Brier Dudley's Blog
Brier Dudley offers a critical look at technology and business issues affecting the Northwest.
June 24, 2008 9:01 PM
Posted by Brier Dudley
One of the most exciting places in tech lately is wireless mobile devices, and Bellevue-based T-Mobile USA is in the thick of it.
So when I was chatting Tuesday with T-Mobile Chief Executive Robert Dotson about the company's new @Home phone service - which is going national today, after trials in Seattle and Dallas - it was hard to stay on topic.
We touched on the iPhone 2.0, Virgin Mobile's new pricing and Nokia's move Tuesday, to buy out the Symbian phone platform and make it open-source, increasing competition with the "Android" phone platform that Google is developing with heavy support from T-Mobile.
Dotson insisted that T-Mobile isn't trying to become a land-line phone provider, even though @Home lets customers shift their traditional phone service to T-Mobile. It's providing the $10 per month service via customers' broadband line.
"I'm not trying to be a land-line provider, I'm not trying to get into that business," he said. "What I'm trying to do is leverage the communications experience that happens on a T-Mobile device today and extend it inside the home."
Qwest may have a different interpretation, especially if @Home takes off the way Dotson expects.
Here are edited excerpts from our conversation:
Q: You said @Home is a big launch taking T-Mobile into a new category. Do you need to add new services to continue growing, with the U.S. market saturated and facing a weaker economy?
A: Yes, reaching outside the traditional four walls of how we define wireless is definitely part of our core mission. We have to continue to redefine - not just the competitive set, for us it's how do we define the industry we compete in?
If you define that industry strictly as wireless, it's a far too narrow definition for us. We are a trusted communication provider for people. That is why the consumer has allowed us to go inside the home without reservation. That's what we look for - what are those logical things we can do to extend existing behavior and existing relationships we have today.
Q: What do you think about Virgin Mobile announcing an $80 flat-rate plan that undercuts your rates?
A: I think Virgin - I don't know how many consecutive quarters of losses now (they've had) - they better do something. Virgin is not one that we lose a lot of sleep on, day in and day out. When you're in the pricing paradigm that they are and you have a transient customer base, that's a really tough model to stay competitive on. So it's not surprising to me to see them take what I consider a very desperate move to try to stay relevant in the consumer space.
Q: How about Nokia's announcement that it's buying out Symbian and taking it open source - T-Mobile's pretty invested in an alternative, Google's Android platform.
A: We are invested in an alternative but anytime that there's a good, ubiquitous, open platform it's a healthy thing overall for consumers and as a result it's a healthy space for us to be. We're going to have to continue to innovate in our space and make sure the integration of applications devices and networks is as seamless as possible and traditionally that’s been fairly clunky - because of the traditional relationships in the wireless category with manufacturers, you just work with a myriad of different operating systems that have different manufacturers underneath them but different applications, you're trying to make work across a myriad of different providers.
To the extent we can get an open environment so all of those pieces integrate together better, those are good, healthy things to have happen. Yes we are invested in an alternative with the Android platform, but I would tell you I welcome any open operating platform that's going to come into the market as a good thing.
Joe Sims, vice president of broadband services, chimed in: Think back to what happened in computing in the '80s - how many operating systems there were then, how many proprietary systems, how hard was it to develop and get a real growth in that industry until we really standardized on a couple different platforms and developers could predictably know how to write to those platforms, then the growth really happened. With the advent of the web, it exploded. We're seeing the same thing.
What we're seeing is a couple of alternatives. Android's an alternative, this is another alternative. There maybe another couple that are out there. Most of them aren't going to make it, some of them will. We're looking to see which ones make the most sense right now. Android makes sense, this may make sense, too. It's not a matter of either-or, it's a matter of which ones are going to be the best in order to really foster the growth of the industry overall. It's not about the handsets, it's more about the developers that are out there, it's more about the applications and services. To the extent this supports and drives that, it's got to be interesting for the industry.
Q: A Wall Street Journal story on Monday suggested that some carriers are getting frustarted with the pace of Android's development ...
A: We're really satisfied with the progress it's making and we still intend to have that product out in the fourth quarter as we previously announced, so I don't see any change there, really. I think a lot of that was speculation. On the ground here, we're still expecting to launch that product in Q4.
The first generation of anything, it's going to be tough. You're giving birth to your first kid ... our view is that pain is definitely not anymore convoluted than we expected a year ago. It is exactly running as we expected. If anything, I'm probably surprised timelines are holding together as firmly as they are.
Q: I wonder if that story was driven by a few participants, like Sprint, that want to get more of their stuff into the platform.
A: One hundred percent of it comes from that. On our side, this is not new for us, it's probably been a year now that we've had a dedicated community working on the Android platform. We put those kind of resources in. I don't know this, but my guess would be our competitors didn't do that.
Q: So if you were in there early, you have more say about what it's going to be like?
A: We're definitely tied into what the experience is. We know what it is, we know how to be plan-ful, we know how to make sure the integration of the Android platform into hardware works how we want to see it work … We're looking to make sure you make a quantum step from where we are today.
Q: It looks like the new iPhone pricing plan in the U.S. is an acknowledgment that Apple had to back down and go with a traditional subsidy approach. Is the iPhone experiment in new mobile device business models over?
A: It's an area I don’t feel comfrotable commenting on because I sit in a unique position - I compete against the iPhone here, and my parent company carries the iPhone.
Q: Okay, I'll ask a different way. Do you expect to see a lot more innovation in the business model going forward, or will the innovation be happening more on the device and application side?
A: It has to be on the devices and the experience. At the end of the day, there are just too many sophisticated components to make that stuff come to market, that you can't own all the pieces. Maybe that's another way of answering what you're asking.
The network performance is every bit as important as what the device does. To the extent that there's any hiccup in those two things I'm going to compromise the customers' experience. That clearly is a different place than where Apple has come from traditionally.
Q: The @Home service seems like a good way to reduce customer churn.
Q: Once you get your home wired with T-Mobile, it's probably a lot harder psychologically to switch carriers.
A: It's also a lot harder to say I'm going to go from a $10 monthly bill to a $50 monthly bill. I think that's what's going to make it more sticky for customers, to say I'm getting all the service I had before, I'm paying in some cases 20, 25 percent of my bill before.
Q: Qwest is trying to deregulate land line phone services. Are we all going to move to broadband phone services? (An aside: This makes me nervous, having experienced a lot of power outages when broadband went away but the old phone kept working, something to think about before cutting the copper cord ...)
A: No. My guess is land-line losses can't continue with the tradtional carriers the way they've been, which means there will be ever more pressure on the land-line carriers to reduce price.
P.S., here are the requirements for using @Home, as provided by T-Mobile:
- A T-Mobile @Home plan ($10/month) added to a qualifying T-Mobile wireless rate plan
- A new HiPort wireless router ($49.99 with a two-year contract)
- An existing broadband Internet connection
- A touch-tone corded or cordless phone (As an option, T-Mobile will offer a VTech cordless phone system for $59.99)
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