By Prince McLean and Kasper Jade

Published: 04:00 PM EST

AT&T is rushing to rollout a major upgrade to its 3G mobile data service in anticipation of a tenfold increase in network traffic from new iPhone hardware expected to go on sale in June, according to a vendor source.

Apple's exclusive mobile service provider in the US has already laid out plans to upgrade its 3G data network on multiple fronts. Last month AT&T CEO Ralph de la Vega said in an interview that "we have the infrastructure capability to go to 7.2 [Mbit/s], and we'll have the capability to go 14.4 and 20 in the next couple of years, so I think there's coverage we're going to improve, there's quality we're going to improve, and there's speed that's also going to get improved."

The current iPhone 3G only supports a maximum of 3.6 Mbit/s, so AT&T's plans to achieve the full potential of its current 3GPP Release 5 network technology would require new iPhone hardware to fully exploit. However, the wireless link between the phone and the cell tower is only part of the network speed equation. Another factor is the speed and capacity of AT&T's network backbone.

Reports have already indicated that about half of the mobile data traffic AT&T handles is related to the iPhone. Web statistics from Net Applications also show that more than two thirds of all US mobile web data traffic is used by the iPhone, which also makes use of WiFi.

But AT&T's upgrade is expected to result in moving even more data across its mobile network, with one source saying they "expect [to] see 10 times as much data traffic as they are now experiencing" once new iPhone hardware is released this summer.

New routers to speed mobile network

The network rollout is reported to be connected to a "massive" order of new Juniper routers that can handle higher data throughputs optimized for video streaming and related features targeted toward video stream broadcasts, the source said. AppleInsider later confirmed that AT&T recently took receipt of a large batch of Juniper routers.

For its part, Apple has been evaluating a portion of the network upgrade already accessible to its engineers for testing purposes and is genuinely impressed with its speed. A person familiar with the situation commented that Apple iPhone engineers have "never gotten pages to load as fast as they were loading on the new routers."

Still, there's reportedly quite a bit of work to be done. AT&T network engineers have been tasked with installing and testing the new equipment over the next two months with the goal of being ready weeks in advance of a June launch. Apple has reportedly set a strict deadline that asks AT&T to complete the upgrade, quality test it, and have it ready to go live no later than May 31st.

AT&T's latest network upgrade certainly isn't unprecedented. While all of the mobile operators are constantly performing upgrades to their networks, AT&T pushed to expand EDGE coverage and speed for its 2G GSM network in conjunction with the launch of the original iPhone, and accelerated its 3G UMTS network expansion to accommodate last year's iPhone 3G launch.

Service coverage improvements also coming inline

In addition to the new backbone network upgrades, AT&T is also working to improve its 3G coverage in markets currently served by 1900MHz cell towers by migrating to 850MHz service in several markets. AT&T's de la Vega said that by the end of 2009, "we'll finish [the 850MHz transition in] San Francisco, we'll finish parts of New York, and then that'll bring the best technology 3G on the best backbone to significantly improve the quality and the coverage for 3G on our network."

The longer wavelength, lower frequency 850MHz band has been growing in popularity among mobile providers because it provides greater coverage area using fewer towers and better penetration through walls and other barriers, such as foliage. AT&T uses both 850MHz and 1900MHz bands for 3G UMTS in the US.

Last June, Kris Rinne, AT&T's Senior Vice President of Architecture and Planning, was cited in an industry press release as saying, "AT&T has delivered HSPA service at 850MHz wherever possible, with more on the way this year as we redeploy additional 850 spectrum previously used for our TDMA network," indicating a continuation of the company's often repeated strategy of deploying additional 850MHz coverage to strengthen its 3G service in the US.