AT&T secures 700MHz licenses for $2.5B

Ensuring its leverage on the January auction of the 700MHz licenses, AT&T announced Tuesday that it will pick up a wide swath of the spectrum from Aloha Partners for $2.5 billion. The mobile carrier didn't specify what use it has in mind for the licenses that cover 196 million people.

Customer demand for mobile services, including voice, data and video, is continually increasing, Forrest Miller, AT&T group president of corporate strategy and development, said in a statement. "Aloha's spectrum will enable AT&T to efficiently meet this growing demand and help our customers stay connected to their worlds."

Aloha's subsidiary Hiwire had been testing video delivery with T-Mobile in Las Vegas for several months, leading to speculation that AT&T, too, could use the spectrum to deliver mobile TV over its cellphone networks. The Aloha spectrum could strengthen AT&T's competitive position against arch rival, Verizon Wireless, which has been testing Qualcomm's MediaFLO mobile phone video technology.

AT&T's purchase comes only a few months before the 700MHz spectrum is expected to be opened up by the move of over-the-air TV off the spectrum. The auction is scheduled Jan. 28, 2008, and is expected to raise as much as $15 billion for the U.S. Treasury.

FCC's biggest auction
According to former Federal Communications Commission (FCC) Chief of Staff Blair Levin, the 700MHz auction will be the biggest spectrum auction ever held and probably also will be the last big FCC spectrum auction. The 700MHz spectrum has several superior advantages, including low interference problems and wide-area coverage that cuts down the number of towers needed. The spectrum also could be used for WiMAX.

While the leading mobile phone service providers are all likely candidates to participate in the upcoming auction, interest has been heightened by Google's interest in the spectrum. The search colossus has said it's ready to spend $4.6 billion on the auction, if it decides to join the bidding.

The FCC has called for a wide chunk of the 700MHz spectrum to be set aside for "open" use, which presumably would open 700MHz networks to independent suppliers and drop prices for consumers. Verizon Wireless, which is a joint partnership of Verizon Communications and Vodafone Group, has challenged the FCC on the "open" provisions of the auction, however.

- W. David Gardner
InformationWeek