T-Mobile’s Bobsled Tackles the App Market, Racks Up 2M Users

7/17/12Follow @curtwoodward

You’d have to be a little nuts to tackle a new voice and messaging service for a wireless carrier.

Sure, those have been the carriers’ bread-and-butter services for many years. But these days, revenues from voice and text services are dropping like a brick—a decline that’s being hastened along by Internet-based alternatives from smartphone companies and app developers.

That’s what makes T-Mobile’s Bobsled so intriguing.

Launched last year, initially as an application to make phone calls over Facebook, Bobsled has grown into a full-fledged Internet voice and messaging service. It’s free to use, and works on the major smartphone platforms and Web browsers—regardless of which wireless carrier you’re on. Over time, the plan includes adding features like video calling to the mix.

So it’s like Skype, or Google Voice, or Apple’s FaceTime, right? Yes, and many of the other voice-over-IP and Internet messaging services out there. But it’s important to note that this entrant is coming from the wireless industry—that stodgy, tottering old business that’s not supposed to care much about innovation.

In an era where their traditional business is in irreversible decline, plays like Bobsled show that there are people at the carriers who are looking to the future. While the strategy drives customers away from using today’s billable services like voice and text messaging, it also puts the carrier behind the wheel of a new app that’s dependent on Internet data usage—one of the key future revenue sources for the carriers.

The Bobsled project also highlights Bellevue, WA-based T-Mobile’s role as the scrappy innovator among U.S. wireless carriers. It’s No. 4 among the national carriers, and clearly unwanted by corporate parent Deutsche Telekom, which tried to sell the business to AT&T last year. The fact that T-Mobile is the only carrier experimenting in public with an IP-based all-in-one calling and messaging service gives some heft to complaints that an AT&T merger would have snuffed out innovation in the market.

And Bobsled is more than just a demo or a side experiment. Alex Samano, the T-Mobile general manager in charge of Bobsled, says the immediate goal is one that might sound odd to all the startup guys out there: Make money.

Samano

“We need to show that this approach and this business model that we’re pursuing can deliver,” Samano says. “Because we are in a space that no one’s actually been able to deliver a business model that makes money … Everyone’s been living off of their VCs.”

Users seem to be paying attention. In May, a little more than a year after its debut, Bobsled announced that it had crossed the 1 million user threshold. It doubled that in just a few months, with Samano telling me that Bobsled crossing the 2 million user mark in the first week of July (users were defined as someone who downloaded the app, registered, and used it for voice calls or messages at least three times).

It’s all been done by a pretty small team of people inside T-Mobile. The core group, Samano says, is about a half-dozen, with others borrowed from within the parent company from time to time.

The Bobsled team does have some advantages being tied to a big carrier, including the ability to draw from in-house technical and business talent rather than get into the scrum of recruiting. But it also isn’t as easy as you might assume. Bobsled hasn’t, for instance, relied on T-Mobile’s large marketing budget to get the word out about its service.

The new offering also gets right to the root of how difficult it can be for the legacy carriers to compete with people from the software world. For example, Samano says, a carrier simply isn’t set up to deal with anybody who isn’t already sending in a check every month.

So how do you issue a phone number to someone who’s signed up for free? How would you bill them for possible premium services, or deal with their customer service problems?

“We don’t even have a system to keep track of them,” Samano says. “So how do you do that? How do you issue a number to somebody who is going to log into your system using their Google, Yahoo, Facebook, or other Internet ID? Welcome to my world.”

Setting up something as ambitious as Bobsled also requires reaching outside the company for the infrastructure to make a purely IP-based service work. Bobsled’s VOIP system is provided by Vivox, a venture-backed provider based in Natick, MA. Its messaging is handled by HD Messaging, a Burlingame, CA-based startup.

Being tied to T-Mobile’s underlying access business, where users pay monthly fees for mobile Internet, can certainly help the service get some runway in front of it. But Samano says the real goal is to find business models beyond relying on the corporate parent—that’s why 90 percent or more of Bobsled users are not even T-Mobile customers.

“I almost see it like it would be the easisest way to do it. And it doesn’t mean we’re not going to. But we’d like a bigger piece of the pie,” Samano says. “If we would have taken that approach … you would have seen many, many, many more pre-loads and much more merchandising and advertising to our base.”

One of the most obvious models for earning money from the Bobsled app takes its cue from mobile game developers: Offer a free, basic service to get a wide user base, and charge for premium upgrades that add features.

“We believe that this is no different,” Samano says. “It wouldn’t surprise anybody to see us do that. How specifically you implement that strategy is what we need to figure out.”

Samano says he also thinks personally that tiered levels of service will be a promising source or revenue across the industry.

“There are people who are not going to put up with not being able to guarantee a certain level of service. It’s communications,” he says. “It’s not OK for me not to know if my message got to my wife. And I think there will be a tendency to open up your wallet again for certain guarantees of service.”

It’s refreshing to see a carrier playing in this sector, and putting some of the industry’s minds to work on the big questions in the still-developing mobile computing revolution.

The Pacific Northwest was the breeding ground for today’s wireless behemoths, but those companies have seen their roles usurped by the Apples and Googles of the world. If more carriers get aggressive about competing with the service providers who ride on their networks, the consumers will certainly reap some benefits.

“We want a piece of that market, period,” Samano says. “We want share. A meaningful share. You may measure that in subscribers, you may measure that in minutes of use, or volume of SMSs, or minutes of use of video. It may end up getting measured in many different ways. Share is where we need to be.”

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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  • Lorraine Fahy

    Very interesting to see these continued developments, with T-Mobile and Telefonica quickly ramping up their user base with these Apps. IP Video/Messaging and voice is key to their offering, with accessibility from multiple user devices, of most interest will be their monetization plans in the long run.