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Wednesday, July 21, 2010, 01:30 pm PT (04:30 pm ET)

T-Mobile, Apple rumored to be in 'advanced talks' for Q3 iPhone launch

T-Mobile USA is said to be in discussions with Apple to bring the iPhone to the wireless carrier this fall, ending AT&T's exclusive hold on the handset, according to a new rumor.

Citing a "highly placed source" at T-Mobile, Leander Kahney at Cult of Mac reported Wednesday that the wireless carrier and Apple are in "advanced talks." He placed an 80 percent likelihood that the iPhone will become available on T-Mobile's network this fall.

Apple became interested because of the influence of T-Mobile's parent company, Deutsche Telekom, the source indicated. T-Mobile is the smallest of the four carriers in the U.S., with 33.7 million customers.

As it currently is, the iPhone 4 is not compatible with T-Mobile's high-speed 3G network in the U.S., as the carrier uses the unique 1700MHz spectrum. The iPhone is compatible with UMTS/HSDPA 3G connections at the frequencies 850MHz, 1900MHz and 2100MHz. In other words, the handset would need a new internal radio to work with T-Mobile's network.

Apple and AT&T originally agreed to an exclusive deal through 2012, though it's believed the terms of that contract likely changed over the years.

The latest rumor comes as most expected the iPhone to first head to Verizon, as both The Wall Street Journal and Bloomberg reported this year that Apple is working on a CDMA iPhone that would be compatible with Verizon's network. Unlike T-Mobile's network, which uses the same technology but operates on a different frequency, Verizon is a completely different technology, which would require a more drastic redesign of the iPhone.