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.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile 2012 and beyond
• CES 2012: a recap and analysis
• Updated: Forecast: global mobile subscribers, 2010-2015

T-Mobile now not only has the iconic device it has so long craved, but it’s offering it with compelling service pricing. Under the new plans unveiled over the weekend you can pay as little as $50 a month for unlimited voice, text and 500 MB of data, and you can use your phone as a hotspot — something most carriers charge you extra for doing on an individual data plan. For $70 a month, you can upgrade that data plan to unlimited, though hotspot usage is limited to 500 MB a month. All of these plans are available without a contract.

But T-Mobile is demanding you make a tradeoff. Its cheap rates mean it will no longer subsidize its devices, meaning customers will have to buy their iPhones up front, enroll in a financing plan, or bring an unlocked device to the network.

“We’re canceling our membership in the carrier club,” CEO John Legere said at T-Mobile’s Uncarrier event in NYC on Tuesday.

T-Mobile will finance the iPhone 5 for a down payment of $99.99 and payments of $20 each month for 24 months. That works out to $580, which is actually cheaper than the unsubsidized, unlocked device price of $650 Apple charges today. The iPhone 4S will have a down payment of $69.99 with monthly payments of $20, which works out to $550 (the same price Apple charges). The iPhone 4 costs $14.99 down with $15 monthly payments, which totals $375, a full $75 cheaper than the unsubsidized equivalent. You can also bring an unlocked iPhone to the T-Mobile network to avoid financing costs completely, though only AT&T’s iPhone 5 version will work on T-Mobile’s new LTE network.

T-Mobile also revealed it will be the first U.S. carrier to support HD voice on the iPhone through its newly upgraded networks.

The reason we’ve waited so long for the elusive T-Mobile iPhone is a combination of physics and economics. Since T-Mobile first launched its 3G mobile broadband network, it’s set itself apart from the other major carriers on the electromagnetic spectrum. Apple didn’t make an iPhone that tapped into the Advanced Wireless Services (AWS) band used by T-Mo’s HSPA+ network, and it showed no inclination of custom-designing a device for a specific carrier.

That all changed last year when T-Mobile undertook an ambitious plan to reconfigure its networks and clear up spectrum for LTE. It began moving its HSPA+ network into the 1900 MHz PCS bands used by most U.S. carriers for 3G, and in the gaps that opened up it began deploying its LTE systems.

Last summer, T-Mobile began inviting unlocked iPhone users to test out its network, but it hadn’t reached the point where it could support all of the new iPhone 5’s most advanced features. The missing component was LTE, which T-Mobile launched today in an iPhone-friendly band.

Will the iPhone be T-Mobile’s savior? It’s tough to say. T-Mobile will finally have the most sought-after smartphone in its arsenal, and T-Mobile has readily admitted its lack of the device has hurt it with consumers. It will also be able to offer that device at very low pricing. But pricing and variety don’t always sway consumers. Verizon Wireless may be the most expensive carrier in the business, but its coverage and customer service have kept it on top of the heap.

This post was updated several times throughout the morning as events unfolded.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile 2012 and beyond
• A look back at mobile in the third quarter
• Takeaways from mobile’s second quarter

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.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile 2012 and beyond
• CES 2012: a recap and analysis
• 2012: Data, spectrum and the race to LTE

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”:

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile first-quarter 2013: analysis and outlook
• 2012: Data, spectrum and the race to LTE
• Where new opportunity lies in the mobile operating system space

“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.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• 2012: Data, spectrum and the race to LTE
• Takeaways from mobile’s second quarter
• Mobile 2012 and beyond

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.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile 2012 and beyond
• Updated: Forecast: global mobile subscribers, 2010-2015
• 2012: Data, spectrum and the race to LTE

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.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile 2012 and beyond
• 12 tech leaders’ resolutions for 2012
• CES 2012: a recap and analysis

Apparently that will change in mid-October. Both TMoNews and The Verge have tracked down information suggesting T-Mobile will begin selling the nano-SIM in mid-October. TMoNews got its hands on internal T-Mobile SIM materials that show that nano-card will be available mid-next month, and The Verge spotted a tweet from T-Mobile customer service stating T-Mobile is “looking at getting them mid October.”

This is hardly a surprise since T-Mobile has been actively luring iPhone owners of all makes over to its network where they can wallow in the carrier’s unlimited and cheap big-bucket data plans. The big catch is that in most of T-Mobile’s footprint customers can only access 2G speeds on the iPhone. Gobs of cheap data aren’t much use if you can only download them at sub-dial-up speeds.

But that’s changing, and quickly. T-Mobile is overhauling its networks, aligning them with the 3G and 4G radios embedded in the iPhone and most other North American GSM devices. iPhone customers can already access its HSPA+ network in New York City, Las Vegas and Seattle, and T-Mobile CTO Neville Ray has said the carrier will have a “material” footprint of HSPA+ in iPhone friendly bands by the end of the year. (Ray will share more details on T-Mobile’s network transformation at GigaOM’s Mobilize conference next week).

In the second half of 2013, T-Mobile’s LTE network will be online, giving it full compatibility with all of the iPhone’s radios. So if you can’t wait until T-Mobile officially lands an iPhone distribution deal and are willing to shell out the hefty price for an unlocked device, we suggest you buy the AT&T/North American version of the device. It’s the iPhone that will be exactly where T-Mobile’s networks are in 2013.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile 2012 and beyond
• CES 2012: a recap and analysis
• 2012: Data, spectrum and the race to LTE

That doesn’t mean T-Mobile will start selling the iPhone directly, but some of the million-plus current unlocked or hacked iPhones on T-Mo’s network may soon start seeing a “4G” icon popping up on their notification bars, as well as find their current slow-poke Edge speeds jump up to multiple megabits per second. Any customer coming off an AT&T contract with an unlocked iPhone 3GS, 4 or 4S will be able to buy a SIM card and hook into the HSPA+ network where the upgrade is complete.

In a blog post, T-Mobile revealed more details about its ambitious spectrum refarming plans, which requires sunsetting a large portion of its 2G capacity. It is changing out gear in 400 of its cell sites this month as an initial test before its engages in a large-scale conversion next month.

Those 2,500 cell sites are only a fraction of T-Mobile’s 37,000-site network, so most of the country will have to wait before they can get mobile broadband at the PCS band. But T-Mobile will most likely target whole cities for the refarming, rather than upgrade a handful of sites in each market. So if you happen to leave in one of those select markets you may get close to uniform HSPA+ coverage. The first city on the list is most likely San Francisco, where T-Mobile has already tested the new network – not coincidentally during Apple’s World Wide Developer conference.

Apple won’t actually tap T-Mobile to be an iPhone retailer until all or most of its HSPA+ network is converted to PCS. That day could come as soon as this year or it may not come until well into 2013 right up to the point it launches its LTE network. My bet, though, is we’ll see a fully functioning and nationwide HSPA+ network on PCS long before we see LTE. T-Mobile needs to activate HSPA+ at PCS before it can start shutting down its current mobile broadband networks in the Advanced Wireless Services band, which is the spectrum that will host its LTE service.

The iPhone 4S can’t match T-Mobile’s theoretical 21 Mbps and 42 Mbps of T-Mobiles HSPA+ and dual-carrier networks, but it still has a substantial ceiling of 14.4 Mbps, providing an experience comparable to AT&T’s network and much faster than what Sprint and Verizon Wireless can currently offer on their CDMA networks.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile 2012 and beyond
• 2012: Data, spectrum and the race to LTE
• The future of mobile: a segment analysis by GigaOM Pro

While you might assume that when their LTE networks do go live this year, they will next be welcomed into the iPad fold (and, more importantly, a future iPhone with LTE). But that won’t necessarily be the case. LTE is a whole new ballgame, and the old 3G rules that determined which carriers were blessed with Apple’s devices don’t apply in 4G. In fact, in this new LTE order the two operators may reverse roles, with T-Mobile landing its first iPhone and Sprint being left out in the cold.

Sprint’s weird network

Of all the operators, Sprint has the funkiest LTE setup. It is the only operator to launch its LTE network over PCS spectrum, which is traditionally reserved for 2G and 3G services. What’s more, Sprint plans to add LTE capacity by tapping into Clearwire’s future TD-LTE network, which uses not only completely different spectrum but also a variant of LTE technology that neither Apple nor any handset maker has yet to support. To bring Sprint fully into the iPhone and iPad fold, Apple would need to design custom versions of those devices for the carrier. Apple is certainly willing to do that for mammoth operators like AT&T and Verizon, as evidenced by the two different LTE versions of the iPad it just released, but Sprint might be too small to make the cut.

That’s not to say Sprint won’t have access to a new iPhone. In fact, it’s a practical certainty that it will, given the 4-year, 30.5 million-unit commitment Sprint has made to Apple to sell future devices. But those phones may just function in CDMA mode, making the LTE radios in them useless weight. This is basically the approach Apple is taking with the iPad internationally. The iPad + 4G has already popped up on Apple’s UK website, along with a long list of supported carriers: Orange, Vodafone, O2, T-Mobile and 3UK. Everyone else gets the AT&T version of the new iPad but with the LTE radios turned off.

I’m not saying a Sprint LTE iPhone is impossible. It’s a question of whether it can leverage its big commitment to sell more iPhones against Apple’s historical unwillingness to split its product lines. The sale of 30.5 million iPhones may seem like a lot, but that is spread out over four years. In terms of global sales, that’s just a single good quarter for Apple.

T-Mobile’s time has come

Once Apple opened its portfolio to CDMA last year, T-Mobile became the orphan of the U.S. wireless industry, as no version of the iPhone supported HSPA in its AWS bands. T-Mobile, however, will be in the exact opposite position with LTE. By this time next year, T-Mobile will have completely reconfigured its network, moving a chunk of its HSPA+ network to PCS (which all versions of the iPhone support) and launching a new LTE network in AWS. Basically, T-Mobile’s networks will have nearly the exact same configuration as AT&T’s, and any phone that can work with Ma Bell will be able to work with T-Mo.

The iPhone is now definitely destined for T-Mobile. It’s just a question of timing. By the time the expected new iPhone emerges this fall, T-Mobile’s LTE network won’t be live, but it may have migrated a portion of its HSPA+ network over to PCS. If that’s the case, it could launch the new iPhone (as well as older versions) immediately and turn on the LTE radios as the new network goes up.

Of course, Apple has a say about whether any of these operators gets its device. Apple’s tendency is to sell the iPhone through any operator willing to make a volume commitment. But it also tends to stagger launches, giving preferred partners like AT&T and Verizon first crack. By mid-2013, it’s a good bet we will see the iPhone offered by all four nationwide operators. It’s just a question of which networks those devices will access.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• 12 tech leaders’ resolutions for 2012
• 2012: Data, spectrum and the race to LTE
• Takeaways from mobile’s second quarter