T-Mobile claims to soon have fastest 3G in U.S.

LAS VEGAS--T-Mobile USA said it will soon have bragging rights as the nation's fastest 3G network. But will the claim to fame help the company attract new customers?

Executives at the CTIA trade show here on Tuesday outlined the company's network upgrade plans to a technology called HSPA+ that will effectively triple its network download speeds on its 3G wireless network by the end of the year.

T-Mobile admits that it got to the 3G wireless party late, but executives at the company said current upgrades to their network will offer faster speeds to more consumers than even new 4G wireless networks being built by Verizon Wireless and Clearwire, which is partnering with Sprint Nextel.

"We were late with 3G," Neville Ray, senior vice president of engineering and operations at T-Mobile USA, said during an interview. "But we've been catching up rapidly. And now with HSPA+ we will surpass our competitors."

Today, T-Mobile's 3G network can reach about 206 million people in the U.S. Last year, the company completed a network upgrade that brought HSPA 7.2 technology to its entire 3G footprint. Since then the company has been aggressively building fiber backhaul, the network that connects radio towers to the wired infrastructure of the Internet. So far, T-Mobile has upgraded just more than 10,000 wireless bay stations, which covers less than half of its 3G footprint. By the end of the year, it expects to double the number of bay stations with fiber backhaul.

This upgrade is important because it alleviates a major bottleneck on the wireless network. And it instantaneously improves performance of its existing HSPA 7.2 network, Ray said.

What this means for T-Mobile subscribers is that most will experience noticeably faster download and upload speeds on the devices they currently own. Most of the 3G handsets that T-Mobile has been selling during the past year are HSPA 7.2 capable. And the three new handsets and a new Netbookannounced on Tuesday are also HSPA 7.2 capable.

But Ray also said T-Mobile isn't stopping with merely upgrading backhaul to get the full performance out of its HSPA 7.2 technology; the company is also upgrading to the next generation of wireless known as HSPA+. This technology, which offers a theoretical download speed of 21Mbps, is three times faster than the theoretical speed of 7.2 Mbps on the older version of HSPA technology.

Ray said 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 or Long Term Evolution technology in the future.

"We have room to grow and the time is ours," he said.

So what about T-Mobile's competition? Right now, AT&T claims it has the fastest 3G wireless network. AT&T, like T-Mobile, has built its network using GSM technology, and it is also upgrading its network to HSPA 7.2. The company is also upgrading its backhaul network with more fiber to alleviate bottlenecks, which should improve performance. Even though AT&T is using the same basic technology building blocks as T-Mobile, Ray claims T-Mobile is further along in its upgrade to HSPA 7.2 and its backhaul networks than AT&T.

Unlike T-Mobile, AT&T has not committed to upgrading to HSPA+. Instead , the company has said that it plans to move to 4G wireless technology called Long Term Evolution, or LTE. It will begin testing an LTE network in 2011.

Meanwhile, Verizon Wireless and Sprint Nextel, which originally took a different technology path than T-Mobile and AT&T, are building 4G wireless networks and beginning to offer 4G services. Verizon Wireless is building a 4G network based on LTE. It will launch the service in the second half of this year and expects to be in 25 to 30 markets by the end of 2010. Sprint is using Clearwire's 4G network using a technology called Wimax. The network is already offered in 27 markets and will be in several others, including Miami, St. Louis, Cincinnati, Cleveland, Pittsburgh, Salt Lake City, New York City, Houston, Boston, Washington, D.C., Kansas City, Denver, Minneapolis, and the San Francisco Bay Area by the end of this year. On Tuesday, Sprint announced its first 4G Wimax handset.

Even though these 4G networks could potentially outperform T-Mobile's existing HSPA 7.2 network, Ray said that T-Mobile's HSPA+ network will offer comparable speeds to Verizon's LTE service and Sprint's Wimax service.

What's more, T-Mobile will have a wider footprint of faster wireless service than any other national wireless carrier, Ray said. Verizon expects to reach about 100 million potential customers by the end of the year with LTE, and Sprint Nextel today only reaches about 30 million potential customers. It says it will reach 120 million by the end of the year.

T-Mobile only has a handful of cities upgraded to HSPA+ today: Philadelphia, New York, New Jersey, Long Island, Washington, D.C., and soon Los Angeles. But its entire network, which reaches 206 million potential subscribers, is upgraded to the faster HSPA 7.2.

Until Verizon and Sprint can expand their 4G networks further, their subscribers will fall back to a 3G network when 4G isn't available that is slower than the 3G network T-Mobile has deployed throughout its territory, Ray said.

"Let's just say I am less worried about Verizon's switch to LTE, because I know we can deliver superior network speeds compared to their CDMA-based 3G network which is the network servicing the majority of their subscribers," he said. "It will take at least three or four years before their LTE network offers meaningful scale and a real device ecosystem is established."

Ray believes that T-Mobile's faster speeds could help it peel off customers from its bigger rivals. Over the past several quarters, just the opposite has been happening. T-Mobile has been losing customers, while rivals AT&T and Verizon Wireless have been adding customers.

In addition to a faster network, T-Mobile is also competing on price, offering competitively priced data plans and less expensive Android-powered smartphones.

"We missed an opportunity a couple of years ago by not having a big enough 3G network," Ray said. "But we've fixed that. Now we have a big opportunity to grow in a meaningful way. And we have to win new customers from rivals."