AT&T Buys Alltel as Carriers Rush to Snap Up Wireless Spectrum

By Wayne Rash  |  Posted 2013-01-23 Print this article Print

So is it really a win-win for both sides? At this point it seems to be. So far no opposition has surfaced, even from groups that frequently oppose AT&T on almost everything they try to do. While it's too early to know what the reaction of the regulatory folks will be, it seems that the chances of this deal being approved are fairly high. The FCC approved AT&T buying the parts of Alltel that were divested by Verizon Wireless years ago. There doesn't seem to be much likelihood that they'll fight the deal to buy the rest of it.

But there's more to this deal than just a fairly minor acquisition by AT&T. What you're seeing here is likely the wave of the future until the FCC frees up more spectrum, and that won't happen for a while. The FCC has already announced plans to auction off new spectrum in the 1900MHz band, but government users occupy those frequencies, and the spectrum can't be sold until the current users are located to other frequencies.

Meanwhile, AT&T is in the midst of a major spectrum shift, but it can't complete that shift without more spectrum. By buying the spectrum Alltel owns, AT&T solves part of its spectrum crunch. But Alltel won't solve the whole thing.

In fact, the chances are very good that you'll see more moves by AT&T to stitch together a spectrum map that gives it the bandwidth it needs. To accomplish this, AT&T will need to make piecemeal acquisitions of spectrum from wherever it can find it.

But this need to acquire spectrum isn't just an AT&T story. You'll remember that Sprint announced it was planning to buy the part of Clearwire it doesn't already own, and that Dish has announced a plan to buy Clearwire out from under Sprint. Both companies need spectrum badly enough to wage financial war over it.

And it won't stop there. Small carriers are the low-hanging fruit of spectrum acquisition, which is why T-Mobile announced its plans to acquire MetroPCS in a move similar to the AT&T acquisition of Alltel. But there's also wireless spectrum in the hands of noncarriers, which is why an ongoing effort is happening to buy spectrum from cable television companies, for example.

Until the FCC frees up more spectrum that carriers can use for LTE, the small acquisitions you're seeing are the direction of the wireless business. Larger carriers will gobble up smaller regional carriers where it makes sense. Right now, if there's a real winner in all of this, it's the stockholders of those small regional carriers who may have found the path to true riches.


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