BERLIN—Berlin is a city undergoing a rebuilding and refurbishment program the likes of which few other cities in Europe have experienced in modern times. Against this backdrop of transformation, Deutsche Telekom used the grand opening of its high-tech offices in the city to announce the launch plans for its third-generation (3G) network in Germany and its ambitious goal to become a global player in mobile telecom via its T-Mobile subsidiary.
Ron Sommer, the company’s chairman, was insistent that the launch of its 3G service, which will take place in 20 German cities later this year, is consistent with T-Mobile’s plan to achieve 10-percent coverage by 2004 and nationwide service by 2010.
“There is no mistake about this. We have paid a lot for our licenses, and there will not be any ‘3G-free’ zones in Germany. We must be at the front in this deployment,” Sommer said.
Sommer stressed that T-Mobile will be the first operator in Germany to launch 3G services, albeit this year it will be little more than a technical trial with a limited number of participants and without an operational billing system. The company also confirmed it will not make the mistake with 3G that it made with ISDN services by focusing only on business users.
“ISDN has now attracted a huge number of consumers, and this is reinforced by the uptake of ADSL in Germany, where it has become an overnight success. 3G will follow these same routes by appealing to business users and consumers.”
However, senior executives from Deutsche Telekom and T-Mobile failed to illustrate how its 3G service will become a success, apart from repeatedly stating they are “convinced” it will. Sommer claimed the company already has the “killer applications” for 3G services, while other executives maintained there is no such application.
“There is not a strong mobile data market today. Handsets are poor, billing is disconnected from the terminals, applications don’t work and the delivery of content is poor,” said Nikesh Arora, a board member of T-Mobile International. “CeBit will be the first step in correcting this when we announce and launch new content channels and location-based services presently undergoing trials in Frankfurt. We can, because of our relationship with developers, see at least six months ahead in terms of devices and applications being prepared for market. But it will take time, not technology, to overcome some of these issues.”
In parallel with these moves, Deutsche Telekom will act to rebrand all its overseas mobile operations under the T-Mobile banner. According to Kai-Uwe Ricke, a board member of T-Mobile, branding is of crucial importance to its worldwide success, and the company needs to position T-Mobile correctly to ensure it achieves this.
“In two to three years, the global market will be dominated by a very small group of cell-phone operator brands—maybe only two or three—of which T-Mobile will be one,” said Ricke. “We must provide one look, one feel and one promise to customers around the world. But I also realize we are taking an enormous risk by taking the T-Mobile brand worldwide.”
Part of this global branding exercise, which will see VoiceStream in the United States change over to T-Mobile when it enters the California market this year, will mean hard times for mobile virtual network operators (MVNOs) like Virgin Mobile in the United Kingdom, which is hosted by Deutsche Telekom’s U.K. subsidiary, One 2 One.
“I doubt the success of these operations in the future. Virgin Mobile is very successful in recruiting customers, but they have to be profitable. MVNOs are also closely allied to brand, and in the future there will be fierce competition in global brands, and with T-Mobile becoming a global player, MVNOs will find it difficult,” said Ricke.
This forceful tone was also adopted with regard to T-Mobile’s relationship with content and application providers. “We are willing to share a significant proportion of the revenues generated by the content with the supplier, but there must be a commitment from them to actively market the service. But we will not share airtime revenues with these companies,” confirmed Arora.
Concluding on T-Mobile’s global ambitions, Sommer claimed the company is not worried about competition, and while continuing to dispose of non-strategic assets around the world, this does not include any holding it has in mobile operators. “The investments we have made in Central and Eastern Europe are very pertinent, and we are now the number-one operator in that region,” Sommer said. “T-Mobile is also the only transatlantic operator with GSM as its standard, and we’re seeing GSM make a real breakthrough in the U.S. It must be recognized that we took a risk buying into the U.S., but we intend to use our influence to make GSM a pan-U.S. standard.” GW
