T-Mobile Confirms 3G Plans

T-Mobile US Inc. confirmed this morning that it will go ahead with plans to rollout a 3G UMTS network at the end of this year with nationwide deployment expected to be completed by 2009.

As expected, the operator will upgrade its GSM network using UMTS, now that it has the bandwidth available to deploy the technology following the AWS auction. (See T-Mobile 3G Is Imminent.) The firm says it will start the upgrade before the end of the year, with deployment of actual UMTS markets scheduled to begin mid-2007 and extend through 2009.

The operator's parent company, Deutsche Telekom AG (NYSE: DT), says that it plans to spend around $2.7 billion on the updates between 2006 and 2009. This is on the low-end of what analysts had initially projected.

T-Mobile will still be playing catch-up with the big three operators. "Despite catching up on total bandwidth, T-Mobile USA will still be nearly two years behind Cingular and three years behind both Sprint Nextel and Verizon Wireless in deploying 3G service," notes analyst John Byrne from Technology Business Research Inc. (TBR) .

Inder Singh, analyst at Prudential Equity Group LLC , writes that he expects Ericsson AB (Nasdaq: ERIC) and Nokia Corp. (NYSE: NOK) to be the major equipment suppliers for the new network.

T-Mobile is hoping that it can attract users with a slew of new services on the 3G network including email, personal information management, and user-generated content in the mold of the popular YouTube video site. "However, in the interim, T-Mobile USA will be relying on a new wave of products such as 'T-Mobile [email protected]' to seed the market for UMTS services and leverage the company's WiFi hotspot network," TBR's Byrne says.

Indeed, T-Mobile's other big upcoming initiative is fixed/mobile convergence services using its hotspot network. The firm is expected to unveil its initial handsets for the service this month. (See BT & T-Mobile: No Convergence.)

Much of this work seems to be aimed at consumers, however, and enterprise users are not yet convinced by the concept of FMC services. "The service providers will need to sell the business case for fixed/mobile convergence," says Gary Goerke, information systems manager at Farmington Hills, Mich. real estate firm Ramco-Gershenson Properties Trust.

"There must exist real, measurable productivity enhancements or other benefits to the corporation," says Goerke. "Cheap calling via VOIP is a novelty for corporate users but certainly not compelling enough to change service providers."

— Dan Jones, Site Editor, Unstrung

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