Some aren’t so sure. Vibhu Norby thinks Yahoo shareholders need an explanation because the math doesn’t make sense — $30 million for two engineers, a founder and dubious control of intellectual property. But hey, this is the same company that hired a guy as its CEO who had made up his resume. Emin Guen Sirer doesn’t pull any punches in his dismissal of the deal. Can D’Aloisio inject some minty-fresh thinking into the company?

Math Madness: As algorithms become the driving force behind the latest and greatest mobile apps, NPR asks the question: Is math the next tech bubble?

Flipping the magazine world:  Flipboard packed a few potentially disruptive features inside its latest update. The company announced the Flip It! button this week, which will allow users to collect articles, images, videos, and songs from Flipboard content, RSS feeds, and social streams and curate them in their own digital “magazines” right inside Flipboard, with the best ones being featured by the company.

The atomization of content continues, and we are seeing further disintegration of the magazine brands and the content they create. When I see this move, I see a Netflix-like effort to build a packaged service on top of existing content creators.  Not only that, but Flipboard has also said that it will adopt a layer of e-commerce in the near future, making Flipboard a one-stop shop for consumption, bookmarking and social sharing. (Please sign up for the Om Says magazine, while you are at it.)

T-Mobile says contracts are stupid:  And since we’re on the subject of disruption, T-Mobile is hoping to step out of the shadows and “rattle the cage” of the wireless industry. CEO John Legere introduced the company’s new “un-carrier” moniker, which means T-Mobile will do away with phone subsidies, and will offer plans and phones untethered — including the iPhone 5 — starting April 12. While that may incite a guttural “hallelujah!” from the depths of your 24-month-contract-abhorring soul, you should make sure the switch is worth it, both in cost and coverage.

By the way, if you are switching from AT&T, then your iPhone 5 is going to work with T-Mobile’s LTE (but not 3G) network.

You can choose to buy your device outright and enjoy contract-free usage till the cows come home, or plop down a smaller chunk of change and pay off your phone over the course of 20 months, rendering the balance if you choose to leave T-Mobile before then. Not exactly a contract in way we’re accustomed to, but still a pretty short leash. T-Mobile also lags behind the competition in fast wireless speeds, but the company is finally dropping its LTE service on seven cities across the nation, with more being rolled out in the coming year. Still, there are many questions left to be answered: Are T-Mobile’s offerings enticing enough to get you to switch? Was John’s new cool-guy wardrobe a hit? What will T-Mobile girl Carley Foulkes do now that she’s been handed her pink slip?

Two Kinds of Cyber Warfare: We all wish that time would slow down a bit, but the Internet? Not so much. The biggest cyberattack in history took place this week, causing slowness for users around the globe. It’s suspected that a group called Cyberbunker targeted their 300 billion-bits-per-second DDoS attack at The Spamhaus, a spam-fighting group with which it’s had a long running feud.

If that’s not enough, a trio of divers was busted for allegedly trying to cut through undersea Internet cables just off Alexandria, Egypt. If those cuts had been carried out, it would have made things even worse by crippling the web access for entire continents. Though both attacks were thwarted, it makes you wonder if hand tools with sharp edges are still a bigger threat than zombie PC’s.

And here are some stories you might have missed this week:

• Someday, advertisers might be able to skip all that pesky market research and simply use their brainwaves to deliver targeted ads in real time. Sounds fun, right?
• More advertising is coming, and there is nothing you can do about it. “The question for brands will change from “How many fans or followers do you have?” to “Whom do you want to reach?” writes AdAge.
• The San Francisco Bay Bridge will be lit up with over 20,000 LEDs for the next two years. Here’s a look behind the project.
• Will Google Glass follow the path of most innovations and totally tank the first time around?
• The rise of the noUI. Simply a brilliant and must read article.
• We are happy to report that coffee is, in fact, nectar of the Gods.

Read this and other in-depth articles on GigaOM’s Flipboard channel

Customers who buy a device from T-Mobile through one of its financing plans (for instance, the iPhone 5 can be had for $100 up front and 24 monthly payments of $20) will still get locked devices. But T-Mobile CMO Mike Sievert said whenever a customer finishes paying off his or her financing plan, T-Mobile will unconditionally unlock the device.

Earlier this month, I wrote that the phone locking was a symptom of the broken subsidy model used by carriers. T-Mobile is now fixing the subsidy system, but it’s not ending the practice of locking. What gives?

Well, the answer is a bit nuanced. Instead of diving headlong into the murky depths of full-cost devices, where customers wind up fronting the costs of a $500 or $600 smartphones on day one, T-Mobile is easing customers into the model with interest-free financing plans.

Though it’s separating the device from service plan – and eliminating the contract in the process – T-Mobile is still on hook for the device cost, and it wants ensure that its customers won’t take their new iPhone or Galaxy S 4 and then bolt to another carrier. As with any loan, customers are still bound by financing contract, but T-Mobile wants extra insurance that they won’t renege.

T-Mobile USA CEO John Legere

At the event on Tuesday, T-Mobile went to lengths to explain that it is against the idea of locking all phones for the mere sake of binding customers to a specific carrier. In fact, T-Mobile hopes to benefit enormously from an unlocked device market, said T-Mobile USA CEO John Legere. He’s hoping AT&T customers will take their out-of-contract and unlocked devices over to T-Mobile, giving them a second life on T-Mobile’s network.

Legere also said that T-Mobile is a strong advocate of device portability — Customers can take an unlocked phone to T-Mobile for a month, and if they’re not happy they can move on to the next carrier. T-Mobile expects to win out in any head-to-head contest with a major carrier over unlocked devices because it won’t be factoring contract subsidies into its pricing plans. “The rate plan is just going to be about the service,” Legere said.

With that philosophy in mind, T-Mobile will unlock any device as soon as the customer’s financial obligation for it is over. If a customer buys a phone up front, T-Mobile will unlock it, Sievert said. If they accelerate their financing agreement and pay the phone off early, then T-Mobile will unlock it, Sievert said. If they return the phone to T-Mobile before the contract ends, T-Mobile will credit their financing agreement with the current market value of the device, Sievert said.

It’s not an ideal situation. There are uses for unlocked phone even if you’re sticking with your service provider – traveling overseas for instance – but I can understand why T-Mobile is imposing the locking practice. Ultimately it seems that if we want to be free of the carrier yoke entirely, we’ll have to start buying our devices outright.

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Though Legere and T-Mobile haven’t said explicitly which Apple device or devices the carrier would sell, the timing would put T-Mobile in line to retail the current-generation iPhone 5 a good four to five months before the smartphone is likely to be refreshed this fall. There’s also the off chance that T-Mobile might be a candidate for the rumored “cheap iPhone” Apple is supposedly developing.

Neville Ray, CTO, T-Mobile (c) 2012 Pinar Ozger pinar@pinarozger.com

What’s more, T-Mobile probably wouldn’t have to sell the iPhone as a mere 3G device as many international operators and smaller U.S. carriers are forced to do. T-Mobile CTO Neville Ray revealed at T-Mo’s big CES event that he would have a good portion of his LTE network online by mid-2013. Couple that with Ray’s rapidly accelerating HSPA+ network upgrade around the country, and T-Mobile will be able to support all of the iPhone 5’s connectivity capabilities in many of its markets at launch. Not bad for a carrier that couldn’t get anything more than a 2G signal to the iPhone just six months ago.

T-Mobile originally planned to launch LTE in the second half of this year, making it the last U.S. operator to deploy the latest generation mobile broadband technology. T-Mobile is still behind its primary competitors, but management has apparent lit a fire under Ray’s engineering team. At CES, Ray said T-Mo’s first LTE systems would go online in Las Vegas in the next few weeks, which would put him five months ahead of schedule.

The iPhone won’t be the only device benefiting from T-Mobile’s accelerated LTE plans. The Verge is reporting that T-Mobile will soon offer an LTE version of the Samsung’s popular Galaxy S III smartphone. Though The Verge didn’t name a launch date, the device could hit shelves well in advance of the actual LTE launch since T-Mobile could activate its LTE radios at any time with a simple over-the-air software update.

T-Mobile had a big CES. In addition to the LTE and iPhone revelations, T-Mobile made multiple updates to its technology and service plans.

• My colleague Kevin Tofel wrote about T-Mobile’s plans to take unlimited smartphone plans contract-free, answering one of T-Mobile customers’ biggest gripes. T-Mobile is moving to an unsubsidized model, meaning customers will either pay full freight for their devices, bring their own phones or buy them in installments. Since contracts are supposed to cover carriers’ upfront subsidy costs, enforcing contracts with no subsidy makes little sense. It will be interesting to see if T-Mobile moves away from contracts completely as it phases out subsidies this year.
• T-Mobile revealed its network is now high-definition-voice compatible, which means it can support a much higher call quality than current cellular voice systems. Three current devices – the Galaxy S III, the HTC One S and the Nokia Astound phone – will support the HD features, but there are also some big limitations to its initial appeal. As PC Mag’s Sascha Segan explains, HD calls will only work between T-Mobile devices that both have the HD client, and so far T-Mo’s technology is incompatible with any of the HD codecs other carriers are working on.
• In order to encourage devices other than smartphones onto is network, T-Mobile is offering 200 MB of free data each month for two years on select Windows 8 laptops. Called 4G Connect, the program could get really interesting if T-Mobile expands it tablets, providing a big incentive for consumers to buy 4G versions of the iPad and other slates.
• T-Mobile has upgraded its HSPA+ network to support iPhone frequencies in four more markets: Denver, Los Angeles, San Diego and Virginia Beach, Va. The network refarming is now complete in 46 cities covering 126 million people. The reconfiguration is key to T-Mobile supporting the iPhone’s data capabilities, and at its current pace should be largely complete at the iPhone’s launch.

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AT&T revealed at the show that it activated 10 million smartphones in the fourth quarter, mostly iPhones and Android devices. That figure bests its previous record set in Q4 of 2011 of 9.4 million smartphones sold. According to the carrier, it averaged 110,000 smartphone sales a day during the three-month period.

Verizon hasn’t released its gross smartphone activations, but at a Citi conference held in conjunction with CES Monday, Verizon CEO Lowell McAdam said the carrier racked up 2.1 million net new subscribers in Q4, FierceWireless reported. Adam added that 85 percent of the device smartphones sold in the quarter were smartphones, and that 23 percent of its subscriber base now uses an LTE device, up from 16 percent in the third quarter.

That big jump in 4G subscribers has a lot to do with the new LTE-enabled iPhone 5, which went on sale in September. In fact, both carriers saw huge boosts in iPhone sales leading into the holidays. According to research group Kantar Worldpanel ComTech, in the 12 weeks leading up Nov. 25, iOS phones accounted for 71.8 percent of AT&T’s smartphone activations and 55 percent of Verizon’s — big increases over the same period in 2011 when the iPhone 4S was released.

The iPhone is also doing well at the single U.S. nationwide operator that doesn’t yet sell it. At the same Citi conference on Tuesday, T-Mobile USA CEO John Legere said it is connecting 100,000 iPhones a month and it currently hosts 1.9 million Apple smartphones on its GSM and HSPA+ networks, TMoNews reported. Though T-Mo doesn’t offer the device to its customers, it’s actively encouraging consumers to bring their unlocked iPhones to its network.

Of course, T-Mobile is only connecting the same number of iPhones a month that AT&T sells in a day, but that should change once T-Mo starts selling the device directly later this year.

Photo courtesy of Shutterstock user Stanislav Komogorov

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Put simply, T-Mobile is upending the established business and device distribution models of the U.S. wireless industry, separating the handset from the service. It’s a model that’s thrived in Europe and other countries, but it’s one that’s failed to gain traction in the U.S. except in the prepaid market, namely because U.S. consumers like getting even the most sophisticated high-end phones on the cheap.

Traditionally a U.S. operator sells a device at a steep discount in an effort to lure customers. It doesn’t just write off that subsidy. It makes that money back and then some by charging higher rates for voice and data over a long contract term. It’s a model that’s worked well for big operators like AT&T and Verizon Wireless, turning them into two of the most profitable and highest revenue-generating operators in the world despite the fact that many multinational carriers have far more subscribers.

T-Mobile proposes to reverse the equation with its Value Plans. Customers pay the full cost of their device, either up front or in installments, or bring their own compatible handsets. In exchange, T-Mobile will offer them cheaper rates, in many cases $20 a month cheaper than it would charge for a subsidized phone plan. Do the math: that’s $480 in savings over two years, which in many cases is much more than the up-front discounts operators are offering on subsidized phones (For instance, a Samsung Galaxy S III subsidy on T-Mobile is $350 including rebate). Given that T-Mobile’s subsidized rates are already much cheaper than its major competitors, the savings from T-Mobile’s Value Plans are compounded.

The repercussions of T-Mobile’s strategy will be felt far beyond the point-of-sale and monthly bill, though. If successful, T-Mobile’s elimination of subsidies could have a huge impact throughout the U.S. mobile ecosystem, changing how we value our devices and our relationships with our carriers and handset manufacturers.

• The rise of phone financing: T-Mobile knows that it will take a while for consumers to overcome the sticker shock of a paying full freight for phones. T-Mo CEO John Legere said T-Mobile would implement financing programs that would mitigate those up-front costs. In the example he gave, a customer could get an “iconic smartphone” for $99 down with monthly installments of $15 to $20 for 20 months.  This will look pretty similar to a subsidy plan to most customers – the device payments will just be separate from the service fees on the monthly bill. But operators won’t necessarily be the only ones financing. Handset makers, electronics retailers could offer their own programs.
• Greater portability of handsets between carriers: There will always be restrictions on where you can bring your phone due to huge variation in network technologies used by U.S. carriers. But moving to an unsubsidized model means for the first time consumers can buy their devices and then select their carriers. Keep in mind T-Mobile’s Value Plans are still contract plans (for now), but it offers prepaid plans as wells. By buying their phones up front consumers would have more flexibility in moving GSM/HSPA phones between T-Mobile, AT&T and the growing number of mobile virtual network operators (MVNOs) that use their networks.
• Less carrier control: If your carrier isn’t selling you your device then they should have less say in what services or apps you can use. That could be a simple as avoiding the pre-installed apps carriers load onto our smartphones, but it could also mean that you’re no longer dependent on your carrier to ship you OS upgrades. It will also be more difficult for them to restrict over-the-top services over their networks (read FaceTime) or limit you to their mobile payment services.
• A larger selection of devices: Carriers have always acted as device gatekeepers in the U.S. Until recently, Nokia couldn’t make a dent in the U.S. because it couldn’t strike the right operator deals. Unsubsidized phones mean that vendors can start marketing and selling directly consumers with no carrier middleman.
• Huawei and ZTE could become household names: These two Chinese juggernauts have made some in-roads to the U.S., but they’ve only gotten as far as the carriers have let them. Mostly their U.S. business consists of low-end feature phones or inexpensive carrier-branded smartphones like T-Mobile’s MyTouch. But a vibrant direct-to-consumer market could benefit Huawei and ZTE immensely. Both can make high-end smartphones at low prices, which would be very appealing to consumers paying the full cost of their devices.
• The development of a vibrant phone resale market: Smartphones are expensive and sophisticated devices, but their low subsidized cost in the U.S. has caused us to treat them like throw-away electronics. But if customers are faced with full sticker price of their phones, they would be more inclined to reuse them and sell them to recover their costs, and customers on a budget would be more inclined to buy used and refurbished phones.

Of course, T-Mobile is just one carrier. The other operators have also expressed discontent with the subsidy model, but they aren’t going to give up on it overnight. In fact, they will probably attempt exploit T-Mobile’s big strategy shift for all its worth. Verizon, AT&T and Sprint have a huge advantage: they will “sell” the same iPhone for $200 that T-Mobile is asking customers to buy for $650 – that’s a powerful argument.

T-Mobile has a tough job ahead of it convincing customers they will save money and benefit from its model in the long run. If T-Mo succeeds, other carriers will follow its lead, changing the U.S. mobile industry for the better. If it doesn’t, this will be just another noble but failed experiment for the history books.

Feature photo courtesy of Shutterstock user Robert Kyllo; T-Mobile image courtesy of Flickr user swruler9284

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T-Mobile will shift entirely to its unsubsidized Value Plans, which offer customers far cheaper rates for voice and particular data. Traditionally carriers factor subsidies into their normal contracts rates – basically you’re paying a mortgage on your phone. With the Value program, T-Mobile is keeping the contract, but passing what it saves on subsidies back to consumer.

According to T-Mobile, 80 percent of its activations in the last quarter were for value plans, which leads it to believe there’s a huge demand for this kind of a model. The question is whether the iPhone breaks the model. The unlocked, unsubsidized price of the iPhone 5 is steep, between $650 to $850 depending on the model. One of the reasons the iPhone is so popular is because the operators offer big subsidies for the devices, driving the out-of-pocket costs to as low as $200.

T-Mobile will have to explain to customers that they will actually save money over the length of a two-year contract by paying a lower value plan rate. And while there would be truth in T-Mo’s claims, it’s still a hard sell to many consumers, especially with the iPhone’s huge price tag dangling in front of them.

But T-Mobile has something up its sleeve. Legere said that T-Mobile would offer the iPhone in a unique way. He implied that T-Mobile could heavily finance the device, selling it for $99 and then charging $15 to $20 a month in payments over 20 months. That kind of financing plan, however, would look very much like subsidized contract plan to the customer.

“When this device rolls out I can only tell you it will be a dramatically different experience, and I can only tell you that of all the reports that have been written about what’s going to happen when it comes out, they’re all wrong,” Legere said.

So we know T-Mobile is getting the iPhone, and we know it won’t be subsidized. The only remaining question is when. In the next six months T-Mobile will likely complete the reconfiguration of HSPA+ on the 1900 MHz PCS band, which will make its 3G network iPhone compatible nationwide (today only its 2G service works on the iPhone). Or Apple may want to wait for T-Mobile’s LTE network, which the carrier plans to launch in the latter half of 2013. If Apple does wait for LTE, that almost certainly means T-Mobile will have to wait for the next generation of iPhone, whatever it happens to be called.

Here’s the video of Legere’s talk along with a presentation by CTO Neville Ray. In it they reveal a bunch of interesting details about becoming America’s “Un-carrier”:

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This deal purportedly makes a struggling nationwide operator more competitive, rather than eliminate a nationwide competitor from the market. This is the kind of merger regulators want to encourage. The other thing that could potential muck up the deal is a counter bid for MetroPCS from Sprint. But so far the company has held off, and at the moment Sprint seems to have its hands full dealing with its own potential acquirer Softbank.

Assuming this deal gets blessed, what implications does the combined company – which I shall refer to as “T-Metro” for the rest of this post — have for its customers? On day one of the merger’s closing, subscribers won’t notice anything at all. T-Metro will maintain both networks and doesn’t plan to interrupt services in any way. But soon after, customers on both networks will start seeing gradual changes to services, devices and coverage. Let’s break them down.

If you’re a MetroPCS subscriber

MetroPCS customers should expect to see the biggest changes for the simple reason that their networks and devices they use will simply cease to function in a two-to-three year period. By the end of 2015, T-Metro plans to remove all traces of Metro’s CDMA and LTE infrastructure from the grid, and it plans to replace every CDMA phone with a new HSPA device.

But T-Mobile CTO Neville Ray pledged to make transition as seamless and painless as possible. MetroPCS customers can keep using their current CDMA phones all the way into 2015, which is the final sunset date for Metro’s systems. T-Metro may even continue to sell new CDMA phones for a short period while it gets its device portfolio and distribution chain in order, Neville Ray.

But not too long after closing, customers browsing in MetroPCS stores and on its Website will notice those old CDMA handsets disappearing, replaced by the GSM/HSPA available to T-Mobile’s customers. There will be a lag between the merger’s finalization and the deployment of the unified T-Metro LTE network, which will roll out in the latter half of 2013 and in 2014. But once those new 4G systems are up, those new handsets will include LTE radios as well.

At that point, MetroPCS customers with CDMA-LTE phones should also experience a big boost in both 4G speeds and coverage. MetroPCS customers will get a firmware update on their phones that will allow them to access the new T-Metro LTE network. That means they will eventually see 4G connections nationwide, instead of merely in MetroPCS’s 14-city footprint. And as T-Metro shoehorns Metro’s 4G spectrum into its combined super-LTE network, Metro customers will start seeing speed increases as much as four times greater than what they experience today.

Sometime in 2015, customers holding onto their CDMA phones will have to relinquish them, but T-Mobile’s Ray doesn’t expect to many of those customers to remain. More than 60 percent of Metro subscribers upgrade to new handsets each year. And once you factor in the normal churn of departing customers, T-Metro should have replaced the large majority of its CDMA install base by the time the shutdown countdown reaches zero. The remainder should start receiving offers from T-Metro for free or discounted devices to entice them over to the new network.

It’s not all roses, though. T-Metro will start shutting down portions of the CDMA capacity in 2014, long before the official sunset date. That means customers will have to vie with one another for fewer 2G signals to place their voice calls. T-Metro, however, plans to mitigate this by coordinating the shut down of 2G capacity with the migration of customers off the network – fewer CDMA devices mean fewer overall calls that need to be supported.

Finally, the single big casualty from the merger may be Metro’s voice-over-LTE service. Ray said T-Metro would support the mobile VoIP service until the last MetroPCS handset is switched off, but hasn’t decided whether it will continue its aggressive VoLTE plans.

MetroPCS plans to put VoLTE to more handsets and roll out the service to its entire coverage footprint in the next few months, so by the time the merger closes it could have an extensive VoLTE subscriber base. T-Mobile has promised that VoLTE will work on its LTE networks as well, expanding the service’s coverage nationwide. But what will most likely happen is T-Metro will wind VoLTE down naturally as customers switch to GSM/HSPA handsets. A year or two later, T-Metro will launch its own unified VoLTE platform available to all of the carriers’ customers.

If you’re a T-Mobile subscriber

For most T-Mobile customers the creation of T-Metro will mean business as usual. They’ll keep the same handsets, voice and data plans and coverage. Their device selection won’t change, but there may be one immediate benefit to customers in service plan choice. CEO John Legere has said the new T-Metro would maintain the prepaid contract-free unlimited data plans that are MetroPCS’s specialty.

Currently T-Mobile offers truly unlimited data tiers for its contract customers, but all of its prepaid plans have soft caps (if you go over your monthly data allotments, connections are throttled down to 2G speeds). Such an unlimited prepaid option would be a boon for month-to-month customers and the growing number of subscribers that bring their own unlocked smartphones to T-Mobile’s network.

T-Mobile customers who happen to live in a MetroPCS market will eventually get access that to a big fat 4G pipe. Combining the two carriers’ 1700 MHz/2100 MHz Advanced Wireless Service (AWS) airwaves will allow T-Metro to deploy an LTE network with as much as 40 MHz of capacity in 10 of the largest markets in the US, including New York City, Los Angeles, Dallas, Boston and San Francisco. To put that in perspective, Verizon and AT&T currently use 20 MHz of spectrum for their LTE networks.

If you happen to live in a non-MetroPCS market like Chicago or Seattle, the new T-Metro will still give you LTE just not in such plentiful bandwidths. The above map from Mosaik Solutions shows just where MetroPCS owns spectrum. In general, the darker the color in a city, the more powerful the future 4G network will be.

Unfortunately, there is one immediate benefit to the merger that the two carriers won’t take advantage of. The day the deal closes in the spring, T-Metro will own a 14-market LTE footprint long before T-Mobile’s own LTE network is complete. Earlier, I speculated that would be welcome news for T-Mo customers who bring their own unlocked LTE-capable devices like the iPhone 5. T-Mobile has confirmed, however, that those customers won’t get access to MetroPCS’s 4G networks.

T-Mobile’s LTE systems will already be under construction at that point, but there will still be a lag – anywhere from three months to well over a year – before the unified LTE network rolls out in individual markets. So if you live in New York or San Francisco and buy an unlocked iPhone 5 for use on T-Mobile’s network, expect to wait a bit longer before that LTE icon pops up on your notification bar.

Question links image courtesy Flickr user Oberazzi.

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The iPhone 5 requires T-Mobile to support two common frequency configurations: 3G in the 1900 MHz PCS band and LTE in the 1700 MHz/2100 MHz Advanced Wireless Service (AWS) band. T-Mobile has neither today, but it will meet the first requirement shortly as it completes the relocation of its HSPA+ network this and early next year. As for LTE, T-Mobile won’t have a commercial network ready until the second half of 2013 and even then it won’t have a sizable LTE footprint until 2014. That’s where MetroPCS comes in.

MetroPCS has a live LTE network in 14 cities, and for the most part it’s running on the same AWS frequencies already supported in the AT&T/Canadian variant of the iPhone 5. T-Mobile CEO John Legere said on Wednesday that as soon as the merger closes, as expected in the first half of 2012 2013, the combined carrier will have dual-mode devices supporting T-Mo’s HSPA network and Metro’s LTE network ready to go. One of those devices might just be the iPhone 5.

Of course, T-Mobile and MetroPCS aren’t saying any of this out loud. It’s best not to test the Apple gods, and there’s certainly no guarantee that the companies will be able to strike an immediate distribution deal with Cupertino. But T-Mobile is already servicing more than a million iPhones on its 2G network and will ramp up its efforts to lure in even more unlocked iPhone owners as soon as it can fully support the device’s 3G capabilities.

T-Mobile may have to continue that bring-your-own-iPhone strategy for another year, but if all goes according to plan, by next spring it will have a fully Apple-compatible network in some of the country’s biggest markets, including New York City, San Francisco, Philadelphia, Las Vegas, Dallas and Boston. There are still a lot of obstacles T-Mobile and MetroPCS need to overcome to make this merger work, but at least the iPhone won’t be one of them.

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In short, the new carrier – which the companies are referring to as NewCo while waiting for regulatory approval – would be much greater than the sum of its parts, according to Legere, who would take over the helm of the new carrier. “When you add MetroPCS to an already aggressive challenger strategy, it acts as an accelerant,” he said.

T-Mobile USA CEO John Legere

From a consumer’s perspective, there’s a lot to like in combined T-Mobile and MetroPCS assuming they can pull their complex transition plan off. Its 42 million subscribers would still leave it the No. 4 carrier in the U.S. rankings, but it will have closed considerable distance with No. 3 Sprint. What’s more, those two subscriber bases would match up almost perfectly, Legere said.

T-Mobile already has a sizable prepaid customer base, but the merger would allow it to expand Metro’s highly successful contract-free business model beyond its regional footprint of a dozen big cities. The companies’ combined networks and economies of scale would allow them to get even more aggressive with mobile data pricing. Legere said NewCo would be able to offer unlimited data plans not just to contract customers but prepaid ones as well.

During the call, however, it quickly became apparent what T-Mobile parent Deutsche Telekom saw as the biggest advantage of the deal. It all comes down to spectrum.

The Big Apple gets big LTE

T-Mobile will be able to bulk up its 4G airwaves in some of the key cities where bandwidth is in highest demand, such as New York City, San Francisco and Los Angeles. In the top 25 markets, T-Mobile will see its average spectrum holdings increase from 63 MHz to 76 MHz, and much of those gains will be in the Advanced Wireless Service (AWS) band where both companies are launching LTE.

T-Mobile currently has the spectrum to launch a 20 MHz network in half of its metro markets, but it would only be able to support a 10 MHz network in other regions. Metro’s licenses certainly don’t fill in all of those holes, but in 11 major cities the combined company will have more 50 MHz of AWS spectrum, enough for NewCo to launch a mammoth 40 MHz network. That’s double the size of any 4G network AT&T or Verizon(vod) has today.

Those gains are nothing to scoff at, but it’s important to note that they’re only in handful of markets. For every New York and LA, there’s a Chicago or Washington, DC, where T-Mo’s position remains unchanged. Also it will take time for NewCo to clear those airwaves. Right now MetroPCS has both 2G and 4G in the AWS band, so the band will have to be cleared of CDMA before its capacity can be repurposed entirely for LTE. According Legere, that transition would be complete by the end of 2015. That leaves three years in which the carrier will be running two separate, incompatible networks.

This is no Sprint-Nextel

On Tuesday I compared the merger to Sprint’s ill-fated acquisition of Nextel. Forced to run two separate networks and manage two separate customer bases, Sprint has been far worse for the wear for the last seven years. Legere, however, bristled at the comparison.

“The sound-byte that this is a Sprint-Nextel do-over is absolutely completely wrong,” he said. “Nothing could be further from the truth.”

Legere’s point is that Sprint and Nextel launched into their ill-advised marriage with the aim of running separate networks. T-Mobile’s aim is to shutter Metro’s CDMA systems as quickly as possible and create a unified network. As soon as the merger is complete, NewCo will begin selling as HSPA-LTE devices to MetroPCS’s customer base, and given Metro’s prepaid model turnover will be very quick.

Legere said 60 percent of Metro’s customer base switches out handsets on an annual basis. If those trends hold, the majority of Metro’s 9.3 million customers will have HSPA devices in two years. At that point, NewCo will have to offer incentives (read: free handsets) to the remaining holdouts before the CDMA kill date arrives, he said.

I still think T-Mobile and MetroPCS are being overly optimistic. The new company may not have to endure Sprint’s 7 years of operational hell, but it still faces three years of such hell. T-Mobile has two conflicting objectives here: to harvest Metro’s spectrum and the keep Metro’s customers. I’m not saying it can’t accomplish both, but its certainly not going to be easy. Even if it meets its timeline, NewCo will still spend several years managing two disparate networks while transitioning 10 million subscribers to a new technology.

The question is whether all of that hassle is worth the relatively limited gains. Remember we’re not talking about a new nationwide network here. We’re only talking about boosted 4G capacity in a dozen major markets.

Handshake image courtesy of Flickr user buddawiggi; NYC skyline photo provided by Shutterstock.

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Legere, 54, will officially change offices on Sept. 22, when interim CEO Jim Alling will return to his old job as T-Mobile’s COO. From his resume, Alling Legere seems like an odd choice. Global Crossing, which was acquired by Level 3 Communications last year, was a submarine cable operator providing the fiber connections that link continents, not a consumer-facing wireless business. Legere had a stint at Dell Computer, but the last time he worked at a retail carrier was in 1998 at AT&T, and even there he wasn’t working in the cellular or consumer side of the house. He managed AT&T’s Asian wireline business operations and headed up corporate strategy.

But then again, someone unaccustomed to how things are usually done in the US mobile industry is exactly what T-Mobile needs right now. If T-Mobile is to succeed it will be through challenging the status quo established by AT&T and Verizon Wireless, which collectively manage two-thirds of all US mobile connections. T-Mobile started down that path after its planned merger with AT&T failed last year. As I wrote when Humm departed in June, T-Mobile’s new CEO shouldn’t change a thing about strategy. It’s not clear whether Legere is going to listen to GigaOM, but hopefully he’ll listen to the T-Mobile’s more-than-capable staff, who started laying the foundation of that challenger strategy long before DT got into bed with Ma Bell.

T-Mobile is questioning the long-accepted accepted pricing models in the US mobile market. It’s moving customers away from device subsidies and in the process eliminating the hidden device “mortgage” payments we make on our monthly bills. It’s offering data plans at a steep discount to AT&T and Verizon, and it recently rejoined Sprint in selling an unlimited smartphone plan.

On the network side, T-Mobile is taking advantage of the limited spectrum resources it has to overhaul its network, shutting down old 2G networks so it can repurpose their airwaves for an LTE network as well as eke out more 3G capacity. In the process, it’s realigning its networks bands with the major North American GSM operators, which will give it access to a greater variety of devices – including the new iPhone. (T-Mobile CTO Neville Ray will detail that transformation at GigaOM’s Mobilize Conference this Friday.)

That network overhaul, however, can’t come soon enough. As the only nationwide US operator sans iPhone, T-Mobile is suffering customer defections it can’t stem no matter how cheap it makes its data plans. T-Mobile is actually 400,000 subscribers smaller today than it was at this time last year.

Legere is going to have to figure out how to staunch that subscriber bleed, but hopefully he won’t do it by reversing T-Mobile’s course and emulating the big operators. Though T-Mobile once had dreams of mega-carrier glory, the failure of AT&T-Mo put an end to those fantasies. Whether it likes it or not, T-Mobile’s new role is that of the market challenger, and it’s not going to succeed by playing the same game as its bigger rivals.

Related research and analysis from GigaOM Pro:
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• 2012: Data, spectrum and the race to LTE
• CES 2012: a recap and analysis
• The future of mobile: a segment analysis by GigaOM Pro