T-Mobile offers WIFI/Cellular dual mode phone

According to a New York Times article on WIFI enabled cell phones (and many other articles of similar nature), T-Mobile is gearing up to offer a dual mode phone that lets the user “seamlessly” switch between a WIFI network in the home or office (read: anywhere that the phone has been previously configured to use that network with proper security).

A number of articles suggest that T-Mobile is doing this simply to save money developing new cell sites- which is definitely true. However, looking at the number of cell sites owned by each of the big four wireless providers (see our previous post on number of cell sites owned by each carrier), and if you look at the number of subscribers for each wireless carrier, it might seem more clear why T-Mobile finds it necessary to do so.

T-Mobile has a smaller coverage area than the other big three in the US. Furthermore, much of their spectrum is in the PCS 1900mHz range- which is not as effective as the cellular frequencies. T-Mobile is playing catchup- and rather than lose clients who find inferior coverage in their homes and offices where T-Mobile’s coverage is weaker, they are displacing the cell traffic to the free WIFI networks. Given that much of the heavier data intensive use will come when the user is stationary (home/office) this also frees their network of high bandwidth traffic.

To T-Mobile’s credit, the user has greater control over the quality of service (QOS) and can simply add coverage at their home even if the phone does not work well there.

The article points out that there are some issues. First, and most importantly, WIFI is unlicensed spectrum so the possibility of interference and poor signal coverage is high, especially in urban areas. Secondly, T-Mobile will in essence now be taking on the tech support role for setting up wireless networks correctly. Lastly, the article does not mention whether a call made on an open WIFI network will be protected from being overheard.

We believe this is a good move for T-Mobile- and that the other carriers will follow eventually. Giving the end user a higher level of service will reduce churn- especially for users who were on the edge of acceptable coverage in the past. Furthermore, it might allow T-Mobile to increase the number of users who purchase unlimited data plans.