Brought to you by Wireless Intelligence

T-Mobile USA is a late entrant into the US high-speed mobile market. Having previously lacked the appropriate high-speed licenses, the operator preferred to concentrate on its successful Wi-Fi network strategy. However, all this changed in 2006 when the operator paid close to US$4.2 billion for 120 Advanced Wireless Services (AWS) licenses; it was the largest bidder in the auction. In May this year it turned on its first commercial WCDMA-HSPA network in New York City and this month began services in Las Vegas. It plans to expand the network to at least a further 20 US markets by year-end.

By the end of second-quarter 2008, the operator said it had 14,000 WCDMA capable basestations up and running, up 1,000 on the previous quarter. This build-out was largely responsible for an increase in quarterly capex to just over US$1 billion, almost double the expenditure in the same quarter last year (US$546 million).

While the lack of high-speed mobile services and handsets to date has no doubt put T-Mobile USA at a competitive disadvantage, its late arrival into the market also offers a host of benefits. These include access to a wide range of compatible handsets that are both established and affordable, and the ability to rollout HSPA simultaneously. The operator also claims it will benefit from the commercial experiences of WCDMA-HSPA rollouts by its various sister-companies in Europe, where its higher-speed networks are considerably more developed.

At this early stage, high-speed connections account for a small share of T-Mobile USA’s total connections. According to our calculations, WCDMA-HSPA connections accounted for 1% (314,660) of T-Mobile USA’s connections in second-quarter 2008, compared to almost 18% (13 million) at AT&T – the largest WCDMA operator in the US, which began its high-speed network rollout in 2005. CDMA operator Verizon Wireless has more high-speed connections than either of the two GSM operators with 59% (40.5 million) of connections on its CDMA2000 1xEV-DO networks.

However, T-Mobile USA’s high-speed connections are expected to grow substantially over the next couple of quarters as the network is turned on in many more markets. We predict its WCDMA-HSPA connections will comfortably surpass 1 million before year-end and reach almost 5 million by the end of 2009. By this stage we predict that WCDMA-HSPA will account for between 10% and 15% of T-Mobile USA’s total connections.

On the handset front, T-Mobile will be hoping its new network will enable it to carry some of the world’s most advanced (and sought after) handsets. Rival AT&T, for example, has been able to exclusively launch Apple’s iPhone 3G this year, and this month it is also scheduled to launch the much-anticipated BlackBerry Bold, the first WCDMA-HSPA-enabled BlackBerry. While T-Mobile may have missed out on these devices, it is rumoured to be preparing to launch one of the very first high-speed devices based on Google’s Android platform – a move that could be strategically aligned with its WCDMA-HSPA network rollout.

Joss Gillet, Senior Analyst, Wireless Intelligence

This year, T-Mobile has been rolling out its ‘Myfaves’ community concept to its key markets in Europe. MyFaves has been described by the operator as a “US success story brought to Europe” to improve the operator’s positioning in the mobile content and services area. In early 2008, 80% of its handset portfolio was optimised for ‘Web’n’Walk,’ its mobile content portal – the only thing lacking was high-speed network coverage. In Europe as well as in the US, T-Mobile has chosen to rely on its EDGE network when its competitors were busy deploying WCDMA networks. Today, the operator is clearly improving its WCDMA-HSPA network coverage across most of its markets and is aiming at differentiating via its services and handset portfolios. Among the various factors that will speed up the adoption of WCDMA-HSPA networks are: the launch of WCDMA-HSPA-enabled laptops; WCDMA-HSPA devices moving down the price tiers to reach mass market; reductions in roaming fees; widespread introduction of unlimited data plans; and partnerships with OEMs and content providers.