February 01, 2012

The Great Spectrum Grab

This article originally appeared in the Feb. 2012 issue of Next Gen Mobility

It wasn’t a very happy holiday for AT&T.

Just days before Christmas 2011, the company announced the end of its quest to acquire T-Mobile (News - Alert) USA – a $39 billion deal that would’ve been the largest acquisition of the year. Instead, AT&T had to pay a $4 billion breakup fee and look for a new strategy to acquire move spectrum.

So what’s the next move for AT&T? And what are other big wireless players, like Verizon (News - Alert), doing to expand their spectrum holdings?

Peter Bernstein of TMCnet predicts that AT&T next will seek to sell off some of its business lines, like outside plant operations, that are considered “troublesome assets” relative to FCC (News - Alert) rules. There’s also talk that AT&T might make a move for DISH, which would give AT&T access to the satellite company’s spectrum and which likely wouldn’t have the same anti-trust problems as the failed AT&T-T-Mobile pairing given AT&T and DISH are significantly different. And just days after news broke of AT&T dropping the T-Mobile acquisition effort, AT&T got the green light to buy from Qualcomm 700mHz spectrum licenses covering more than 300 million people for approximately $1.9 billion.

"This spectrum will help AT&T continue to deliver a world-class mobile broadband experience to our customers," said Bob Quinn, senior vice president-Federal Regulatory, AT&T. "We appreciate the FCC Chairman, the Commissioners and their staff for completing its review before the holidays.”

Meanwhile, Verizon recently announced an agreement to buy mobile licenses from cableco consortium SpectrumCo and, separately, from Cox Communications. Verizon’s $3.6 billion deal with SpectrumCo gives the telco nationwide AWS spectrum licenses. It is spending an additional $315 million for spectrum from Cox.

That’s not a bad strategy, considering Verizon stands to get a good chunk of new spectrum out of the deals, as well as a cadre of nice wholesale wireless customers out of the deal.

All of the above could create an interesting new dynamic in the communications industry that would replace the telco-cableco throw down that started in the 1990s (and the nascent wholesale wireless efforts by Clearwire and LightSquared) with an AT&T-DBS vs. Verizon-cableco competition, according to Tim Farrar, president of Telecom, Media and Finance Associates, aconsulting and research firm in Menlo Park, Calif.


Farrar recently blogged: “…the FCC needs both the AT&T/DISH and Verizon/SpectrumCo deals to proceed in parallel, in order to impose a uniform set of rules on both companies. As a result, the FCC is likely to approve DISH’s waiver requests to permit terrestrial-only use of its recently acquired 40MHz of satellite spectrum in the very near future, perhaps even as soon as this Friday.

“The ripple effects of such a transformational change to the telecom landscape are almost too numerous to mention,” he continues. “They range from what happens to DirecTV and Cablevision if they are left on their own once the other cable companies and DISH choose sides, to whether Sprint’s (News - Alert) Network Vision plan can compete with second rate spectrum and limited scale against retail-focused providers with access to AT&T or Verizon’s far superior 4G network infrastructure.

“However, even more important in the near term will be the reaction of Congress (which thinks it decides how the telecommunications landscape should be structured) in a polarized election year environment.”

Indeed. We should be hearing much more about all of that this month. At ITEXPO (News - Alert) East Jan. 31-Feb. 3 in Miami, Paget Alves, president of Sprint Business, is among the keynote speakers. Sprint, as you may recall, was the strongest opponent of the AT&T-T-Mobile pairing. The failed AT&T-T-Mobile deal and the new spectrum efforts will also likely be a subject of discussion and hot debate at Mobile World Congress later this month in Barcelona, where Ralph de la Vega, president and CEO of AT&T Mobility & Consumer Markets, is expected to be among the keynote speakers.

See you there.

Stay Connected My Friends.

Paula Bernier

Edited by Stefania Viscusi

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Meet the Editorial Team

Rich Tehrani,
Since 1982 Rich has led TMC© in many capacities. Rich Tehrani is an IP Communications industry expert, visionary, author and columnist. He founded INTERNET TELEPHONY® magazine...Read More >>>
Carl Ford,
Partner and Community Developer, Crossfire Media
Today as a partner at Crossfire Media, Carl is developing programs that bring to light an understanding of the issues required for delivering broadband wireless Internet...Read More >>>
Erik Linask,
Group Editorial Director, TMC
Erik oversees the editorial content and direction for all of TMC. Erik has contributed literally thousands of features during his 5-year tenure, with a focus...Read More >>>
Paula Bernier,
Executive Editor, IP Communications Group
Paula oversees editorial content and operations of INTERNET TELEPHONY and Next Gen Mobility Magazines. Bernier is...Read More >>>
Paula Bernier,
CTO & Executive Technology Editor
om is executive technology editor for TMC® Labs, the industry’s most-well known and respected testing lab, and ...Read More >>>