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Connecting the hot spots

T-Mobile USA operates the largest number of public hot spots in the country. But the industry is changing and Joe Sims wants to point the network in a new direction.

When it comes to equipping public locations with wireless broadband access to the Internet, T-Mobile USA leads the pack. At last count, the company's network of nearly 4,000 hot spots numbered more than twice as many locations as its nearest competitor. Until recently, however, the carrier has shown little interest in teaming with service providers or network operators. T-Mobile USA was better known for teaming with chain partners, such as Borders and Starbucks.

But the company, which wants to attract more mobile business workers to its network, has begun looking to share its network with select service providers. In part, that's a reflection of changes within the industry as well as a shift in T-Mobile USA's priorities, according to Joe Sims, the company's general manager of hot-spot service.

Service providers looking to gain access to its network will have to measure up to a list of criteria that T-Mobile USA and Sims deem as paramount to providing a consistent and high-quality experience. Sims spoke with CNET News.com to explain what those characteristics are and why they're important.

The strategy for T-Mobile USA has been to team with chain partners Starbucks, Kinko's and Borders, which varies from that of competitors who are teaming with aggregators. Explain that.
The first couple of venues that we partnered with--specifically Starbucks and Borders--were about ubiquity and being every place that people go. It was very important to have a broad footprint. The announcements that you've seen since then target a specific behavior, not generalized coverage. Starbucks gives us broad coverage, whereas a Kinko's is very much about the small- to medium-size business workers.

Was that a change in strategy?
It was an evolution in strategy. It's very important to have a broad footprint to begin with but then to begin to narrow that by going after venues where the targeted customers go...We know about 88 percent of our current users use our service for business, so instead of trying to figure out what venues to go build, we ask them, "Where are the places you go all day?" And that's where we're looking for venue partners.

It's also important that with our venue partners that our service is in all of their stores or locations so you don't have to wonder which locations have our service.

So you're piggybacking on their brand?
Or we're complementing each other's brand-- Right, adding to their brand.
Hopefully, yes. The idea is to help (customers) get more from the experience of using T-Mobile HotSpot. Part of that is helping them to do it in places and brands they recognize and already trust and have relationships with.

Are you going to stick with the strategy of partnering with large chains?
Broadly distributed brands that mobile workers know and trust--that's a good bet. You're going to see some other announcements in the near future about major brands that are broadly distributed across the United States.

McDonald's is a pretty well recognized brand and they are in trials with some of your competitors, but you're not in that trial pool.
No, we're not.

How would that be different from a Starbucks and why aren't you going after McDonald's?

It's not just about pricing.
McDonald's has a great brand and they're a fabulous success story about how to establish a brand and fulfill brand promise. But so far our users haven't told us McDonald's restaurants are places where they spend a lot of time. When we asked them--and it wasn't just McDonald's; it was the whole category of convenience or fast-food restaurants--it's not a place where they spend a lot of time doing business.

If the goal is to get as much traffic as possible, why haven't you done a deal with a service provider? Service providers are supposed to add a lot of traffic to a network.
The problem is that to have a roaming relationship you want three things: Quality of service, meaning the roaming partner has to have the same level of service as you do and that your customers have come to expect. The second thing is a compatible back-end infrastructure to allow for easy authentication, access control and billing. A lot of the partners we've talked with in the past haven't had that. And third, they have to have subscribers to be able to bring to your network. Frankly, a lot of potential partners haven't had subscribers.

That has changed in the last six to nine months. The industry has matured rapidly, and there are several providers out there right now that meet all those criteria. We are absolutely engaged with them and intend to announce some roaming relationships in the very near future.

How do you envision pricing plans changing and customers responding to current plans?
More and more customers have really opted for a day pass. They've done that because it's not a matter of paying for the incremental minutes or paying more or less. A lot of what our customers do is go from location to location. They'll go from a Starbucks to a Borders because they're traveling throughout the day, and so they find it economical and convenient.

We're going to leave our pricing where it is for a while. It's not just about pricing; it's about how you fit with customers. For example, we have a special price plan for T-Mobile voice customers allowing them to add Wi-Fi to their (cellular) voice bill.

Is the music offering at Starbucks locations indicative of the sorts of services you will provide with your partners?
Yes. That's a joint project with content produced and provided by Starbucks and the network is provided by T-Mobile. We're helping them by hosting some of the content and helping them to manage the interaction with their back-end servers.

The cooperation makes sense because you wouldn't expect customers at a Kinko's to want to download music, they'd be more concerned with sending out faxes or working on work-related projects. Is that the sort of thing that T-Mobile will work on with their partners?
That's a perfect example. With Kinko's we're working on a customized print solution for them so that when customers walk into a Kinko's store they can access print resources without going out over the open Internet. We're providing a differentiated service for a partner in their venue. You'll see more of that with other venues.

What does cellular mean within the company in relation to Wi-Fi? The two have gone from being viewed as competing technologies to being complementary.

The Internet today is used as an integral part of most, if not all, businesses. Wi-Fi is no different.
I would agree with that. It's a matter of best available bandwidth. We want to eventually provide users with the best available bandwidth for the application of choice on the device at hand--and that device may be a cell phone or PDA or converged device.

T-Mobile announced it would be supporting 802.1x in its networks by early next year, and Microsoft said it would be supporting it in the next version XP. How feasible is it to manage security in a public hot spot?
It's paramount. If you don't have a commitment to a secure infrastructure, you really can't comfortably conduct business. We saw that with the Internet. The Internet today is used as an integral part of most, if not all, businesses. Wi-Fi is no different.

Our decision did have something to do with Microsoft's announcement. But the truth is most clients today are coming onto the market with 1x support and the reason is because over-the-air encryption is essential to have a fully encrypted end-to-end solution, and that's what we've committed to do. We think it's essential to all providers, especially those that our customers are going to roam onto--that they also have the same commitment to security.