ATandT Buys NextWave to Expand Wireless Spectrum Holdings

The purchase of NextWave Wireless will bolster AT&T's ability to take advantage of the long-awaited Wireless Communications Service (WCS) radio spectrum if federal rules changes eventually allow its use.

AT&T is buying NextWave Wireless, a wireless spectrum holding company, as it seeks to grasp a new chunk of the 2.3 GHz Wireless Communication Service (WCS) spectrum, which presently is not yet available for use by mobile Internet carriers.

The move will allow AT&T to be ready to take advantage of WCS when federal rules change to allow the use of WCS in about three years, according to an Aug. 2 statement by AT&T.

"WCS spectrum was first auctioned in 1997, but has not been utilized for mobile Internet usage due to technical rules designed to avoid possible interference to satellite radio users in adjacent spectrum bands," according to the statement. "In June, AT&T and Sirius XM filed a joint proposal with the FCC [Federal Communications Commission] that would protect the adjacent satellite radio spectrum from interference and enable WCS spectrum€”for the first time€”to be used for mobile Internet service. This proposed solution on WCS spectrum, which is still under review by the FCC, effectively creates much-needed new spectrum capacity."

Under the deal, AT&T will pay about $600 million for NextWave, including $550 million to acquire its debt.

In addition to its WCS holdings, NextWave also holds licenses in the Advanced Wireless Service (AWS) band in the United States and Canada.

By working with the FCC to modify the rules governing WCS while protecting from possible interference with adjacent radio bands, "the proposed WCS rule changes and NextWave acquisition represent an alternative approach to creating additional wireless network capacity to help support skyrocketing wireless data usage on smartphones and tablets," according to AT&T.

If approved, AT&T said it hopes to begin initial deployment in three years to add to its 4G Long-Term Evolution (LTE) capacity.

The NextWave acquisition must be approved by the FCC to be finalized. The deal is expected to close by the end of this year.

The first 128 licenses in the 2.3GHz WCS were originally auctioned by the FCC for use back in April 1997, but they quickly raised concerns about potential radio-wave interference with the nearby Satellite Digital Audio Radio Service (SDARS) band, according to an ATT Public Policy Blog post.

That dispute has continued to drag on, preventing wireless companies from using the WCS band for their growing legions of customers. That's where the new joint proposal from AT&T and Sirius XM comes in with hopes to finally find a solution to the debate.

"It€™s time for the era of dispute and uncertainty to come to an end," wrote Joan Marsh of AT&T in the blog post.

The proposal "will enable the adoption of technical rules satisfactory to both interests and should enable licensees in the 2.3GHz WCS band to deploy the most efficient new mobile broadband technologies, including LTE, while not posing an unreasonable interference threat to satellite radio reception," Marsh wrote. "To be sure, neither party to this proposal got everything it had asked for and perhaps wanted. But both AT&T and Sirius XM are confident that they have developed a set of technical rules that will allow each service to flourish while ending the uncertainty that has plagued both bands for far too long."

NextWave and the FCC were previously locked in an eight-year legal battle over wireless spectrum rights until a settlement was reached in 2004.

Editor's Note: This article was updated to clarify how much AT&T paid to acquire NextWave.