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10/6/2006
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T-Mobile To Upgrade 3G Services

The company expects to spend nearly $2.7 billion on a network upgrade for improved multimedia services.

T-Mobile USA laid out plans on Friday for the $4.2 billion wireless spectrum it won in a recent federal auction.

The company said it expects to spend nearly $2.7 billion on a network upgrade to 3G that can deliver mobile multimedia services, capabilities it lacked, but offered by other carriers.

The roll out of the 3G network is scheduled to begin this year, with most of the work completed between 2008 and 2009. Some markets will get new services enabled by the updated network in mid-2007, the company said in a statement.

T-Mobile USA said it will upgrade to a 3G network similar to what Cingular Wireless uses. The network called Universal Mobile Telecommunications System, or UMTS, will enable T-Mobile USA to offer fast mobile connections for video, music downloads and other multimedia services, said Ovum telecom analyst Roger Entner.

"Once you have UMTS adding another base band for more frequencies is easy," Entner said. "T-Mobile had to take this step. Otherwise their global strategy would have been in shambles."

Entner said the move supports T-Mobile USA's strategy to hold onto recent market-share gains in the U.S.

That's good news for ex-customers like search-technology company a Baynote CEO Jack Jia, who tried T-Mobile USA's service for three days, couldn't get good enough reception for data services he required, and switched to another carrier.

"I had service with Sprint, but wanted a BlackBerry," Jia said. "Sprint didn't support RIM phones at the time, so I had to look for another carrier."

T-Mobile USA, the U.S. wireless arm of Deutsche Telekom AG, was the recent top bidder in a Federal Communications Commission auction of new licenses geared toward using the public airwaves for wireless services.

According to reports, T-Mobile's bid accounted for nearly a third of the $13.9 billion raised when the bidding closed last month.

T-Mobile USA said the spectrum acquisition supports its strategic reorientation, "Telekom 2010," announced in September. Since the purchase of T-Mobile USA in 2001, Deutsche Telekom has expanded its business to 23.3 million customers.

The Deutsche Telekom subsidiary is currently No. 4 among the nationwide carriers in the U.S. market, behind Cingular Wireless, Verizon, and Sprint, Entner said.

Today, Entner said, there are about 10 million 3G subscribers out of the 223 million mobile subscribers in the U.S.

T-Mobile USA contributed 6.7 billion euros (about $8.4 billion) in the first half of 2006, adding to 22 percent of the group's overall revenue and 43 percent of the mobile communications business area, the company said.

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