T-Mobile Takes its $10 a Month Unlimited Domestic Calling Landline Service National

| June 26, 2008 | Digital Home - U.S. | Competitive Update

| Analyst: Bruce McGregor

Current Perspective: Positive
Vendor Importance: High
Market Impact: Moderate/High

Event Summary

June 25, 2008 – T-Mobile starting on July 2, 2008 will expand nationwide its initial two market trials of its home phone service through VoIP technology called @Home. In February 2008, the residential VoIP service formerly known as HotSpot @Home Talk Forever Home Phone was tested in the markets of Dallas and Seattle at a price of $10 a month for unlimited local and long distance calling. T-Mobile @Home service requires a qualified T-Mobile wireless phone plan, a separate broadband Internet connection, a standard touch-tone phone and a $49.99 HiPort Wireless Router with Home Phone Connection (two year contract required for equipment discount).

Analytical Summary

• Current Perspective: Positive on T-Mobile’s offering its @Home landline phone service to wireless customers nationwide because at just $10 a month for unlimited local and domestic long distance calls, the plan undercuts other VoIP service prices (Vonage costs $24.99 month for residential unlimited calling) and it is substantially cheaper than traditional wireline unlimited voice plans. Beginning in February 2008, the @Home service was trialed in Dallas and Seattle with an estimated 97% of test customers who had an existing traditional landline phone service substituted that service for T-Mobile @Home (please see T-Mobile Launches Landline VoIP Trial with $10 a Month Unlimited Domestic Calling, February 25, 2008). T-Mobile can use the new residential phone service as a retention strategy to offer its existing wireless customers a good value with a cheap add-on landline, allowing customers to retain their current home phone number and use their existing broadband connection.

• Vendor Importance: High to T-Mobile, because the nationwide launch of the @Home service is very price-competitive, giving customers who want both wired and wireless voice an attractive bundle package cable that telephone carriers can’t match. @Home will find buyers because of the growing acceptance of VoIP technology as is evidenced by the successful deployment of VoIP by Vonage, the cable companies and other providers - it is clear that many customers have overcome their initial concerns with VoIP technology.

• Market Impact: Moderate to high on all wireline voice providers, because the new T-Mobile landline service is substantially cheaper than any other unlimited local and long distance wireline plan on the market today. But competitors should be aware the T-Mobile @Home service will have limited market reach despite going national since it comes with a long list of requirements and limited reach to T-Mobile wireless customers. @Home requires a qualified T-Mobile wireless phone plan, a broadband Internet connection from another provider, a standard touch-tone phone and a $49.99 HiPort Wireless Router with Home Phone Connection (with a two year contract required for equipment discount).

Recommended Competitor Actions

• Triple play bundle providers who don’t require a wireless connection for discounted local and long distance should point out that their total bundle price is cheaper because the customer doesn’t have to buy a wireless plan to qualify for the bundle discount.

• If the customer is considering a quadruple play then providers like AT&T, Verizon and Qwest who can include a wireless component should consider a total quadruple play bundle price that discourages customers from buying T-Mobile wireless and wireline voice.

• Vonage needs to hasten its preparations with Covad to rollout Vonage Broadband DSL service ahead of schedule and try to market its double play aggressively during H2 2008. It is paramount for Vonage to price its upcoming double play bundle package of unlimited domestic VoIP calling and DSL at a highly competitive rate to attract new customers (please see Vonage Double Play Coming Soon Thanks to a New DSL Partnership with Covad, May 12, 2008).

• Outside of strong triple play bundles, major cable providers don’t today offer wireless calling plans. Comcast, Time Warner Cable, Brighthouse and Cox failed to attract customers to their wireless plans via the now dismantled Sprint powered Pivot service. The April 2008 demise of Pivot leaves the MSOs scrambling to create a new wireless strategy that comes at a time when consumers increasingly want mobile voice, data and video services.

• In May 2008, Sprint Nextel and Clearwire announced an agreement to combine their next-generation wireless broadband businesses to form a new wireless communications company named Clearwire that will focus on expediting the deployment of a mobile WiMAX network. Sprint and Clearwire need to explain how they will offer voice services over the WiMAX network, including both how it will offer voice over WiMAX when the PC, handset, or stationary WiMAX terminal is inside the home.

CLIENTS ONLY

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report on Digital Home - U.S. | More information
| Client access - Wireless Services - U.S. | More information

Top