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T-Mobile goes for smart grids

T-Mobile USA hopes its new SIM card and partnership with a leading smart grid technology company will help it grow its wireless business.

T-Mobile USA has developed a new durable SIM card that is ideal for providing wireless connectivity to smart electric meters, as the company tries to expand its market opportunity beyond cell phones.

On Thursday, T-Mobile introduced the embedded SIM, which is much smaller than traditional SIM cards that fit into mobile phones and other mobile devices. The tiny is made out of silicon instead of plastic and is about the size of a pin head. It is designed to be durable enough to withstand environmental factors, such as temperature, humidity, and motion. And as a result T-Mobile says it's ideal for applications such as smart electrical grids.

Echelon, which develops technology for smart meters used in building smart electrical grids, is the first customer to announce it is using T-Mobile's new SIM. The two companies also announced Thursday that they have developed an alliance to accelerate the adoption of smart grid technology.

Smart grids are composed of smart meters, which record more information than traditional electric meters and transmit that data over a communications network to utilities instead of having an employee periodically read the meters. The smart meters can help utilities better manage their power grid and can help people save money on their electric bill.

Improving the nation's electrical infrastructure has become an important political issue lately. And Congress has allocated $4.5 billion of economic stimulus package to develop new smart grid technology.

All four of the major wireless operators in the U.S. are gunning for a piece of this business. As cell phone penetration climbs above 85 percent, all the major wireless carriers are looking at ways to expand the market. Using a portion of those networks to provide communications and Internet access for machine to machine applications, like smart grid technology, as well as, for consumer electronics is an important opportunity, phone company executives have said.

In addition to smart grids, AT&T and Verizon Wireless have also been talking about using their networks to provide wireless to consumer gadgets. At the CTIA 2009 tradeshow in Las Vegas this month executives from AT&T and Verizon Wireless said they planned to more aggressively address this market.

Verizon has established a new Open Network Initiative to help streamline the certification process for these devices onto its network. And AT&T has created an emerging device business unit, which is headed by Glenn Lurie. This business unit is looking at devices that could use embedded wireless technology as well as new business models.

But T-Mobile claims it actually has a head start on all of these operators. John Horn, national director of the machine-to-machine business unit at T-Mobile, said the company has been providing wireless access for machine-to-machine applications for six years. A little over a year ago, T-Mobile created a separate division for its embedded device market.

Horn said that separating this business from the rest of T-Mobile has helped it better address the needs of its customers.

"Other carriers try to make machine-to-machine fit into the traditional carrier box," he said. "But it has a completely different cost structure. We aren't looking for $50 ARPUs (average revenue per user). And we don't have the same resource restraints such as subsidizing device or implementing a large customer care structure. So we are much better able to create great plans for our customers."

That said, AT&T and Verizon Wireless also recognize that different business models are required to address the machine to machine market as well as the embedded consumer device market

"We need to be more flexible," Ralph de la Vega, the head of AT&T's wireless business unit said recently. "This is a new frontier. And we need to approach it with new ideas. We can't be forced to go down an old path."