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T-Mobile offering home phone service

Upping the ante in its attempts to compete against AT&T and Verizon Wireless, T-Mobile's new service offers voice over IP service to replace traditional phones.

T-Mobile USA said Thursday it's testing a new Internet telephony service in Dallas and Seattle that will replace consumers' wireline home phone service.

Subscribers will be able to connect any regular home telephone to a T-Mobile router that will send calls over the Internet much the same way as services like Vonage operate. The service costs $10 a month plus taxes and fees for unlimited domestic local and long distance calls. But customers also have to be signed up for a T-Mobile wireless service costing at least $39.99 a month. The required router, which also provides access to the Internet, costs $50 after rebates. T-Mobile said existing phone numbers can be ported over to its service.

The company had been rumored to be working on a voice over IP wireless router since this summer when it was discovered that the company had filed plans for the device with the Federal Communications Commission.

T-Mobile, which is the fourth largest cell phone operator in the U.S., is upping the ante as it competes against, AT&T and Verizon Wireless, the No. 1 and No. 2 cell phone operators in the U.S. Aside from having more customers and larger network footprints than T-Mobile, these two operators also offer regular landline phone service to consumers. T-Mobile, which is owned by the German operator Deutsche Telekom, does not own landline infrastructure in the U.S. This makes it difficult for T-Mobile to compete against these players when it comes to bundling services and enticing customers to drop their existing phone service for service with T-Mobile.

But the new Talk Forever Home Phone service along with another T-Mobile service called HotSpot AtHome, which was launched last year and enables T-Mobile subscribers to use their home Wi-Fi network to talk on their wireless phones, are designed to entice consumers to abandon their traditional telephone service for T-Mobile's service.

Both of these services fit into T-Mobile USA's bigger strategy, which is to expand its network footprint and add capacity to attract more customers. This year the company is expected to upgrade its network and roll out new services using spectrum it acquired in the Advanced Wireless Services spectrum auction run by the Federal Communications Commission in the summer of 2006.

Earlier this week, T-Mobile also announced that it would offer an unlimited voice, data and text-messaging cell phone service for $99.99 a month. This announcement came after competitor Verizon Wireless announced a similar plan. AT&T also announced it would offer unlimited voice and data for the same price.