T-Mobile turns to customers to improve its network

 T-Mobile (TMUS) is taking an unusual approach to improving capacity on its phone network, announcing on Monday that customers can get their own mini-wireless broadcast tower.

Dubbed the 4G LTE CellSpot, T-Mobile's small plastic box plugs into a customer's home Internet connection and provides up to 16 nearby devices with full T-Mobile wireless signal, including the fastest LTE format. T-Mobile said the Cellspot would be free with a $25 deposit to customers on its Simple Choice plans.

Wireless carriers have been experimenting with adding many more, smaller transmission points to relieve some of the congestion on their networks as iPhone-happy teens uploading ever more videos to Snapchat and their ilk threaten to overwhelm the capacity of the existing system.

Some analysts think adding numerous smaller cells, called femtocells in the industry, could be a cheaper and more efficient way to expand capacity than building more traditional large towers or buying more spectrum at an upcoming government auction. But most plans have been for the carriers themselves to deploy the smaller transmitters, not customers.

"The other major carriers always seem conflicted about femtocells because they're an implicit admission that their networks have shortcomings," says Jan Dawson, chief analyst at Jackdaw Research. "T-Mobile, on the other hand, has had trouble getting its network to reach into buildings, so it's had to embrace femtocells as a way to overcome those shortcomings."

Customers would be relying on their own Internet service to make the behind-the-scenes connection between the small cell and the rest of T-Mobile's network. And any T-Mobile device, not just those owned by the person who installed the Cellspot, could get a connection. That means there could be some unexpected piggybacking on small cells installed in apartment buildings or other densely populated areas.

T-Mobile's outspoken CEO John Legere used the announcement as yet another opportunity to bash his competitors. "The big difference between us and the carriers is that they’ll do absolutely everything they can to bleed you dry," Legere said in a statement. "We’ll do absolutely everything we can and use every proven technology available to give you the best coverage possible."

Verizon (VZ) responded that its network already has better coverage. The carrier's current improvement plan "includes an aggressive small-cell build strategy to strengthen a network that already provides customers with more value than any in the industry," a spokesman said. AT&T (T) and Sprint (S) had no immediate comment.

T-Mobile's CellSpot is about the size of a typical Wifi router and extends the company's wireless network to cover about 3,000 square feet.

T-Mobile customers deployed more than 1 million Wifi-based network extenders that the company started offering a year ago, Chief Operating Officer Mike Sievert said in an interview. But the older device requires phones that have the Wifi calling feature and only reaches such phones if they are signed onto a specific device's wifi network.

Legere said the small cells were a prelude to an annoucement next week of the 10th piece of his "Uncarrier" strategy, first unveiled in 2013 with the decision to eliminate two-year contracts. In March, Legere offered an inexpensive plan for businesses as the ninth iteration.

Some reports say the next move will be to allow customers to watch digital video networks like Netflix and HBO without using up their data allowance, similar to T-Mobile's "Music Freedom" program allowing free streaming of many music services. Sievert declined to comment. "Every time we do one of these moves, there's a round of speculation," he said. "We don't comment on it."

The unconventional approach has worked, as T-Mobile has gained subscribers more quickly than its three competitors, Verizon, AT&T and Sprint. The company last week announced that it added 2.3 million net new subscribers in the third quarter, its 10th consecutive quarter of at least 1 million additions.

Shares of T-Mobile were almost unchanged at $37.92 in early trading on Monday. The shares have gained 41% so far this year, outpacing a 16% gain by Sprint and flat performance from AT&T and Verizon.