The merger will combine the country’s smallest nationwide carrier with its largest regional carrier, giving the new company a total of 42.5 million wireless customers. That’s still not enough to overtake Sprint as the nation’s No. 3, but it will give the new company plenty of spectrum in key markets. T-Mobile has plotted a course that calls for delivering large quantities of mobile data to consumers at cheap prices and with no contracts. That strategy requires T-Mo to lay its hands on all the spectrum it can find.

Though Deutsche Telekom is the one making the buyout offer, T-Mobile will actually become a part of MetroPCS, taking advantage of the U.S. company’s placement on the New York Stock Exchange. DT, however, will own the majority of the shares, and – though we’ve been calling the new merger T-Metro for short – the company will take on the name T-Mobile USA. MetroPCS will live on as a brand in T-Mo’s arsenal.

The deal sailed over regulatory hurdles (the FCC didn’t even bother to vote on it), but it nevertheless suffered a close call when it came before Metro’s shareholders. Institutional investors took exception to what they considered DT’s low-ball offer and threatened to rage a proxy war to derail the deal.

DT at first played the tough guy refusing back down, but as the shareholder meeting approached earlier this month, it got nervous. MetroPCS rescheduled the meeting for this week, while DT proffered up a new terms – lowering the merged company’s debt load and that debt’s interest rates – to make the more attractive. It worked. The deal’s biggest opponent, hedge fund Paulson & Co., lifted its protests.

Once the deal closes, T-Mobile has a long integration process ahead – an ordeal that makes me question whether the merger is worth the trouble. T-Mobile, however, isn’t looking to duct tape together its GSM-based networks and Metro’s CDMA systems. It has something more radical in mind: cannibalizing MetroPCS for its spectrum. While T-Mo will keep the Metro brand and support its existing customers, the regional carrier’s CDMA and LTE networks are goners. T-Mobile plans to incorporate Metro’s spectrum into its ongoing network overhaul, creating very fast and high-capacity LTE and HSPA+ networks.

This post was updated at 9:30 AM Wednesday to add more background details.

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An internal T-Mobile screenshot leaked to TMoNews states that the iOS update will not only authorize the T-Mobile network (T-Mo’s 2G and a portion of its HSPA+ networks are already supported), but will enable Apple’s visual voicemail and MMS features on the carrier as well. Here’s the text of document:

“The T-Mobile Carrier Update is a minor iOS software update that enables official iPhone support by T-Mobile. When installed, the software update enables a handful of capabilities like Visual Voicemail, MMS Settings and Network/Device optimizations that customers do not have access to today. On April 5, the software update will begin being pushed via OTA to all iPhone devices on the T-Mobile network with iOS 6.1.x or higher.”

I asked Apple and was told it isn’t commenting on a rumor, so I suppose we’ll have to wait until Friday to see if an iOS update shows up in iTunes.

Keep in mind that only the North American GSM iPhone 5 model will work on T-Mobile’s LTE systems, which are now live in seven markets, and to connect to T-Mo you must have an unlocked device. All generations of iPhones will work in T-Mobile’s 2G footprint and on its HSPA+ networks in about 50 markets today. The carrier is expanding that HSPA+ support quickly as it undergoes a major network overhaul.

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Bottom line: if you have a North American GSM version of the iPhone 5 — whether you bought it from AT&T or Apple or got it in from Canada – it can connect to T-Mobile’s new LTE network. It just has to be unlocked. So for AT&T customers looking to switch sides, that means you have to finish your contract, and ask your carrier to unlock the device.

The device will also work on T-Mobile’s 3G HSPA+ network (which T-Mobile calls 4G), just not in every city today. T-Mobile is in the process of a big network overhaul that will align all of its networks with the radios in the iPhone and most other AT&T devices. It’s completed the upgrade in about 50 cities covering 142 million people, but other cities are getting converted quickly.

The source of the confusion is over frequencies, which is why we’ve been seeing all of these references to the Advanced Wireless Services (AWS) band. T-Mobile runs two technologies in the AWS band, it’s LTE network and a portion of its HSPA+ network. The iPhone 5 will support LTE in the AWS band, but it won’t support HSPA+ over AWS. The iPhone 5, and all previous versions of the iPhone, will work on its new upgraded HSPA+ systems in the PCS band.

Apple will release a new version of the iPhone 5 next month that will make all of the band differences completely moot. The updated version will support HSPA+ on both AWS and PCS band. It will even be able to access T-Mobile’s dual-carrier 42 Mbps HSPA+ network, which current and older versions of the iPhone cannot.

All of this is probably still extremely confusing so I’ve broken it down into a Q&A, which hopefully will answer any lingering questions.

How do I know if my iPhone will work on T-Mobile’s networks?

For the iPhone 5, check your model number. It must be the A1428, sold by AT&T, the Canadian operators or Apple. Older iPhone models will also work on T-Mobile’s 2G and 3G networks. All of these devices must be unlocked, though, or they’ll be blocked.

How can I be sure I’ll have access to T-Mobile’s LTE and HSPA+ networks?

For LTE, it’s simple. T-Mobile launched LTE in seven markets this week: Baltimore, Houston, Kansas City, Las Vegas, Phoenix, San Jose, and Washington, D.C. New York City is scheduled to come online this summer along with a bunch of other yet unnamed cities.

For HSPA+, it’s a bit more difficult to tell since T-Mobile doesn’t have any kind of map that tracks which markets have HSPA+ running on the PCS band. They make regular updates on their blog and to the media. PCMag has the most the recent list of T-Mo’s 49 iPhone-optimized cities.

As a general rule of thumb, though, if T-Mobile has LTE in your city, then HSPA+ will be in all the right places, too. And if you get a new version of the iPhone 5 next month, it will work on all of T-Mobile’s network.

When will I be able to bring my old iPhone over to T-Mobile? 

You can do it right now if you like. T-Mobile already has millions of iPhones on its network, running over its 2G and 3G services. In order to access LTE though, you’ll have to wait until Apple updates iOS, authorizing the iPhone 5 to use T-Mobile’s network. Apple hasn’t given a date for when this will happen, saying it will come as an over-the-air update.

Will I be able to access dual-carrier HSPA+?

On a current iPhone, the fastest 3G network you’ll have access to is its 21 Mbps single-carrier system, since all of T-Mo’s dual-carriers are in the AWS band. T-Mobile will eventually launch dual-carrier in the PCS band, but that will take some time. It has to close its acquisition of MetroPCS and convert a lot of old GSM networks to 3G first. If you’re set on accessing the dual-carrier network in the near future, then you’ll need to get one of new versions of the iPhone 5.

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Coupled with the markets T-Mobile has already upgraded, it has a new HSPA+ network running in the PCS 1900 MHz in 37 cities, including many of the country’s largest. T-Mobile isn’t updating its coverage figure for the overhauled network, but these new markets will add considerable numbers to its last count of 100 million people covered.

T-Mobile will begin selling the iPhone sometime next year, but in the interim it has been trying to lure customers with unlocked iPhones over to its network. Its biggest obstacle, however, was the fact that its old network configuration could only supply the iPhone with 2G speeds. By relocating its HSPA+ from the Advanced Wireless Service (AWS) to the PCS band, it can now link to the iPhone’s 3G radios, but T-Mobile also clears up space for its LTE launch next year.

Update: Interestingly enough, T-Mobile customers won’t be the only ones benefiting from this upgrade. T-Mobile mobile virtual network operator Solavei said it would take advantage of its wholesaler’s reconfigured network to support the iPhone as well. Like T-Mobile it won’t sell the iPhone, but it will sell a micro or nano-SIM that fits into an unlocked iPhone and allows customers to take advantage of its $49 unlimited voice, text and data plans. Other MVNOs like Straight Talk already offer similar iPhone SIM activations, though they work mainly on AT&T’s HSPA network. Now that the reconfiguration is well underway, expect more MVNOs to start offering iPhone support over the T-Mobile network soon.

Here is the full description of the new upgraded markets from T-Mobile’s blog:

• New York, including The Bronx, Brooklyn, Manhattan, Queens and Staten Island
• Newark, N.J., including the surrounding cities of East Orange, Elizabeth, Jersey City, North Bergen, Paterson and Union City
• Boston and Cambridge, Mass., including the surrounding cities of Amherst, Andover, Arlington, Bedford, Belmont, Billerica, Braintree, Brockton, Brookline, Burlington, Canton, Chelmsford, Chelsea, Chicopee, Dedham, Everett, Framingham, Hadley, Holbrook, Holyoke, Lawrence, Lexington, Lowell, Ludlow, Lynn, Malden, Marblehead, Medford, Melrose, Metheun, Milton, Nahant, Natick, Needham, Newton, Quincy, Reading, Revere, Salem, Saugus, Sommerville, Stoneham, Swampscott, Tewksbury, Wakefield, Walpole, Waltham, Watertown, Weston, Westwood, Weymouth, Wilmington, Winchester, Winthrop and Woburn
• Springfield, Mass.
• Providence, R.I., including the surrounding cities of Cranston, North Providence, Pawtucket and Warren
• Philadelphia
• Detroit and Warren, Mich., including the surrounding cities of Dearborn, Romulus, Royal Oak, Sterling Heights and Troy
• Dallas, including the surrounding cities of Arlington, Carrolton, The Colony, Denton, Farmers Branch, Flower Mound, Frisco, Garland, Grand Prairie, Irving, Lancaster, Lewisville, McKinney, Mesquite, Plano, Richardson, Rowlett and Southlake
• Fort Worth, Texas, including the surrounding cities of Keller and Mansfield
• Austin, Texas including the surrounding city of Round Rock
• San Antonio
• Tampa, Fla., including the surrounding cities of Clearwater, Largo, Safety Harbor, St. Petersburg and Vinoy Park

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“T-Mobile has entered into an agreement with Apple to bring products to market together next year. Additional details will be made available at a later date,” a T-Mobile spokesman said in a statement.

Update: T-Mobile CEO John Legere has confirmed that the iPhone will be among those Apple devices.

That lines up exactly with what we’ve been saying for the last year. T-Mobile’s network isn’t yet ready to support the iPhone or iPad yet, but it will be in the near future when T-Mo completes its network overhaul. And once that overhaul is complete, Apple will jump at the chance. T-Mobile may be the smallest nationwide operator in the U.S. but it still has a customer base larger than population of most countries.

The big question is how far along in its overhaul T-Mobile will be before the Apple deigns it iPhone ready. 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 iOS devices, whatever they may be.

Either way, once T-Mobile is done with its network upgrades, all generations of the iPhone and iPad will be optimized for its networks, leaving no obstacle for a long and fruitful Apple-T-Mobile relationship.

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T-Mobile’s networks simply aren’t ready yet. The reason T-Mobile has been left off the iPhone bandwagon for so long is that its HSPA networks don’t support the PCS 3G bands the iPhone uses. T-Mobile is fixing that issue, moving its network down the electromagnetic spectrum as part of a nationwide overhaul.

T-Mobile, however, has officially completed that upgrade in only 15 cities. If the iPhone were to go live next week, the vast majority of T-Mobile’s customers who bought it would experience only 2G speeds. That’s to say nothing of the iPhone 5’s LTE capabilities, which T-Mobile won’t support until the second half of 2013. Considering the iPhone is first and foremost a mobile data device, I don’t think even Apple is willing to unleash it on a network that can perform only a fraction of the data functions it was designed for.

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

That said, T-Mobile is aggressively completing its network overhaul, and it has been inviting customers with unlocked iPhones to sign up for SIM-card service. Readers have reported receiving T-Mobile PCS HSPA+ signals all over the country, especially in big metro markets like New York City and Chicago. T-Mo CTO Neville Ray has promised a “material” portion of its footprint will be iPhone-ready by the end of the year.

Make no mistake: the iPhone is bound for T-Mobile. It’s just a question of technology and timing. But unless Ray can somehow complete his nationwide overhaul in the next few weeks, the timing just isn’t right. Logistically that seems impossible, even for network miracle-worker like Ray. In recent weeks, T-Mobile has even tried to distance itself from Apple, claiming the iPhone isn’t necessarily worth the sacrifices.

Who knows? Maybe we’ll hear something from Apple next week about a T-Mobile iPhone, maybe even a commitment to partner with T-Mobile sometime in the future. One of the new iPhone-ready markets T-Mobile announced last week was Apple’s hometown of Cupertino, Calif. You can’t argue with that symbolism. But I wouldn’t hold my breath on getting a magenta iPhone by Christmas.

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KC is only the second city T-Mobile has officially announced as upgraded – Las Vegas was the first – but there has been a lot of activity going on behind the scenes since T-Mo started this process in the summer. Website Airportal.de is keeping a tally of HSPA+ sightings in T-Mobile’s PCS frequencies. The submissions are all unverified, but the map shows activity in dozens of cities from Boston to Los Angeles.

T-Mobile isn’t selling the iPhone, of course, but the carrier has always aggressively recruited iPhone owners to its SIM-card plans. T-Mobile claims to have more than 1 million customers on such bring-your-own-iPhone plans. The problem was, until now, it wasn’t able to offer those customers anything beyond 2G data speeds due to the incompatibility of the iPhone’s 3G radios with the T-Mobile network. With the network overhaul, that all changes.

T-Mobile expects to complete the relocation of its HSPA+ network – which T-Mobile refers to as 4G – in its entire 229-market footprint by mid-2013. After that it will build an LTE network in the spectrum HSPA+ vacated. At that point, T-Mobile also hopes to have closed its merger with MetroPCS, which will give its sizable hunks of new 4G bandwidth in key cities like New York and San Francisco. By the time the overhaul is complete in 2014, T-Mobile’s networks will by in synch with those of the other major North American operators, and hopefully that spells the end of T-Mobile’s long incompatibility with Apple devices.

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On Monday, T-Mobile revealed it will have sole U.S. rights to sell one of Nokia’s new Windows Phone 8 devices: the Lumia 810, which appears to be a tweaked version of the new Lumia 820 being launched with AT&T. The device is optimized for T-Mobile’s unique – though rapidly evolving — 3G frequencies and appears to have a slightly different design and feature set from the 820. An official spec sheet hasn’t been released, but the most glaring difference between the two will likely be lack of LTE radios in the 810.

There’s a much bigger spec gap, however, between T-Mo’s 810 and the Lumia 920, Nokia’s new flagship WP8 phone, which will be exclusive to AT&T at launch. It’s not that the 810 is a bad device. It’s not that it isn’t pretty. But it’s a scaled-down handset compared to the 920, and it’s targeted at a more budget-minded smartphone user (T-Mo hasn’t released pricing details, but is emphasizing the 810’s “great value”). T-Mobile got the same treatment last year, when it landed the Lumia 710 only to see the much sleeker 900 go to AT&T.

It’s not that mid-range phones aren’t a good match for T-Mobile – its customer base often gravitates toward more inexpensive devices and data plans – but as my colleague Kevin Tofel pointed out last week, these kind of exclusive deals do no one any good (except for AT&T). Customers want to chose both their device and their operator. Meanwhile, Nokia is struggling to rebuild its brand in the US and shouldn’t be saving its latest and greatest for a single operator, no matter how big AT&T may be. Tofel points out:

“Nokia does benefit from having AT&T tout this as an exclusive flagship phone and from AT&T’s expected marketing to help sell the device, but I don’t think that will add more benefit than the value lost from selling the Lumia 920 on multiple carriers simultaneously. Look at Samsung’s recent Galaxy Note 2 estimates as an example: It expects 3x the number of sales as the first Galaxy Note in the short-term because of a widespread launch on multiple carriers. The device is expected to be on all four major U.S. carriers in the next several weeks and because of that, I wouldn’t be surprised to see Galaxy Note 2 sales in the U.S. rival those of the Lumia 920 by year-end.”

In the case of the mid-range device, the carrier may not benefit from exclusivity either. Here T-Mobile gets a device that’s purportedly exclusive but really has the same basic features and specs as the Lumia 820 AT&T sells next door. Its enthusiasm for promoting the 810 is further lessened by the fact that it isn’t even selling the most cutting-edge variant in the Lumia line. If T-Mobile carried both devices, there would be a good chance it sold more mid-range 810s than it did 920s, but at least it would have incentive to market its new Lumia portfolio as a whole, instead of settling for the devices that AT&T passes over.

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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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I say “hopefully” because DT doesn’t plan to plow that cash directly back into T-Mobile USA. Instead, DT said it would use that cash to retire debt, which would strengthen its financial position so it can fund future investments, including T-Mobile’s network upgrades.

These towers sit on some valuable cellular real estate: 83 percent are in the top 100 markets while 72 percent are in the top 50. But T-Mobile was more than ready to part with them as owning your own towers is quickly becoming an anachronism. There’s a lot of money to be made in leasing space on the same tower to multiple operators.

While it’s difficult for a T-Mobile to justify working with a direct competitor like Verizon or AT&T, cramming as many radios as possible onto a single tower mast is exactly what Crown Castle is in business for. After the deal closes Crown Castle will own or manage 30,000 towers in 50 U.S. cities.

The 7,200 towers represent only a fraction of T-Mobile’s 51,000 cell sites, the majority of which T-Mobile leases. The deal isn’t a straight up sale though. Crown Castle is buying exclusive rights to lease and operate the towers for about 28 years, after which it can purchase them outright. T-Mobile has also committed to remain a tenant at those cell sites for 10 years.

Image courtesy Flickr user radialmonster.

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