AT&T Snaps Up Wireless Spectrum

AT&T has signed a deal with Aloha Partners to buy 12 megahertz of spectrum in the 700 MHz frequency for $2.5 billion, which will enable the company to expand its wireless services across the United States. Broadband Internet coverage and broadcasting digital TV over the air are possible uses for AT&T.

Interest in the 700 MHz spectrum has soared recently due to an upcoming FCC auction in which the government will raise at least $10 billion. The auction is slated to begin January 8, 2008 and will include the likes of Verizon and Google. Many see the release of the spectrum as a way to boost competition in the wireless broadband Internet space.

Aloha Partners acquired portions of the 700 MHz spectrum during auctions in 2001 and 2003, along with buying up smaller companies that owned FCC licenses. The company has tested mobile broadcasting, but never made much use of the spectrum.

AT&T's purchase will cover 72 of the top 100 markets in the United States, reaching 196 million people in 281 markets in total. The company says it has yet to decide what it will do with the spectrum, most of which will become available in mid-2008.

The rest of AT&T's 12 megahertz will become available in 2009, when broadcasters must switch to digital television. The FCC auction covers this spectrum, which will be opened up for wireless services.

What's not clear is how this deal will affect the upcoming January auction. AT&T could purchase more spectrum to fill any coverage gaps in the licenses from Aloha Partners, or it could step back and give newcomers like Google more of a chance in snapping up the rights. Apple is also rumored to be considering a bid.