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T-Mobile eyes hotspots and Sprint femtocells

As Alltel scores points

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While Sprint and O2 wave the flag for femtocells - with AT&T also likely to take this route, having committed to an all-IP convergence strategy in preference to Wi-Fi/UMA - T-Mobile remains determined to leverage its leading position in Wi-Fi hotspots, especially in the US.

Having trialled its Hotspot At Home convergence service in Seattle, it will now take the offering nationwide from later this month. The trial encountered some problems with Wi-Fi/cellular hand-off using UMA, and with battery life, but according to the operator, these have now been addressed. Nokia and Samsung provided handsets for the test phase, and pricing - which may be changed - was $20 a month on top of the current mobile tariff, plus an additional $5 to add further family members.

Having got its hands on 3G spectrum belatedly - in last fall's AWS auction - T-Mobile has had to compensate by building up its hotspot network to support a measure of convergence, and by concentrating on high levels of customer service. As in Europe, it has made a point of arguing that customers want competitive tariffs and high quality of service now, and that for the time being, those are more important than advanced 3G-plus applications.

However, it needs to avoid falling too far behind its larger rivals, and Wi-Fi has proved a useful bridge to future mobile internet services. In particular, T-Mobile USA is likely to take on the landline giants, Verizon and AT&T, by launching a router later this year that will allow ordinary landline phones to be plugged in.

Whatever the delivery network, T-Mobile knows that attractive navigation and pricing will be the key to success in the mobile internet in the first days, and while Sprint plays a longer game with its grand quad play vision, its smaller rival, plus Alltel, are aggressive about scoring more pragmatic points right now.

The Hotspot at Home option will join other elements in this strategy for T-Mobile, notably its "MyFaves" tariff (recently introduced to Europe too), which allows customers to call any five numbers, wireless or landline, for free, and which the cellco says has been adopted more quickly by its customers than any other service it has ever offered.

MyFaves is a strong example of how an operator can attract customers initially with a good pricing offer, and then use that to introduce the consumer to new-style internet services that may, in future, enhance user loyalty and drive additional spending.

MyFaves is important - not so much in its initial format, but for the future it points to. For instance, it features visual icons of the user's address book, which does not make it a true Web 2.0 or social networking tool yet, but points in that direction for the near future.

This is the right order of priorities, in contrast with many of the new breed of youth oriented US MVNOs, such as Helio and Amp'd, which tried to differentiate their initial services on complex content-based services, and forgot to add simple, low rate voice tariffs. Even more aggressive about using attractive tariffs to introduce customers to next generation services is fifth US cellco Alltel, which challenges - and goes beyond - MyFaves with its innovative CellTop mobile internet user interface and content navigation tools, and has a range of strong pricing options.

In the latest in a string of creative tariff enhancements to stimulate mobile internet usage, the carrier has announced a 24-hour 'day pass', which introduces Wi-Fi style ad hoc browsing fees to the mobile network, supporting casual users who are not prepared to commit to a monthly internet contract (yet). The service is powered by Motricity and each day pass costs $1.50.

Alltel also announced that subscribers can now browse for ringback tones, ringtones and wallpapers without incurring charges, whether or not a subscriber has a data plan. Wade McGill, senior VP of product management, hit the nail on the head as to the challenge facing all cellcos - "Alltel continues to offer services that allow customers to easily integrate mobile content into their daily lives," he commented. "Alltel's commitment is to give our customers the ability to control and customize their wireless experience."

This is the lesson all mobile operators need to learn, though only a handful, such as Alltel and 3, are currently showing strong signs of doing so. The others are making important decisions about the technologies and devices that will drive their mobile internet efforts, but they will need to enhance their pricing and marketing techniques to gain any real short term advantage.

Copyright © 2007, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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