internet is a mission-critical network and using it for backhaul is risky as far as I am concerned.
T-Mobile is the first out of the gate with a complete solution for wide-area and local-area wireless convergence, but you can bet it won’t be the last. Europe and Asia have much better indoor coverage than we do. The reason has to do with the fact that their first wireless networks were installed by government-owned telecom services. They put cell sites virtually anywhere they wanted and when these telecoms went private and new competitors were allowed into the market, they had no choice but to match the coverage provided by the original networks.
Convergence—wired, fiber, cable, wireless―is coming to all of the operators in the near future. Congratulations to T-Mobile for being first to market with its wireless-to-wireless convergence play. I think it will be successful. We are getting ever closer to the promise of one person, one phone number that was envisioned in the mid-1990s. As always, it takes longer to arrive at the ultimate destination than most could have imagined.