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T-Mobile Plays Catch-Up on High-Speed Mobile Data

T-Mobile USA, the No. 4 U.S. mobile service, said on Monday it launched its first commercial high-speed wireless service in New York City, and plans to expand the service to 20 to 25 other major U.S. markets by the end of the year.

The launch will help the U.S. mobile unit of Deutsche Telekom catch up with rivals AT&T, Verizon Wireless and Sprint Nextel, which have long sold fast mobile Web services to help boost revenue and keep users.

The move comes amid reports that Deutsche Telekom (NYSE: DT) is eyeing a purchase of Sprint (NYSE: S), the No. 3 U.S. mobile service. T-Mobile USA and Sprint use incompatible network technologies.

The new service uses airwaves licenses T-Mobile bought for $4.2 billion in a U.S. government auction in November 2006. The service launch has been slowed by the company's struggles to get previous owners to clear the airwaves.

The new service, based on a high-speed technology known as HSDPA, will boost T-Mobile Web speeds by about four times initially, with another doubling of data speeds once the company comes out with a new HSDPA phone in the third quarter.

Neville Ray, its vice president for engineering, said he expects the bulk of the target markets to be ready for HSDPA launches by the end of the third quarter in time for the fourth-quarter holiday shopping season.

Ray said T-Mobile USA, which has a high proportion of young customers who are heavy users of text messaging, expects faster Web speeds to encourage its customers to use their cell phones to access social network sites.

"That's a core area for us, but not an exclusive one for us," said Ray, who also expects customers to use the higher speeds to share videos they've created themselves.

While the company is not initially changing its data price plans for the new service, it will come up with new rate plans after it starts selling the higher-speed phones.

The company offers a $5.99 mobile-Web service for lower-end phones, or $19.99 a month for unlimited wireless Web services for users of advanced phones, such as BlackBerry from Research In Motion. That fee also includes use of Wi-Fi short-range links in venues such as coffee shops.

T-Mobile said its initial data speeds for the service will range from 200 kilobits per second (kbps) to 300 kbps from the current speed of 50 kbps to 80 kbps for customers already using its most advanced phones.

Once the company comes out with a HSDPA phone, its average data speed will roughly double to 600 kbps, according to the company.

Verizon Wireless is a joint venture of Verizon Communications (NYSE: VZ) and Vodafone Group (NYSE: VOD).