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

NEWS ANALYSIS: AT&T bought up the remainder of small regional carrier Alltel as the major wireless companies rush to buy available spectrum to expand their coverage.

Once again, AT&T is trying to acquire another cell company, but unlike the ill-fated T-Mobile deal, this time AT&T will probably be able to pull it off. Chances are that you remember when Verizon Wireless bought Alltel a few years ago as a way to expand coverage. But 105 of those Alltel markets had to be divested as part of the deal.

AT&T bought most of those divested markets at the time, and the rest of them went to Atlantic Tele-Network (ATN), a company that operates a number of small regional carriers in the United States and elsewhere. Part of what ATNI owns and is proposing to sell to AT&T is the remains of the Alltel network in six Southern and Midwestern states.

This deal is far different than the attempt to acquire T-Mobile, and those differences make it likely that AT&T will face little opposition. The current Alltel covers primarily rural areas where AT&T's coverage is at best, very thin. Getting broadband coverage in rural areas is consistent with the FCC's National Broadband Plan, and having that coverage from a major player is something the FCC wants. In addition, it provides real competition to Verizon Wireless in these areas, which the FCC and the Justice Department also want.

Of course, AT&T wants to buy Alltel for other reasons besides those rural customers. Alltel owns spectrum in the 700MHz, 850MHz and 1900MHz bands where AT&T already operates. While Alltel customers are currently living in a CDMA world, all this means is that the company will have to provide a transition plan and eventually provide new GSM handsets to customers as the network moves to the new technology.

For Alltel customers, this means that they'll have access to AT&T's handsets, including the iPhone, and that they'll be able to roam over a much broader part of the world. For AT&T customers, it will mean that they'll have dramatically better coverage in states where Alltel is currently a major carrier. T-Mobile customers may also see some benefits since AT&T and T-Mobile have roaming agreements in some of the areas Alltel currently serves.

Because Alltel is relative small, the financial impact of acquiring the company is unlikely to have much of an effect on AT&T's bottom line. Neither is the relatively small cost of transitioning the existing 585,000 subscribers and acquiring the retail locations likely to have an adverse effect on AT&T. ATNI will keep the remainder of its wireless companies and will be able to use the $780 Million to invest in its existing network.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...