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Summary:

AT&T’s current 4G spectrum holdings are all over the place, but if it can execute its grand plan for the Wireless Communications Services airwaves it will have a consistent nationwide 20 MHz band designated solely for LTE. It just has to pull it off.

Pipeline pipes

AT&T’s LTE rollout plans are a bit of a hodgepodge. The problem is spectrum. It never managed to piece together the licenses to form a consistent nationwide 4G band like that owned by archrival Verizon. Instead AT&T cobbled together 700 MHz licenses here and Advanced Wireless Services (AWS) licenses there. The result is a network that already has some big capacity shortfalls in key markets and could eventually have gaps in coverage.

But AT&T is trying to rectify that situation by tapping spectrum in the most unexpected places. On Thursday, AT&T announced its intentions to buy spectrum squatter NextWave and its big hunk of Wireless Communications Services (WCS) spectrum. Shortly afterward it filed notice with the FCC that it plans to pick up smaller WCS holdings from Comcast and Horizon Wi-Com. UBS Investment Research analyst John Hodulik believes AT&T is now approaching Sprint, which is the last remaining WCS licensee of note.

Hodulik said in a research note that those deals will give AT&T almost exclusive ownership of the WCS band, which ultimately would allow it to deploy a 20 MHz LTE network nationwide.

Getting all those licenses is key to AT&T’s strategy otherwise WCS will remain useless for mobile broadband services, as it has for the last 15 years. Interference problems with the neighboring satellite radio services have made the band a no-man’s land for terrestrial cellular technologies. But a compromise between Sirius XM Radio and AT&T would solve the problem.

Their proposal to the FCC would designate 10 MHz of the 30 MHz WCS band as guard bands, which no cellular signals could cross, thus protecting satellite radio signals from interference. The problem is AT&T can’t tell a bunch of other WCS license holders that spectrum they paid for is suddenly off limits. It has to buy up all of their licenses to make its plan work. In addition, it needs to get as much of the usable WCS frequencies as possible to ensure it has consistent capacity and nationwide coverage for any new LTE network.

Why WCS is important to AT&T’s plans

So what would a 20 MHz network mean? For starters it would be the exact same size as Verizon’s current LTE network, which is rapidly nearing completion. While AT&T already has 20 MHz of 700 MHz of its own in many markets, it’s forced to deploy 10 MHz networks in key cities like Chicago and Los Angeles. WCS could provide a consistent blanket of capacity across all urban markets in the country.

AT&T’s LTE markets are marked by the orange dots

I say urban areas because WCS’s 2.3 GHz frequencies don’t have the propagation characteristics of 700 MHz, hardly making them optimal for rural or suburban deployments where cells are stretched for miles. A bit too much is made of 700 MHz’s reach, though. AT&T doesn’t need gobs of capacity on rural highways. It needs that capacity in cities where high demand and the density of subscribers mandate cells be packed closely together – regardless of what frequency they use.

AT&T still has to close these deals, get FCC approval for its spectrum retooling plan, standardize WCS as an official LTE band and deploy its network. Then it has to build a device market for what will essentially be an AT&T-exclusive band. That will take years. Its current LTE plans will have to move forward regardless of whether its WCS plans work out. Also, it will still be on the hunt for more airwaves.

As Fierce Wireless points out, Verizon would still be far ahead of AT&T in the airwave race, even if Ma Bell can pull off its grand plan. AT&T would have the spectrum for a nationwide high-capacity LTE network in several years. But Verizon has nearly completed the equivalent network already, and if its acquisition of the cable operators’ spectrum is approved, it will have enough spectrum to build a second network of similar size and breadth next year.

The Verizon-cable deal, though, is encountering growing opposition. What should have been an easy bid to buy and put to use spectrum that’s lain dormant for eight years has turned into a big political controversy. Verizon overreached by agreeing to co-marketing pacts with the Comcast and Time Warner Cable, which essentially amounts to the companies divvying up the wireless and residential markets in different regions.

According to Reuters, the U.S. Department of Justice is demanding some big concessions from Verizon before it will let the deal pass, including the dissolution of their co-marketing agreements.

Photo courtesy of Shutterstock user SSSCCC

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  1. This results in AT&T with the LTE equivalent of CDMA in the sense that their devices will only work in a limited area.

    1. Wish I understood what you mean here. I live in Dallas and use AT&T’s 4g LTE in my real estate practice and i’m all over the HUGE city with it. Never fails me. Well, almost never.

      1. In a National picture. Dallas is a limited area. It is a “NFL” city as the industry calls it. That is to say; that these limited areas are always FIRST in a new generational launch.

  2. Bradley Baustert Friday, August 3, 2012

    I never understood why the FCC sells spectrum to companies in the first place.
    Spectrum ownership is a GIANT hurdle for any new wireless startups, so all it really does is hurt competition.

    Is there a reason why they couldn’t standardize a huge block of spectrum for commercial use and rent it instead?

    That way they would gain a constant stream of revenue and allow companies to expand or contract their usage as necessary.

    1. Despite the terminology used, it isn’t a sale, it is a lease. A very long and exclusive lease. The US government (and most other world governments) consider the airwaves to be a public utility.

      The FCC has always auctioned portions of the airwaves. See this 1994 story:

      http://community.seattletimes.nwsource.com/archive/?date=19941027&slug=1938222

      As to the temporary nature of the lease, this is what happened with the changeover of OTA TV from analog to digital. Took spectrum from one entity and auctioned to another. See:

      http://www.bingham.com/Alerts/2011/02/FCC-Takes-First-Step-Toward-Repurposing-UHF-TV-Spectrum-for-Wireless-Broadband-Service

      For a rundown of spectrum leasing:

      http://wireless.fcc.gov/licensing/index.htm?job=spectrum_leasing

      As to the haphazard apportion of the airwaves. Like any other land grab, it started that way in the private sector, the FCC was created to regulate in 1934 and we are continually victimized by history of that chaotic start.

    2. Hi Bradley,

      The only problem with that scenario is huge infrastructure investments carriers have to make. They invest billions in building networks that they intend to run for 10 years. If they only had short leases then they couldn’t justify those investments. Startups would face the same problem if there was a more equitable distribution of spectrum. They might get the airwaves for cheap, but they would still need billions to build a network.

      The odd thing is we are starting to see the “rental” model emerge with MVNOs. It’s becoming cheaper and easier to get into the wireless business with less than $100,000 of upfront of investment. You would think the FCC would have forced carriers to do this, but competition appears to be actually working. Sprint and T-Mobile see MVNOs as another way to get revenue streams and grow despite pressures from ATT and Verizon, so they’re encouraging new startups and making more of their network accessible. Look at Ting and FreedomPop. Sprint is giving both of them access to its LTE network just a few months after launching it,

  3. 2.3 GHz sucks in urban areas. It’s actually less important to have lower frequencies in rural areas than it is in urban areas — depending on foliage. The urban area issue is getting through walls, not covering distance. The rural distance magic of lower frequency bands is very rarely determinative. It actually only matters in areas with large quantities of trees. But anyway…..

  4. Reblogged this on jamesaochoa and commented:
    Carriers are finally catching up to the mobile phenomena that is occurring. Market Research firm Gartner Inc. , said that it expects worldwide tablet sales to surge 98 percent in 2012 to 118.9 million units. Now with a mobile network to support this growth we can expect to see businesses push for a BYOD (bring your own device) environment.

  5. I’m a designer in Atlanta and the plans are ridiculous. If AT&T is going to put 4G LTE in other markets, you would think the competition would keep driving down costs. Guess we can only hope.

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