As expected AT&T is preparing for the data hungry iPhone 3.0 with a HSPA update to its network. This includes new 2100 cell sites with with 20 new areas, 3G speed upto 7.2Mbps (High Speed Packet Access), more bandwidth for high usage areas etc.
AT&T also plans to begin LTE trials by 2010 and bring it main stream by 2011. Well this might help them retain the iPhone that Verizon is eyeing 
. But this announcement from AT&T just before WWDC 09 goes in line with our iPhone 3.0 expectations.
Apple hopes to make iPhone a heavy Internet device. It already holds the maximum mobile internet usage title, but video editing and upload from your iPhone can consume crazy bandwidth. AT&T surely needed an update to their 3G network, the iPhone 3G had put its network to test and as a result Apple+AT&T even faced lawsuits for poor 3G reception. iPhone 3.0 will push the network requirements higher than our expectations IMO and just firmware tweaks wont help AT&T.
“The upgrade to High Speed Packet Access (HSPA) 7.2 technology is part of AT&T’s plan for continued investments to deliver the nation’s best mobile broadband experience – the ideal combination of speed, coverage and best device line-up. AT&T today has the nation’s fastest 3G network and has attracted more than twice the number of smartphone users than any other competitor.” [Release]
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AT&T would be looking to speed up the LTE update if they want to retain Apple iPhone. Verizon is trying hard!