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Saturday, October 7, 2006 - Page updated at 12:00 AM

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T-Mobile revamps image, details 3G plans

Seattle Times technology reporter

NEW YORK — For the past two years, T-Mobile USA has watched from the sidelines as its three largest competitors have started to offer video, music and other applications accessible on a cellphone.

But no more. The nation's fourth-largest carrier recently spent $4 billion for the rights to airwaves that will give it a chance at parity. With the new bandwidth, obtained in a federal auction of broadcast spectrum, the Bellevue company can finally build out new high-speed networks called 3G.

T-Mobile USA, along with its parent company, German telecommunications giant Deutsche Telekom, detailed their plans for 3G at a New York event Friday. It also reinforced a message based on a new advertising campaign launched last week: It no longer wants to be known as the carrier that provides the biggest bucket of minutes for the least amount of money. Instead, it wants to be viewed as a mobile communications company that provides more features of greater value.

"You want to take the legacy of the great things of the [T-Mobile] brand, and put on top of that the other components, so you don't solely stand for price in the marketplace," T-Mobile USA Chief Executive Robert Dotson said in an interview.

Dotson said the switch from T-Mobile's "Get More" tagline to "Stick Together" embodies that new image. Also, as part of the new brand, the company launched the "myFaves" service, which allows customers to get unlimited calling to five of their favorite people.

Dotson said the new image marks a dramatic change for T-Mobile. When it first launched its brand in the U.S. after its 2001 acquisition of VoiceStream Wireless, it was largely unknown, he said. So it hired actress Catherine Zeta-Jones to get the messages out and concentrated on customer service.

"It was really important for us when T-Mobile was a nonentity in the marketplace to have someone as recognizable as Catherine was," he said. "She helped shape what T-Mobile is now recognized for."

Last week, T-Mobile USA announced that it would no longer be using Zeta-Jones.

On the question of deploying 3G technology, T-Mobile USA needed the bandwidth it obtained in the recent auction. Spending $4.2 billion, it more than doubled the average amount of spectrum it had in its top 100 U.S. cities.

It plans to start deploying the newer technology this year, with commercial availability coming halfway through 2007. It expects to have 3G in most markets by 2008. In all, T-Mobile USA estimates it will spend nearly $2.7 billion between 2006 and 2009 on deployment costs.

Dotson said there have been benefits to not deploying 3G until now. The company can get lower prices on handsets and network infrastructure. It also expects the price of a 3G-capable phone to fall to $150 to $300 from $250 to $500, making them more attractive to the consumer.

He said also that by waiting until now, T-Mobile has learned from competitors, and will likely provide different features.

Cingular Wireless, Sprint Nextel and Verizon Wireless have all have significant deployments of 3G, which offers speeds comparable to DSL, and have tried selling everything from streaming TV to full-track music downloads with mild success at best.

Dotson said that those applications are difficult for customers to understand. Instead, T-Mobile USA aims to focus on extending what people already do on their computers to the phone. Think Web browsing and e-mail services, for instance, and less TV programming, which still draws relatively few who watch it on PCs.

Bill Ho, analyst at Current Analysis, said that's true.

"Because they are late, they can see what the other carriers are doing," he said. "With all those experiences, they are saying, 'We know where the pitfalls are, and we aren't going to replicate them.' "

Still, even as T-Mobile catches up and rolls out 3G, it will be a step behind its rival. It is deploying UMTS, a form of 3G based on the GSM technology platform used by carriers worldwide.

But Cingular, another GSM company, is deploying a 3.5G technology called HSDPA. And Sprint and Verizon Wireless, which both use the CDMA platform, are looking beyond its 3G service, called EV-DO. The newer technologies provide even faster speeds than UMTS.

Despite this, Deutsche Telekom has high goals for T-Mobile USA, and for good reason — it has always been a strong performer. In the first half of 2006, T-Mobile contributed revenue of $8.4 billion, or about 22 percent of the of its parent's mobile communications total.

In the next several years, Deutsche Telekom expects the U.S. operation to account for about a quarter of its overall revenues and to be its largest mobile division.

"We are aiming to maximize revenue market share in the U.S. and make T-Mobile USA the largest single company within the [the T-Mobile International] group," said Deutsche Telekom Chief Executive Kai-Uwe Ricke.

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com

Copyright © 2006 The Seattle Times Company

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