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A report from the Silicon Valley Insider citing a “highly reliable mobile industry source” claims that Apple’s next release of iPhone hardware — most likely to be later this year according to the historical iPhone release cycle — will support significantly faster Internet connections.

Further, during a speech at Mobile World Congress last month AT&T Mobility CEO Ralph de la Vega proclaimed that throughout the year AT&T would both extend its 3G coverage into more cities and increase network data speeds in an effort to maintain the title of America’s fastest network.

So just how fast will the next iPhone be able to go? Well, that all depends on the radio components Apple is able to source into the hardware. In the current iPhone 3G hardware, the radio chip supports HSDPA 3G networks up to 7.2Mbit/s, which happens to be the peak speed of AT&T’s current 3G network, also known as Release 6. According to de la Vega, the foundation for Release 7 has already started to be put down, and once ready AT&T will be able to offer speeds of up to 20Mbit/s (note: some countries already support such speeds and current iPhone hardware is unable to utilize these faster networks).

Release 7 will be AT&T’s focus for the rest of 2009 and into 2010, before they start to move into LTE in 2010-2011 — aka super fast speeds.