T-Mobile launches 3G in New York

Operator plans additional launches throughout the year, but handset availability still an open question

New York just gained its fourth 3G network. T-Mobile today said it has turned up its wideband CDMA network in the Big Apple, the first of what the service provider said would be multiple 3G service launches throughout the year.

T-Mobile, however, revealed few details about the new data networks accompanying service plans or handset portfolio. The 3G network is built on the Advanced Wireless Services spectrum that T-Mobile acquired at auction in 2006 and is incompatible with W-CDMA devices used by T-Mobile’s European counterparts are the PCS 3G handsets operating on AT&T’s network.

The operator has four UMTS phones on record—the Nokia 6263 and 3555 and the Samsung T639 and T819—all of which are available at T-Mobile stores and through its Website. All four phones, however, are mid-range voice-centric devices, which cannot access the faster speeds of the high-speed downlink packet access (HSPA) technology. In T-Mobile marketing materials no mention is even made of their 3G data capabilities or even of the additional 1.7 GHz and 2.1 GHz AWS bands the phones can access.

T-Mobile said that the phones will automatically connect to the 3G network if it is available, taking advantage of W-CDMA’s enhanced call capacity. It also said that customers with the new phones will have be able to take advantage of the network’s faster download speeds of the UMTS network, but it did not layout any new data service plan. Presumably customers can use the 3G network under the same per-kb or unlimited-access plans they use today.

T-Mobile, however, did say it would offer its first (HSPA) device in the coming months and planned to seed its new network with more data-oriented multimedia and smartphone devices. For the time, though, it looks like the 3G network will be used for its boosted voice capacity until higher-end devices hit the market.

“The launch of our 3G network comes at a time when 3G phones and services are much more affordable,” said T-Mobile chief development officer Cole Brodman in a statement. “We benefit not only from the economic scale of 3G, but also from the extensive commercial experience of 3G in our European markets.”

The economies of scale attributable to UMTS may not fully apply to T-Mobile’s new $2.6 billion network though. T-Mobile is the only operator deploying UMTS in the AWS band, meaning that all AWS UMTS handsets have to be designed specifically for T-Mobile and its small customer base of 28.7 million subscribers. AT&T, which has more than double the subscribers of T-Mobile, initially had trouble procuring handsets for its 3G network since the PCS band it uses for 3G differ from the 3G bands used the rest of the world. T-Mobile has even fewer economies of scale on its side, said Yankee Group enabling wireless technologies analyst John Jackson.

Jackson said handset makers have to assured of volume shipments in order to invest in the development of an AWS UMTS handset. Even with T-Mobile’s assurance the incremental costs of building an AWS handset compared to a European or PCS version might discourage several handset vendors.

“The incremental cost is just a few bucks, but a few bucks is a lot of money in the handset business,” Jackson said. “The one thing that T-Mobile has going for it is that there a number of guys that to improve their market position in North America. T-Mobile therefore becomes an attractive customer despite their small size. The question is what kind of volume commitments do they need guaranteed in exchange for the incremental costs they’ll occur for making handsets at this funky frequency band?”

That may be why T-Mobile is targeting the lower-tier phones for its initial launch. T-Mobile already focuses primarily on the lower-end of the market, targeting consumers with high messaging and voice usage. Targeting those same customers with low-to-mid-range 3G devices will allow it scale much faster than selling high-end devices, Jackson said. Device makers like LG Electronics may jump at the opportunity to gain T-Mobile’s business for the first time, Jackson added, while vendors already on the T-Mobile network such as Nokia may see the AWS platform as a way to increase their overall market share in the U.S.

The 3G launch comes when rumors have again begun to circulate about a possible deal between T-Mobile parent company Deutsche Telekom and Sprint. Several media outlets reported today that the German telco is interested in purchasing the troubled Sprint. The reports, however, are among several that have emerged this year claiming a deal between the two is being considered. So far none of them have proven out. Merging Sprint and T-Mobile could prove to be a huge operational nightmare, as Sprint already runs two networks (CDMA and iDEN) that are incompatible with T-Mobile’s global GSM/UMTS footprint and is building a third (WiMAX)

T-Mobile did not detail any plans for its nationwide rollout, saying only it would pursue launches in major metro areas, particularly in cities where a majority of customers use messaging and data services. Reuters reported that T-Mobile plans to launch in 20 to 25 new markets by the end of the year. Nokia Siemens Networks and Ericsson are T-Mobile’s primary network vendors.