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Will the Google Phone Give T-Mobile USA a Boost?

With its voice-related revenues and new subscriber additions slowing, and data revenues that lag those of its rivals, the U.S. arm of German phone giant T-Mobile needs a fast-acting picker-upper. Its answer may lie with the Google phone.

At a special event in New York on Tuesday, T-Mobile USA will become the first carrier to show off a Google Phone — a device that is made by HTC and uses Google’s (s GOOG) Android operating system. The much-awaited phone has the potential to give T-Mobile the same turbo boost the iPhone gave to AT&T.

Allow me to explain how T-Mobile has made clear it thinks the Google phone can be its iPhone. To begin with, T-Mobile senior managers were the first to publicly hail the Google phone and their belief in the new business model that could result.

…that it is not an easy game to penetrate the wireless market without the help of the operators, which has led to collaborative relationships…The biggest challenge is to adapt our market perspective and business model to one based on partnerships, content and applications. Historically, wireless carriers had a relatively simple business model — end-to-end voice service — with correspondingly simple billing. That is no longer the case.

Secondly, The Wall Street Journal reported back in June that the first working model of the Google phone wouldn’t hit the market till November 2008. In its report, the WSJ indicated that T-Mobile was taking up too much of Google’s resources, leading to some grousing by other partners. Then came the surprise announcement that the device would be launched tomorrow. Taken together, it’s reasonable to assume that T-Mobile fast-tracked the device.

Now to why T-Mobile needs the lift at all. First, the number of subscribers it’s adding is slowing down. In the second quarter of 2008, the U.S. arm of T-Mobile added 525,000 new subscribers vs. 875,000 additions in the second quarter of 2007. That’s the lowest level of adds since 2006 for T-Mobile USA, which currently has about 31.5 million subscribers.

And when it comes to the more lucrative data revenues, T-Mobile USA has lagged its bigger rivals. The company has been especially hampered by its lack of a 3G network, which has forced it to make do with a blend of EDGE and Wi-Fi networks. According to Chetan Sharma Consulting, 3G subs have more than $23 in data ARPU. In the second quarter of 2008, the firm estimates that, on average:

Verizon lead in data ARPU with $12.58 (or 24.41% of the revenues) closely followed by Sprint at $12 (or 21.4354%), AT&T at $11.59 (or 22.91%) and T-Mobile at $8.60 (or 17%).

T-Mobile can quickly change all that with the Google Phone, which like the iPhone is very data-centric and utilizes the web. (Read about the keynote Google’s Rich Miner gave at Mobilize.)

The carrier has been rolling out its 3G network just ahead of the Android launch. And T-Mobile USA has to be hoping that the new phone, which will be launched tomorrow but won’t go on sale at retail outlets for a few weeks, will make people pause before reaching for the hot-selling iPhone from AT&T.

T-Mobile USA started rolling out its 3G network in New York City in May, saying the service would be available in 13 markets. Last week they said they’ll offer 3G in an additional 21 markets to coincide with the launch of the Android phone. (I am told San Francisco will see the launch of T-Mobile USA 3G before the end of this month.)

T-Mobile’s 3G network works on different frequencies than AT&T’s, which means there are only a handful of devices that can really use this AWS-based network. In order for people to start using it, T-Mobile needs a device that can do for it what the iPhone has done for AT&T — something like the Google phone.

What do you guys think?

19 Responses to “Will the Google Phone Give T-Mobile USA a Boost?”

  1. Eviltweety88

    I was hoping that G1 was going to be UMA, but it’s not. My condo is built with steel I frame (whatever that is!) and I have no signal from ANY cell service inside the place. UMA is the only way I can receive/make calls etc while at home. Have a curve now…hoping for some type of upgrade soon! Come on T-Mobile…the people you already have as Hot Spot customers are getting fritzed waiting for new, exciting devices that are on a par with other carriers.

  2. Unhappy @Home User

    @Curtis Have you actually attempted to use the T-Mobile @Home service? Voice quality is about as good as my first (circa 1994) analog mobile phone and the reliability is almost unimaginably bad. I have had two separate outages which each lasted more than two *weeks*! Even at just $10 per month (plus hundreds of dollars in hidden fees) it is no bargain. You will get much better sound quality and reliability from two tin cans and a piece of string

  3. Not impressed so far with the looks of this phone. It looks cheap and lags in the videos I’ve seen. Looks more like a prize in a box of cracker jacks than the roll out of a new platform.

    As for a boost to T-Mobile, I suspect they will see a short term user spike as people want to try this phone.

    Maybe a year from now it will be more impressive, but for now seems to offer nothing other phones don’t do better. Open-source = Open-Sores. This may bite them in the long run.

  4. I’ve been a Sprint customer for more than a decade. Through retentions and a magical four-letter plan, my last phone (Samsung M610) was free and my plan is greatly discounted. It would take a fair bit for me to leave and the only company I’m considering right now is T-Mobile.

    There are two T-Mobile offerings that have me interested in switching to the company: the G1 and UMA. I’m intrigued by the G1’s apps and services. I’m also interested in T-Mobile’s Nokia UMA handset. In a perfect world, T-Mobile would have an Android device with UMA connectivity.

    I suppose I’m interested in the company’s superior service too, though I’m a pretty low maintenance customer. While Verizon is rated tops by JD Power, everyone that I know on T-Mobile has raved about the company. My friends on Verizon say that it’s just as bad as AT&T.

    Oh yeah, I’m not sure why people think the phone is ugly. It looks perfectly fine to me.

    @Paul What are you basing this off of? You’ve seen the release version of the OS?

  5. No way. Android has gotten lots of attention in the Silicon Valley echo chamber, but the G-Phone’s a turkey that will poop all over Android’s already-feeble marketing launch.

    Its hardware is deeply unsexy. Its UI is confusing and depressing. It is the George Costanza of cell phones, and will be remembered by T-Mobile only as a huge time-sink. Heads will roll.

  6. Absolutely.

    I agree with all the comments made so far, however here in the US the G1 gphone will stand out. Combine its’ usage with T-Mobile’s HotSpot @Home service and you’ve got a catalyst for unwiring the home phone at a modest price point.



  7. My primary data phone is an iMate Ultimate 6150, which I picked up in Dubai in January of 08. Love the phone. Absolutely amazing quick on AT&T’s network, and supposedly compatible with T-Mobile’s AWS network. But time will tell. Over the past few years, as contracts expired, I’ve been moving employees and family members away from our T-Mobile “life time” commitment solely over the 3G delays. It’s ridiculous that an international company the size of DT can’t roll out even a simple 3G network in the 4 years they’ve promised it.

    Google Android looks like a yawn to me. The iPhone is a yawn. WM6 is a yawn. When will developers actually work with both power users AND amateur users to develop an interface that actually works well? For my WM6 phones, I keep a long thumbnail to touch type quickly. On the iPhones, I can’t type at all because of the lack of fingernail sensitivity. The interfaces on all the phones I’ve used are subpar in terms of efficiency in typing in long notes or emails.

    Wake me when someone releases something revolutionary, that actually considers the power user from the get-go. The wannabe Paris Hiltons will do fine with their Sidekick keyboards.

  8. – In regards the differing 3G frequencies, this could be beneficial for TMO in that Android adopters are less able to unlock the phone for use on the carrier of their choice.

    – Not since the Sidekick has TMO had a must-have device. The sidekick, while undoubtedly the best messaging device at the time, lacked features otherwise that turned off business and power users (like myself). Android, on the other hand, could be the jack of all trades type device, like the iPhone is for ATT that could attract a much wider swath of subscribers.

    – TMO’s wifi system is a great service that other carriers aren’t offering and because they are not necessarily aligned with a larger domestic telecom (VZW-VZ, ATTWS-ATT, etc) they could really make up for the lack of 3G penetration. Unfortunately for them, they havent received the traction needed on this service to attract new subscribers.