T-Mobile launches long-awaited FMC service

T-Mobile today took the tarp off of its Wi-Fi/cellular integrated service after more than a year of testing and trials, making it the first major U.S. carrier to launch a commercial fixed/mobile convergence network.

Called Hotspot @Home, the service uses unlicensed mobile access (UMA) technology to tunnel a GSM signal over the public IP network, allowing a dual-mode phone to switch back and forth between a Wi-Fi and cellular network for voice calls. T-Mobile is offering the service over customers home Wi-Fi networks as well as its 8500 hotspot locations in the U.S. Customers have to buy a dual-mode phone, but the trade off is they get unlimited domestic callings while using the Wi-Fi network, allowing the them to substitute their mobile phone for their home phone line.

“More people than ever want to drop their home landline phone and pocket the savings,” T-Mobile USA President and CEO Robert Dotson said in a statement. “However, they don’t want to use all of their wireless minutes talking from home. Our new service solves this dilemma once and for all.”

T-Mobile is kicking off the nationwide program with two dual-mode handsets, the Samsung t409 and the Nokia 6086, both sold for $50 with a two-year contract. While UMA is designed to work with any standard Wi-Fi router or access point, T-Mobile will also be selling routers easily configurable routers from D-Link and Linksys, offering them for free with a mail-in rebate. The only thing the customer has to bring is a broadband connection.

For the initial launch T-Mobile will charge an additional $10 a month on top of its regular calling plans to use the FMC service or charge $20 a month for a family plan up to five lines. While the service plans could cannibalize minutes from T-Mobile’s voice network, it is trading off the expense of providing more cellular capacity. Using Kineto UMA software, the service bypasses the cellular access network entirely, offloading voice traffic directly into T-Mobile’s circuit-switched core network through a voice gateway linked to the Internet. As T-Mobile faces spectrum pressure over its legacy GSM network as well as per-minute pricing pressure T-Mobile can move more of its traffic to the IP network, growing only its core to handle new capacity demands.

The service, however, not only allows T-Mobile to maximize its capacity it allows it to play in the traditional wireline space, further squeezing the ILECs who already face stiff competition from cable providers and VoIP upstarts like Vonage. Though UMA does not use VoIP—rather encapsulating the GSM call within IP packets—it works much the same way as a VoIP service, using the public Internet to initiate and transport the call.

“T-Mobile doesn’t have any landline or home phone service,” said Moe Tanabian, principle for IBB Consulting, a strategic consulting group that helped T-Mobile manage the FMC deployment. “Any dollar it earns off of UMA is a dollar it steals from a landline carrier.”