AT&T Inc. said Tuesday it has acquired a wireless spectrum license from Aloha Partners L.P. for about US$2.5-billion in cash.
The 12 MHz spectrum lies within the prime 700 MHz spectrum band and covers around 196 million U.S. residents and 72 of the 100 largest metropolitan areas, including the ten largest markets in the U.S.
Aloha purchased the spectrum in Federal Communications Commission auctions held during 2001 and 2003, but hasn't done much with the licenses since the auctions ended.
Iain Grant, managing director at Montreal-based telecommunications consultant SeaBoard Group, said the acquisition is an early move for AT&T as they prepare to gain a strong foothold during the next Federal Communications Commission auctions in January 2008.
“The frequency band in question has potential for great things in both fixed broadband and in mobile broadband. [The band has] far greater reach into buildings and trees than the present Wi-MAX frequencies of 2.5 and 3.5 Ghz; and greater coverage, which suggests a more cost-effective means to reach outlying areas,” Mr. Grant said in an e-mail.
Kaan Yigit, president of Solutions Research Consultants Inc., said in an e-mail the purchase reflects the rush to buy as much unused spectrum as mobile technology moves to more broadband speeds.
“In essence, it's nice beach front property,” said Mr. Yigit. “We are seeing a similar situation here with the push - in particular by Quebecor - to open the spectrum to other players.”
The purchase failed to impress investors, as AT&T shares were initially up as high as 32 US cents after opening at US$41.82 on the news, but fell down to US$41.87 by mid-afternoon.