Glenn posts some more detail on T-Mobile today and it seems their cost structure could be much lower than previously thought. As a carrier they get apparently get a very sweet deal on T-1 lines…
In his post, he notes that even when he was at Wayport, his average T-1 cost was $250 per month, and that T-Mobile could be paying as little as $90 per month in many locations in which they have co-located equipment to carry their cell traffic.
Combine that knowledge with Carlo Longino’s analysis of our post yesterday about T-Mobile’s revenue averaging to $400 per location per month, and you start to see that they could, in fact, be running far cash-flow positive. (Carlo wonders if the infrastructure is all T-1 still; that’s what T-Mobile confirmed for me all last year for Kinko’s, Borders, and all Starbucks past and future.)
Carlo notes, by the way, that T-Mobile said 67 percent of users are subscribers. This doesn’t give us apples to apples on sessions, but if you ascribe $1.2 million to 48,000 subscribers at an average rate of $25/month ($20 for T-Mobile cell users, $30 for one-year commitment regular users, $40 for month-to-month) that would leave you about 25,000 hourly/day sessions a month. Is it really possible T-Mobile has 48,000 subscribers?
Even if T-Mobile is paying prices all across the board, Jim’s information leads me to believe that their recurring costs might be substantially lower than anyone has previously estimated. Carlo’s factoid contributes the knowledge, if it’s all connected correctly, that the cell carrier might be signing up many more regular users of Wi-Fi service than previously imagined. [Wi-Fi Networking News]
Thinking again about how crowded the Starbucks I’ve been visiting are, it seems like T-Mobile is doing just fine.