Business

AT&T Wheels and Deals to Fend Off Spectrum Squeeze

AT&T has reached an agreement with Atlantic Tele-Network to buy its wireless assets for US$780 million. The deal will add approximately 585,000 subscribers — mainly in Georgia, Idaho, Illinois, North Carolina, Ohio and South Carolina — to AT&T’s user ranks. Perhaps more importantly, AT&T’s acquisition of the Alltel brand will bring in spectrum complementary to AT&T’s network — that is, in the 700-, 850- and 1900-megahertz bands.

Alltel currently operates a retail CDMA network for its subscribers in these areas. AT&T reported it plans to upgrade the Alltel network.

Under terms of the agreement, AT&T will acquire wireless properties including licenses, network assets and retail stores. The transaction is subject to review by the Federal Communications Commission and the Department of Justice. It is expected to close in the second half of 2013.

Spectrum Crunch

AT&T’s investment illustrates the nation’s spectrum crunch and the lengths carriers are willing to go to meet capacity demand, said Peter Rysavy of Rysavy Research.

“Some have argued there is none, but if that were the case, why would operators be working so hard to obtain additional spectrum? Given that there are so few opportunities to license new spectrum, secondary market transactions like this one are the most efficient means of reallocating spectrum within the market,” he told the E-Commerce Times.

AT&T’s Plan B

For AT&T in particular, the Alltel transaction is necessary to remain competitive after its attempt to buy T-Mobile USA fell through amid antitrust concerns raised by U.S. regulators, said Andreas Scherer, managing partner of Salto Partners. AT&T’s Plan B, Scherer said, “is a combination of acquiring subscribers, bolstering its license rights to airwaves, and upgrading its infrastructure.”

As the demand for wireless services increases, major carriers have heightened appetites for spectrum rights, he said.

“For the same reasons, Sprint is trying to purchase the remaining portion of Clearwire, and Verizon bought rights to airwaves from Comcast and other cable customers,” Scherer pointed out.

Spectrum demand is also the driver behind AT&T’s plans to invest US$14 billion to upgrade its network, he added.

There is little doubt the demand for spectrum is there — and that it will continue to increase significantly. In 2011, wireless penetration in the U.S. reached 105 percent, according to Deloitte Telecom — that is, there was more than one device in service for every man, woman and child in the country.

Furthermore, while carriers’ network investments in next-generation technology and additional cell sites are expanding network capacities, demand is growing even faster, it reported.

There will be a dearth of spectrum within a few short years, as mobile data usage continues to skyrocket.

In fact, the crisis is already here, said Rysavy.

“Every time you use a mobile browser and it takes longer than 10 seconds to connect, that means there is congestion on the network,” he noted.

A Piecemeal Approach

The urgency of the situation has spawned the piecemeal acquisition strategy carriers are taking, Ritch Blasi, SVP of mobile and wireless at Comunicano, told the E-Commerce Times.

“AT&T and others have been pushed into a corner to find alternatives for increasing their spectrum portfolios to better handle the oncoming data tsunami,” he said.

“At this point, piece-mealing frequencies is the only option — at least until the FCC finally decides it will auction off the much valued and needed spectrum it is holding,” Blasi continued. “The industry is just getting its feet wet in handling content-rich services like mobile video and VoIP.”

When those services go mainstream, it is likely that quality will become an issue if the appropriate spectrum is not in place to handle the flow of traffic, Blasi concluded.

AT&T did not respond to our request for further details.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

How confident are you in the reliability of AI-powered search results?
Loading ... Loading ...

E-Commerce Times Channels

AT&T Wheels and Deals to Fend Off Spectrum Squeeze

AT&T has reached an agreement with Atlantic Tele-Network to buy its wireless assets for US$780 million. The deal will add approximately 585,000 subscribers — mainly in Georgia, Idaho, Illinois, North Carolina, Ohio and South Carolina — to AT&T’s user ranks. Perhaps more importantly, AT&T’s acquisition of the Alltel brand will bring in spectrum complementary to AT&T’s network — that is, in the 700-, 850- and 1900-megahertz bands.

Alltel currently operates a retail CDMA network for its subscribers in these areas. AT&T reported it plans to upgrade the Alltel network.

Under terms of the agreement, AT&T will acquire wireless properties including licenses, network assets and retail stores. The transaction is subject to review by the Federal Communications Commission and the Department of Justice. It is expected to close in the second half of 2013.

Spectrum Crunch

AT&T’s investment illustrates the nation’s spectrum crunch and the lengths carriers are willing to go to meet capacity demand, said Peter Rysavy of Rysavy Research.

“Some have argued there is none, but if that were the case, why would operators be working so hard to obtain additional spectrum? Given that there are so few opportunities to license new spectrum, secondary market transactions like this one are the most efficient means of reallocating spectrum within the market,” he told the E-Commerce Times.

AT&T’s Plan B

For AT&T in particular, the Alltel transaction is necessary to remain competitive after its attempt to buy T-Mobile USA fell through amid antitrust concerns raised by U.S. regulators, said Andreas Scherer, managing partner of Salto Partners. AT&T’s Plan B, Scherer said, “is a combination of acquiring subscribers, bolstering its license rights to airwaves, and upgrading its infrastructure.”

As the demand for wireless services increases, major carriers have heightened appetites for spectrum rights, he said.

“For the same reasons, Sprint is trying to purchase the remaining portion of Clearwire, and Verizon bought rights to airwaves from Comcast and other cable customers,” Scherer pointed out.

Spectrum demand is also the driver behind AT&T’s plans to invest US$14 billion to upgrade its network, he added.

There is little doubt the demand for spectrum is there — and that it will continue to increase significantly. In 2011, wireless penetration in the U.S. reached 105 percent, according to Deloitte Telecom — that is, there was more than one device in service for every man, woman and child in the country.

Furthermore, while carriers’ network investments in next-generation technology and additional cell sites are expanding network capacities, demand is growing even faster, it reported.

There will be a dearth of spectrum within a few short years, as mobile data usage continues to skyrocket.

In fact, the crisis is already here, said Rysavy.

“Every time you use a mobile browser and it takes longer than 10 seconds to connect, that means there is congestion on the network,” he noted.

A Piecemeal Approach

The urgency of the situation has spawned the piecemeal acquisition strategy carriers are taking, Ritch Blasi, SVP of mobile and wireless at Comunicano, told the E-Commerce Times.

“AT&T and others have been pushed into a corner to find alternatives for increasing their spectrum portfolios to better handle the oncoming data tsunami,” he said.

“At this point, piece-mealing frequencies is the only option — at least until the FCC finally decides it will auction off the much valued and needed spectrum it is holding,” Blasi continued. “The industry is just getting its feet wet in handling content-rich services like mobile video and VoIP.”

When those services go mainstream, it is likely that quality will become an issue if the appropriate spectrum is not in place to handle the flow of traffic, Blasi concluded.

AT&T did not respond to our request for further details.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.