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Originally published Wednesday, June 25, 2008 at 12:00 AM

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Brier Dudley

T-Mobile not angling for land-line biz, CEO says

Excerpts from the blog One of the most exciting places in tech lately is wireless mobile devices, and Bellevue-based T-Mobile USA is in...

Seattle Times staff columnist

Excerpts from the blog

One of the most exciting places in tech lately is wireless mobile devices, and Bellevue-based T-Mobile USA is in the thick of it.

So when I was chatting Tuesday with T-Mobile Chief Executive Robert Dotson about the company's new @Home phone service — which is going national today, after trials in Seattle and Dallas — it was hard to stay on topic.

We touched on the iPhone 2.0, Virgin Mobile's new pricing and Nokia's move Tuesday to buy out the Symbian phone platform and make it open-source, increasing competition with the Android phone platform that Google is developing with heavy support from T-Mobile.

Dotson insisted T-Mobile isn't trying to become a land-line phone provider, even though @Home lets customers shift their traditional phone service to T-Mobile. It's providing the $10-per-month service via customers' broadband line.

"What I'm trying to do is leverage the communications experience that happens on a T-Mobile device today and extend it inside the home," Dotson said.

Qwest may have a different interpretation, especially if @Home takes off the way Dotson expects.

Here are edited excerpts from our conversation:

Q: You said @Home is taking T-Mobile into a new category. Do you need to add new services to continue growing, with the U.S. market saturated and facing a weaker economy?

A: Yes, reaching outside the traditional four walls of how we define wireless is definitely part of our core mission. We have to continue to redefine — not just the competitive set; for us it's how do we define the industry we compete in.

If you define that industry strictly as wireless, it's a far too narrow definition for us. We are a trusted communication provider for people. That is why the consumer has allowed us to go inside the home without reservation.

That's what we look for — what are those logical things we can do to extend existing behavior and existing relationships we have today.

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Q: What do you think about Virgin Mobile undercutting you with an $80 flat-rate plan?

A: I think Virgin — I don't know how many consecutive quarters of losses now [they've had] — they better do something. Virgin is not one that we lose a lot of sleep on, day in and day out. When you're in the pricing paradigm that they are and you have a transient customer base, that's a really tough model to stay competitive on. So it's not surprising to me to see them take what I consider a very desperate move to try to stay relevant in the consumer space.

Q: How about Nokia's announcement that it's buying out Symbian and taking it open-source? T-Mobile's pretty invested in an alternative, Google's Android platform.

A: Anytime that there's a good, ubiquitous open platform, it's a healthy thing overall for consumers and as a result it's a healthy space for us to be.

We're going to have to continue to innovate in our space and make sure the integration of applications devices and networks is as seamless as possible, and traditionally that's been fairly clunky. ...

To the extent we can get an open environment so all of those pieces integrate together better, those are good, healthy things to have happen. Yes we are invested in an alternative with the Android platform, but I would tell you I welcome any open operating platform that's going to come into the market as a good thing.

Q: A Wall Street Journal story Monday said some carriers are getting frustrated with the pace of Android's development. ...

A: We're really satisfied with the progress it's making and we still intend to have that product out in the fourth quarter as we previously announced, so I don't see any change there, really.

The first generation of anything, it's going to be tough. You're giving birth to your first kid. ... Our view is that pain is definitely not anymore convoluted than we expected a year ago. It is exactly running as we expected. If anything, I'm probably surprised timelines are holding together as firmly as they are.

Q: The new iPhone pricing plan in the U.S. seems like an acknowledgment Apple had to back down and go with a traditional subsidy approach. Does that mean iPhone's business-model experiment is over?

A: It's an area I don't feel comfortable commenting on because I sit in a unique position. I compete against the iPhone here, and my parent company carries the iPhone.

Q: OK, I'll ask a different way. Do you expect to see a lot more innovation in the business model going forward, or will the innovation be happening more on the device and application side?

A: It has to be on the devices and the experience. At the end of the day, there are just too many sophisticated components to make that stuff come to market, that you can't own all the pieces.

Q: The @Home service seems like a good way to reduce customer churn.

A: Absolutely.

Q: Once you get your home wired with T-Mobile, it's probably a lot harder psychologically to switch carriers.

A: It's also a lot harder to say I'm going to go from a $10 monthly bill to a $50 monthly bill. I think that's what's going to make it more sticky for customers, to say I'm getting all the service I had before, I'm paying in some cases 20, 25 percent of my bill before.

Q: Qwest is trying to deregulate land-line phone services. Are we all going to move to broadband phone services? (An aside: This makes me nervous, having experienced a lot of power outages when broadband went away but the old phone kept working.)

A: No. My guess is land-line losses can't continue with the traditional carriers the way they've been, which means there will be ever more pressure on the land-line carriers to reduce price.

This material has been edited for print publication.

Brier Dudley's blog appears Thursdays. Reach him at 206-515-5687 or bdudley@seattletimes.com.

Copyright © 2008 The Seattle Times Company

About Brier Dudley
Brier Dudley offers a critical look at technology and business issues affecting the Northwest.
bdudley@seattletimes.com | 206-515-5687

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