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UPDATE: T-Mobile USA Begins Rollout of 3G Network

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NEW YORK (Dow Jones) T Mobile USA has begun rolling out its next generation wireless network as it finally catches up to its larger rivals.

The nation's fourth-largest wireless carrier said Monday it has launched its third-generation, or 3G, network in New York City. By the end of the year, it expects the high-speed network to be available in the top 20 to 25 markets where subscribers use more data services.

T-Mobile has lagged behind its rivals in the deployment of a faster network, which allows for more profitable data services. While T-Mobile says it has benefited from the growth of data, it has fallen behind as Verizon Wireless and Sprint Nextel tout their faster services. AT&T, behind the other two, has deployed 3G services to more than 270 markets.

The announcement comes on the heels of reports that T-Mobile's parent, Deutsche Telekom, is interested in acquiring Sprint to bolster its U.S. unit. A spokesman for T-Mobile declined to comment.

T-Mobile is slowly moving towards 3G. The carrier hasn't yet unveiled any related services. Four current T-Mobile phones can tap into the network, with more expected later this year. For now, subscribers with compatible phones in New York City will experience faster download speeds on their handsets and comparable voice quality.

"The full experience will be realized as we bring more data-capable devices into the market," said Neville Ray, senior vice president of engineering and operations for T-Mobile.

While behind its rivals, T-Mobile may not have missed the boat altogether.

"I'm sure they would've preferred to have it up sooner," said Charles Golvin, an analyst at Forrester Research. "But I don't think the timing is all that bad for them."

Coming in late does have a few advantages. The other players have spent billions educating consumers on the benefits of a 3G network, whose services are just starting to become popular, Golvin said. The equipment, meanwhile, is cheaper now that other carriers have gone through much of their deployments.

T-Mobile is late in deploying 3G services because it previously lacked the necessary wireless licenses from the Federal Communications Commission. In 2006, T-Mobile spent nearly $4.2 billion for 120 licenses. Later that year, the company said it planned to spend $2.66 billion over the next two to three years to upgrade its network. Unlike other carriers, T-Mobile is deploying its network using entirely new spectrum, which means a brand new network for customers. The migration of customers on to 3G will ease the congestion on its current network.

"They're looking to offload capacity in high traffic networks," said Tole Hart, an analyst at Gartner Inc.

As consumers get used to more advanced services such as watching videos and surfing the Web on their handsets, there is a greater need for a faster network. As popular as the Apple iPhone is, the biggest knock continues to be its slower 2G connection from AT&T.

T-Mobile's subscriber base tends to skew younger, and its customers are more likely to be interested in data services, Golvin said. So far, a majority of the revenue generated by data comes from text messaging.

The carrier aims to provide services directly aimed at younger users and families, which Ray said the other carriers haven't done as good a job in.

"We want to make it easy and relevant to consumers," he said. "As we look at the rest of the year, the opportunities are just starting. The story is far from over."

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

(END) Dow Jones Newswires

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