T-Mobile's Cellspot could help bridge gap between wireless and cable operators

Sue Marek

T-Mobile US' (NYSE:TMUS) Un-carrier 7.0 announcement yesterday was a bit of a departure from its past productions that primarily focused on revamping 'old-school' wireless business models like phone subsidies, complicated rate plans and lengthy handset upgrade cycles.

Instead, the carrier introduced Wi-Fi Unleashed, a program that is primarily focused on aiding network coverage and enhancing capacity by enticing customers to upgrade to Wi-Fi-capable smartphones and offering customers a proprietary "Cellspot" Wi-Fi router for their home. Existing postpaid customers can get the Cellspot router for free with a $25 deposit.

T-Mobile has long been a leader in the Wi-Fi calling area with its UMA-based Wi-Fi calling feature so it's not surprising that it's taking that Wi-Fi calling feature and expanding it to allow for VoLTE handoffs. But what's really interesting to me is the Cellspot router. According to T-Mobile CTO Neville Ray, the router comes with a patent-pending technology that will prioritize Wi-Fi phone calls and also improve quality of service. He also noted that the Cellspot router expands Wi-Fi coverage to 3,000 square feet, which is a much bigger footprint than most Wi-Fi routers.

Although T-Mobile CEO John Legere touted this router a way for customers to improve in-building coverage in their homes, it's clear that this is also a Wi-Fi offloading strategy and a way for the operator to maximize its network capacity by funneling traffic to the Wi-Fi network whenever possible.

Interestingly, when asked if the Cellspot would be available to all subscribers that happen to be in close proximity to the Cellspot, even if they aren't the Cellspot owner, T-Mobile executives said that while that capability wasn't currently available, they could enable it in the future. In fact, CMO Mike Sievert seemed quite enthusiastic about this being a future capability. "We may make it an option to do in the future," he said. "We could auto-authenticate someone that is coming by."

If that business model sounds familiar, it might be because that's exactly what cable operator Comcast is doing. Comcast announced over year ago that it would deploy Cisco gateways capable of broadcasting a second, public Wi-Fi signal to residential customers in order to create "neighborhood hotspots" and expand the footprint its Xfinity Wi-Fi network. Comcast has said 54 percent of Xfinity neighborhood Wi-Fi usage already travels over the second SSID of these devices.

And Comcast isn't alone. Cablevision also announced earlier this year that it is installing dual-SSID gateways to turn home Wi-Fi networks into public hotspots.

I suspect that T-Mobile is going to first gauge consumer interest in the Cellspot. Most consumers already have their homes outfitted with Wi-Fi and they will have to ditch their existing router for the Cellspot, something that T-Mobile thinks they will be willing to do because of the expanded Wi-Fi footprint and the better signal.

Interestingly, in a research note from Jeffries, analysts said that they see T-Mobile's push into Wi-Fi with the Cellspot router as being attractive to cable operators that have been considering offering a hybrid Wi-Fi/cellular product over their existing Wi-Fi networks.

If the Cellspot proves popular with consumers, T-Mobile will not only be enhancing its coverage and call quality with consumers, it might also be positioning itself for future partnerships and for new business opportunities. --Sue