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T-Mobile Home VoIP Plan Far from Disruptive
2008-02-26
During a week of big cellular news, the major U.S. mobile carriers — T-Mobile USA Inc. included — announced unlimited calling plans for less than $ 100 per month. So it was natural to think that T-Mobile\'s new home VoIP plan was big news, too; \"disruptive,\" some called it. The plan lets customers make unlimited domestic VoIP calls from home for per month if they already have cellular subscriptions of $ 39.99 per month or more. But although the low price is impressive, in reality, the plan represents only a minor marketing advance, if that.
The ponderously named Talk Forever Home Phone service requires users to buy a $ 50 adapter from T-Mobile (and binds them to a two-year contract). The adapter connects to the Internet and has an RJ-11 jack, into which customers can plug any standard phone. It also includes a wireless router for conventional home networking. The adapter sends calls made from the phone over the customer\'s broadband connection for delivery to the PSTN (public switched telephone network). Customers can transfer their existing residential numbers to T-Mobile, which then becomes their home phone company as well as their cellular provider. The service will initially be available in Seattle and Dallas.
As presented, the plan amounts to little more than comarketing of Vonage-style Internet VoIP and cellular service. The only thing that links the two services is that customers are buying them from the same company at a discount — call it a bargain-basement double play. Thus, the plan\'s sole advance is that it commercially links two formerly unconnected businesses.
The plan represents a low-cost, low-risk move for T-Mobile, according to In-Stat analyst Allen Nogee. The carrier already has an offering called Hotspot @Home, he observed, which uses dual-mode cellular/wifi handsets. Calls made from home travel through wireless home routers and over the Internet, while those made away from home travel over the cellular network.
The new service would have been even easier to implement, Nogee said. For one thing, it does not require roaming and handoffs between cellular and wifi networks. For another, it can use all the infrastructure that T-Mobile previously built for the Hotspot @Home service to deliver VoIP calls to the PSTN.
Although $ 10 per month won\'t produce giant revenues, the new VoIP service could help T-Mobile in a couple of ways. If customers buy it, T-Mobile becomes their only phone company, which gives the carrier a better chance of keeping them as customers. Some users who make a majority of their calls from home might also find $ 50 for the combined service preferable to the various $ 100 unlimited cellular-only services that the carriers have just announced. That could help T-Mobile win customers from other cellular operators.
Some customers might even choose the VoIP/cellular combination over T-Mobile\'s own $ 100 cellular plan. Though in normal circumstances that might qualify as cannibalization of one\'s own business, in this case, it might not be all that bad. Those $ 100 plans are expensive to deliver and might in some cases even prove unprofitable, while VoIP service is cheap to provide. In short, the VoIP/cellular package could provide T-Mobile a minor refuge from the price war that the unlimited plans will bring to the cellular industry. Think of it as the upside of cannibalization.
By Robert Poe
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