Good News Arrives in the Form of FCC Approvals for AT&T to Buy Up Unused Spectrum for LTE Deployments

Here's a very interesting twist to a simmering problem - that of a lack of LTE spectrum to meet fast rising demand for lots of mobile data bandwidth capacity. We've covered this issue a number of times, mostly with a pessimistic perspective that the federal government will not be able to get itself moving quickly enough (or, read another way, that the federal government won't be able to get out of the way quickly enough) to allow the wireless carriers to have access to and tap into available, though otherwise unused or underused spectrum so that they are able to meet LTE demand.

That said, perhaps it's time for our pessimism to turn a bit more optimistic. Why? Well, because the Federal Communications Commission (FCC), exactly in order to boost 4G LTE markets in the U.S. as well as to free up the country's underutilized spectrum, has now approved AT&T, the country's second-largest wireless carrier behind Verizon Wireless, to buy Wireless Cellular Service (WCS) and Advanced Wireless Service (AWS) spectrum bands from four companies.

The companies that will sell spectrum to AT&T are Comcast, NextWave Wireless (in fact AT&T acquired Nextwave), San Diego Gas & Electric and Horizon Wi-Com. It's been a long time coming, and it's good to see this happening. The move comes at a time of substantial wireless industry consolidation, with Sprint joining up with Softbank and T-Mobile merging with MetroPCS - all moves that will deliver more LTE capacity. Softbank's money has further enabled Sprint to make an offer to buy up all of Clearwire, driving even more consolidation.

AT&T in particular has struggled to deliver the necessary spectrum. The telecom giant's original M&A gambit to acquire T-Mobile was on great part motivated by the need to expand its high speed wireless capabilities. When that deal fell through at the FCC's insistence that it would hurt competition and thus consumers, AT&T needed to find other ways to add spectrum.

Verizon Wireless, meanwhile, has had a somewhat easier time of it in expanding its 4G LTE markets. The company currently has more than 470 4G LTE deployments compared to AT&T’s 125 4G LTE markets. Both companies spend a lot of advertising and marketing dollars to establish themselves as the dominant LTE provider, but our view of it is that today Verizon has the LTE edge.

AT&T is aggressively buying up spectrum in the 2.3 GHz band from the companies noted, and the purchases should allow AT&T to cover 48 states and bring at least 82 percent of the country’s population within reach. This is critical for AT&T to accomplish - moving into 2013, LTE will play a rapidly increasing role in the types of services the wireless carriers will offer both consumers and businesses. AT&T has outlined an aggressive game plan as well as an aggressive outlay of $14 billion dollars to deliver on LTE and advanced services.