New spectrum chunk will help Ma Bell keep pace with Verizon

Still reeling from the death of its proposed purchase of Deutsche Telekom AG's (ETR:DTE) T-Mobile USA, AT&T, Inc. (T) is now coming to grips with the reality that if it wants to be number one in the U.S. market it will have to get their by competition, rather than by gobbling up the market's smaller weaker residents.  To that end, AT&T was handed a bit of promising conciliatory news by the U.S. Federal Communications Commission, one of the key agencies who helped block the T-Mobile acquisition.

The FCC approved AT&T's $1.9B USD deal to purchase Qualcomm Inc.'s (QCOM) block of the 700 MHz spectrum.  The spectrum was sitting idle after Qualcomm's FLO TV efforts stalled due to monetary losses.

AT&T should be able to put the spectrum to good use developing its new LTE network.  More spectrum allows for more towers to be simultaneously be pumping data to customers, offering more bandwidth regionally for downloads, which in turn limits congestion and improves speeds.

Spongebob on FLO TV
RIP FLO TV, long live LTE! [Image Source: Qualcomm]

The FCC does require that AT&T perform typical tests to make sure its deployment isn't causing interference to services on neighboring bans.  It also requires that AT&T offer data roaming to its competitors from the infrastructure deployed on the new spectrum chunk.  However, to rural carriers' chagrin, the FCC is not requiring AT&T to ensure interoperability of its deployment with the bands used by smaller networks.  That means that smaller carriers' devices may not be able to easily access the spectrum.

AT&T is locked in a battle with Verizon Wireless -- the joint venture between Verizon Communications Inc. (VZ) and Vodafone Group Plc. (LON:VOD) -- to offer the best fourth generation wireless LTE technology to consumers.  AT&T is doing well in speeds, reportedly handily beating Verizon, in areas where both companies have available services.  The chief issue limiting AT&T's LTE effort is coverage -- Verizon covers over 200 million Americans, while AT&T covers only 70 million.  But with smaller spectrum acquisitions and the free cash available in the wake of the T-Mobile deal collapse, it should be able to beef up its infrastructure and expand its coverage.

Verizon is spending $3.6B USD in a similar proposed spectrum purchase to boost its LTE offerings.

Source: AT&T

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