Editor's Corner

You gotta like T-Mobile USA's style. Comments coming from the operator last week made it sound like the company knew what it was doing all along when it comes to its 3G strategy. After emerging as the top bidder for licenses it desperately needed to double its spectrum holdings in the top 100 U.S. markets, T-Mobile announced it will hit the ground running in the fourth quarter to deploy UMTS, spending $2.7 billion on the endeavor. Commercial service is expected to begin by mid-2007 and extend through 2009.

T-Mobile USA CEO Robert Dotson said the operator was better off having waited longer than its competitors to make the 3G transition since both the deployment plans and technology have had time to mature. That means T-Mobile can take advantage of better quality and economies of scale to deploy UMTS cheaper and more efficiently.

Dotson is right, but that certainly could not have been the ideal plan for the company in the first place. It appears the operator got quite lucky as the outcome could have been much different. You have to think T-Mobile executives were wringing their hands all along over the company's poor spectrum position. It simply didn't have enough spectrum to deploy UMTS, and its future was beholden to the outcome of the Advanced Wireless Services auction, which could have easily been derailed. T-Mobile was also fortunate it didn't have to pay more than it did for its spectrum. While it paid $4.2 billion at auction, it could have easily been forced to pay $6 billion or more because of its desperate spectrum position. It would have been forced to do whatever it took to secure the spectrum needed for 3G services.

T-Mobile is now approximately two years behind Cingular Wireless' 3G rollout and three years behind both Sprint Nextel and Verizon Wireless. But, luckily for T-Mobile, it probably won't struggle that much. 3G take-up isn't as big a differentiator at this point as industry pundits thought it would be. T-Mobile may be hitting the market at a point when competition for 3G services actually heats up. In fact, T-Mobile has held its own against these players with products like the Sidekick and now the BlackBerry Pearl that run on its EDGE network. John Byrne, analyst with Technology Business Research, notes T-Mobile can rely on a new wave of products, such as the T-Mobile [email protected] Home, to seed the market for UMTS services and leverage the company's WiFi hotspots.

Now we'll see how far T-Mobile's luck goes. Will it roll out 3G on time? Is bypassing mobile TV and music the right strategy? Will T-Mobile USA remain a key asset for parent company Deutsch Telekom? -Lynnette