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11/29/2012
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T-Mobile May Score iPhone Next Week

Is the time right for T-Mobile to launch the iPhone? At least one analyst thinks so.

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T-Mobile USA is the only major wireless network operator in the U.S. that does not offer the Apple iPhone. AT&T, Sprint and Verizon Wireless each offers the iPhone 5, iPhone 4S and iPhone 4. In fact, nearly a dozen small, regional carriers offer the iPhone, too.

Poor T-Mobile. It wants the iPhone badly, but has been unable to offer it. That's about to change, according to Merrill Lynch.

Merrill Lynch analyst Scott Craig says "speculation is heightening" that Deutsche Telekom, T-Mobile USA's parent company, will announce a deal with Apple concerning the iPhone at its analyst event scheduled for next week.

Lynch's report flies in the face of comments made by T-Mobile just last week. Jim Alling, COO of T-Mobile USA, said, "Make no mistake about it: We would love to carry the iPhone. However, we want the economies to be right for us."

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Alling's comments serve as a reminder that Sprint committed to giving Apple $20 billion for the iPhone. Yes, billion with a "B." Sprint is paying Apple so much for the iPhone, it is impacting the company's financials. T-Mobile apparently wants to avoid such a scenario. Merrill Lynch's Craig does not provide any sort of guidance on how Deutsche Telekom would structure a deal to bring the iPhone to T-Mobile USA.

Of course, T-Mobile USA has bent over backwards to attract iPhone owners to its network. It has courted those with unlocked iPhones to use its network, and even supplies iPhone-fitting SIM cards. Earlier this year, it pitched customers with in-store displays that discussed the benefits of pairing T-Mobile's service plans with the iPhone -- even though it can't offer 3G service (let alone 4G) to the iPhone.

Further, T-Mobile USA is forming its entire 4G LTE network plans around the iPhone.

T-Mobile offers GSM/EDGE voice and data service in the PCS band (1900 MHz). Its faster HSPA+ "4G" network operates in the AWS band (1700 MHz). T-Mobile is moving its HSPA+ network from its 1700-MHz spectrum to its 1900-MHz spectrum (which is compatible with the iPhone). It already has 10 markets live around the U.S. that support HSPA+ in the 1900-MHz band for the iPhone. As T-Mobile moves its HSPA+ network to its 1900-MHz spectrum, it will begin to fire up LTE in its 1700-MHz spectrum. This process is known as refarming.

Does T-Mobile really need the iPhone? According to Alling, yes. "We recognize that it has been a point of churn for us," Alling said last week. At this point, Deutsche Telekom must believe that the cost to bring the device to its network outweighs the continued loss of customers to other networks that sell the iPhone.

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