T-Mobile’s entrance into the landline business today is the latest encroachment of the fixed voice market from a competitor without a fixed voice network. But analysts say the entry of the nation’s fourth largest wireless company into the voice-over-IP market could hurt cable companies more than telcos.

The nationwide service announced by T-Mobile today, unlimited domestic calling over broadband connections, gives the carrier a new wireless/wireline service bundle and thus more in common with major telecom providers such as AT&T and Verizon. Tested in Dallas and Seattle since February, it will be available beginning on July 2 for $10 a month. To subscribe, customers will also need a wireless plan beginning at $40 per month and a T-Mobile Internet router for $50. The router plugs into the home broadband connection, and the customer's corded or cordless phones plug into the router.

Bobby Perez, research analyst at IMS Research, said that while he doesn’t see T-Mobile being a true, 100% landline provider, it is an important strategic move in being the sole voice provider for its consumers. As the number-four mobile operator, its potential market is still somewhat limited compared to VoIP provider Vonage’s broadband subscriber base, which pays $25 per month for service. T-Mobile’s offering is strikingly similar to Vonage’s but requires customers to switch out their original routers, whereas Vonage includes an adapter that connects to an existing router. The lower price tag will make the two more competitive, but T-Mobile may actually have the biggest impact on the cable companies entering the telephony market.

“More than Vonage, their main competition will be from the Internet providers,” Perez said. “Whether it be on a DSL connection from AT&T or Verizon or a cable company, the selling point is that $10 a month is a lot cheaper than $25 from the cable company. That price point is undercutting the cable providers as the main competitor.”

Yankee Group senior analyst Patrick Monaghan pointed out that T-Mobile still faces challenges related to the complexity of installing the service, as well as consumers’ lack of understanding for how to get UMA to work on their cell phones. That being said, he believes it will make T-Mobile more attractive to people interested in cutting the cord, but not yet ready to ditch the landline entirely.

“If we looked at VoIP three years ago, you would’ve said this is going to revolutionize the telecom industry and it did,” Monaghan said. “It reduced prices significantly, but what wireless is doing now with free nights and weekends, My Faves and now the unlimited all you can eat packages for $100 is they are driving cord cutting and affect telcos fixed line and VoIP services more than VoIP provides like Vonage.”

The service builds on T-Mobile’s Hot Spot@Home, which enables Wi-Fi equipped cell phones to use the home router for indoors calls. Since it now works on wireless or corded handsets, the service will be targeted at customers who aren’t yet ready to lose the familiarity of the landline phone. According to Perez, this includes most consumers. Landline isn’t going anywhere, at least not for the foreseeable future, he said. Especially with cable companies, like Time Warner, offering digital phone service essentially free when bundled, no industry player is going to entirely stop pushing a landline phone service to the home.

That being said, Monaghan added that in the long run as more consumers go to wireless, T-Mobile’s service should prove to erode the ARPU for cable providers and their telephony products. An offering like this eases customers into cutting the cord by still offering the security of a landline. While T-Mobile is trying to make their subscribers aware that it is not VoIP nor it is plain old telephone service, in the end, consumers probably won’t really remember. They’ll just remember that it’s another layer of service that they aren’t paying all that much more for.

“We see companies like Vonage trying to add services to reduce churn,” Monaghan said. “I think T-Mobile is thought of very highly in terms of customer satisfaction as far as wireless carriers are concerned, but at the same time having more services to layer on is ultimately more important in terms of keeping customers. We see this just as another service to reduce churn.”