T-Mobile Bets on Wi-Fi, Drops Zeta-Jones

By Ed Oswald, BetaNews

September 26, 2006, 3:39 PM

Fresh off a major spectrum grab at the recent wireless frequency auction, T-Mobile USA plans to step up efforts to gain new customers and separate itself from its competition. The changes will also include the exit of Catherine Zeta-Jones as T-Mobile's spokeswoman, the Wall Street Journal reported Tuesday.

The nation's fourth biggest wireless carrier will introduce new phones as early as next month that can use Wi-Fi hotspots in order to make phone calls. Sources have told BetaNews that the company had been testing the phones in the Oregon/Washington area since mid-summer, and although buggy at first, the service had generally worked well.

It is likely that the same area is where the service would be launched initially. Wi-Fi support would require an additional service plan, as well as a special router and phone. In tests, sources told BetaNews that a Samsung SGH-T709 along with a provided D-Link TM-G5240 router was used.

Although its not immediately clear, the WSJ speculates that T-Mobile could offer a VoIP service much like Vonage, which would also entice subscribers away from landline phones. The paper said T-Mobile holds a special advantage since doing so would not cannibalize other parts of its business.

For example, Sprint and Verizon stand to hurt their landline and long distance businesses if they would attempt to lure users away from traditional phone service. The dual-mode phones would automatically switch between Wi-Fi and GSM signals seamlessly.

T-Mobile stands to benefit from such a setup. Through design, GSM signals typically have a harder time making it through the walls of buildings. Thus, in places with a compatible router, or a T-Mobile Hotspot, the service would boost the signal for the carrier's users.

In addition to the Wi-Fi service, the carrier also plans to introduce a new service dubbed "My Favs." Similar to the "My Circle" program recently announced by Alltel, T-Mobile subscribers would be able to select up to five numbers to be added to their unlimited calling plan.

Sources told the WSJ that the service was being tested in the Northwest, and could go nationwide soon. Still unknown is T-Mobile's exact plans for the spectrum it had acquired through the FCC auction.

With all the changes also comes a switch in advertising strategy. Since the days when T-Mobile was VoiceStream, the company has built its campaigns around a spokesperson - first Jamie Lee Curtis, and now Catherine Zeta-Jones.

Now, however, the company apparently plans to use a "man on the street" concept to promote its products. While Zeta-Jones may still appear in ads for the immediate future, it is expected she would be phased out by next year.