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VoiceStream Morphs into 'T-Mobile'
Fri Jul 19, 1:32 PM ET

Jay Wrolstad,

VoiceStream has started its transition to a new name and brand, T-Mobile, in the U.S. with the launch Thursday of T-Mobile wireless voice and data services in the California and Nevada markets.

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T-Mobile is the global wireless arm of German telecom giant Deutsche Telekom (DT), which will use the California and Nevada launch to initiate a changeover from the VoiceStream brand to T-Mobile by the end of the year and market the new nameplate in all of its U.S. markets.

VoiceStream, which was spun off from parent company Western Wireless ( Nasdaq: WWCA - news), in 1999, was purchased in June 2001 by DT for some US$20 billion, forming the first transatlantic wireless carrier operating on the international GSM standard.

Leveraging Brand Equity

VoiceStream is the sixth-largest U.S. carrier, with about 7.5 million customers and a 6.3 percent market share. The company recently has been cited as the target of a possible takeover by AT&T Wireless ( NYSE: AWE - news), reflecting a possible response to the heavy debt load being carried by DT.

However, reports of whether such a merger was actually in the works were conflicting. The company also has a network-sharing arrangement with Cingular.

The branding changeover has already been done with VoiceStream's wireless LAN service, which is now known as T-Mobile Broadband. "The objective here is to leverage brand equity with Deutsche Telekom and promote the international benefits of T-Mobile," IDC wireless analyst Keith Waryas told Wireless NewsFactor.

A Different Market

DT has been pushing its international roaming capability and is seeking a consistent brand name across all continents to allow worldwide marketing of a single entity, he said.

But because U.S. wireless service is based on local choices among various technologies, compared to Europe, where virtually all operators use GSM network technology, the jury is out on whether this move will pay off for DT, Waryas said.

Touting New Faces, Features

To get the ball rolling, T-Mobile kicked off a massive multimedia marketing campaign in California and Nevada, and the company has apparently dropped VoiceStream spokesperson Jamie Lee Curtis in favor of actress Catherine Zeta-Jones.

T-Mobile/VoiceStream offers service in 8,000 cities across the country, including voice and data communications. Its Wi-Fi (802.11b) wireless broadband Internet access service features an agreement with Starbucks ( Nasdaq: SBUX - news) to offer the service in the coffee shop chain.

The carrier also claimed it will also be the first in the U.S. to introduce the Microsoft Windows-based Pocket PC 2002 Phone Edition software platform for enterprise users.

In establishing a new corporate identity in the U.S., Waryas said, T-Mobile is attempting to keep pace with the competition, but now must devote time and resources to a new marketing effort.

"They spent a lot of money on name recognition with VoiceStream, and now they will have to do that all over again while handling parallel marketing budgets," he said.

"I'm not sure why they didn't roll out the service nationwide, rather than market-by-market."

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