T-Mobile considers 4G network partnership

Mobile phone carrier is considering partnering with a private equity firm that is building a 4G wireless network using LTE technology.

T-Mobile USA is considering leasing network capacity from the private equity firm Harbinger Capital to build its 4G wireless network, according to a report by the Financial Times.

The news agency cited unnamed sources who said that T-Mobile's parent company, Deutsche Telekom, is in early talks with Harbinger about the deal.

In March, Harbinger said it would build a 4G wireless network using LTE, or Long Term Evolution technology, that will cover most of the U.S. by 2015. The company is using spectrum it owns through investments in satellite company SkyTerra. The FCC gave the green light on the plan, but is requiring the provider to only sell the service wholesale. And it has put restrictions on how much of the network can be used by the two largest wireless operators in the U.S., AT&T and Verizon Wireless.

Representatives from Harbinger and Deutsche Telekom declined to comment.

A deal between Harbinger and T-Mobile would give the struggling fourth place U.S. wireless operator an opportunity to boost wireless speeds as it tries to compete more aggressively against market leaders.

Verizon is building its 4G wireless network now using 700 MHz spectrum it acquired in the last Federal Communications Commission Auction. The company will launch the service later this year and will reach 25 to 30 markets by the end of 2011. AT&T has upgraded its network to HSPA 7.2 and it plans to upgrade to LTE in 2011.

T-Mobile is also in the midst of a network upgrade using a technology called HSPA+, which will boost theoretical download speeds to 21Mbps. It's three times faster than the previous generation of HSPA technology, which offers download speeds of 7.2Mbps. T-Mobile is using HSPA 7.2 throughout its network now, and it's been upgrading to the HSPA+. So far, the service is already up and running in Philadelphia and parts of New York City, New Jersey, Long Island, N.Y.,and Washington, D.C.

Neville Ray, senior vice president of engineering and operations at T-Mobile USA, said in a recent interview that with the 30MHz of spectrum it acquired in the Advanced Wireless Spectrum auction a few years ago, it has plenty of headroom to grow its 3G network. That said, the company still plans to upgrade to 4G wireless using LTE in the future. And earlier this year, Robert Dotson, CEO of T-Mobile USA, confirmed the company had spoken to Clearwire and cable companies about a joint venture.

With more than 90 percent of Americans now owning a cell phone, wireless operators are finding it difficult to grow their businesses. AT&T and Verizon Wireless have managed to add new subscribers, but Sprint Nextel and T-Mobile have been losing customers. Operators are still focused on winning new customers, but they are also trying to get existing customers to spend more money on data services. Next-generation wireless networks that use 4G technology offer them an opportunity to get customers spending more per month on wireless service.

There has been a lot of speculation over the past year about what the German parent company Deutsche Telekom will do with T-Mobile USA. Deutsche Telekom CEO Rene Obermann said at the company's annual meeting Monday that he is not "fully satisfied" with T-Mobile USA's performance, The Wall Street Journal reported. But he said Deutsche Telekom is "not yet giving up on the company. "After all, it is making us a great deal of money," he said. A public offering could be in the works to raise cash.

 

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