AT&T's Spectrum Buy Rearranges Pieces On The 700-MHz Board - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Infrastructure

AT&T's Spectrum Buy Rearranges Pieces On The 700-MHz Board

The spectrum purchase has consequences for new bidders and potentially forces Verizon Wireless to rethink its strategy, analysts suggest.

AT&T's $2.5 billion purchase of valuable spectrum in the 700-MHz band from Aloha Partners not only gives the renascent Ma Bell a head start in the race to build high-speed wireless networks, but also shuffles the deck for the upcoming FCC spectrum auction.

The move could also force Verizon Wireless, AT&T's chief competitor in the 700-MHz stakes, to rethink its strategy based on the newly available frequencies.

The purchase announced Tuesday covers licenses for roughly 196 million people in 281 markets, according to the company, including 72 of the top 100 and all of the top 10 markets in the United States.

AT&T had been expected to be one of the top bidders in the FCC auction of 700-MHz spectrum being vacated by the television broadcasters, currently scheduled for Jan. 28. The company may still bid in the auction but is unlikely to contest the most highly prized slice of airwaves up for sale, the so-called "C block," said Gabriel Brown, chief analyst for wireless market research group Unstrung Insider (which, like InformationWeek, is owned by CMP Technology).

"This makes it less likely AT&T will bid to win on the C block," said Brown, "and makes it more likely to focus on the A and B blocks to complement this newly acquired 700-MHz footprint."

The C block includes two swathes of 11 MHz each of spectrum; the A and B blocks each comprise two 6-MHz slices. The C block is also the portion of the spectrum that is subject to the "open access" requirements set by the FCC in its rules for the auctions. The winner of this band must open the network built on it to applications and devices from third-party providers. Verizon has sued the FCC over the new rules.

The open access requirements were at the heart of demands from potential insurgent bidders, including search company Google and startup Frontline Wireless, co-founded by former FCC chairman Reed Hundt, to ensure that the resulting networks are not controlled solely by the incumbent telecoms (i.e., AT&T and Verizon). The A and B blocks, however, are not subject to the open-access rules, meaning that AT&T could build a traditional, "closed" network based on spectrum in those bands and the frequencies it now plans to take over from Aloha.

"AT&T is reverse-encumbering the other band," writes Glenn Fleishman, editor of Wi-Fi Networking News. "While the C block involves more bandwidth and greater coverage, Verizon is now in a worse position because of the lack of device and application lock-in" under the open-access requirements.

AT&T's spectrum purchase will also likely make it harder for upstarts like Frontline to compete in the auction. Frontline has protested against the "reserve prices," or minimum bids, set by the FCC for the 700-MHz auction, saying they are unprecedentedly high and could discourage the major bidders like AT&T and Verizon from bidding in the first round of the competition. If the reserve prices are not met, the FCC said it will restage the auction with no reserve prices and without the open-access conditions.

The price paid by AT&T for the Aloha bandwidth, though, effectively sets a value of around $1 per megahertz, per POP (point of presence, or individual user covered by the network). That is higher than the reserve price set by the FCC rules, making it unlikely that Frontline's protests will change the rules.

"For all the rhetoric," Brown writes in his recent report on the likely auction outcomes, "700MHz Technology Options: Reshaping The U.S. Wireless Market," "it's highly unlikely that any significant new entrant will emerge from the 700MHz auction."

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Slideshows
What Digital Transformation Is (And Isn't)
Cynthia Harvey, Freelance Journalist, InformationWeek,  12/4/2019
Commentary
Watch Out for New Barriers to Faster Software Development
Lisa Morgan, Freelance Writer,  12/3/2019
Commentary
If DevOps Is So Awesome, Why Is Your Initiative Failing?
Guest Commentary, Guest Commentary,  12/2/2019
White Papers
Register for InformationWeek Newsletters
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
Video
Current Issue
The Cloud Gets Ready for the 20's
This IT Trend Report explores how cloud computing is being shaped for the next phase in its maturation. It will help enterprise IT decision makers and business leaders understand some of the key trends reflected emerging cloud concepts and technologies, and in enterprise cloud usage patterns. Get it today!
Slideshows
Flash Poll