AT&T, Verizon To Swap Rural Wireless Assets - InformationWeek
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12/4/2007
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AT&T, Verizon To Swap Rural Wireless Assets

The practice of gaining spectrum in rural markets through acquisitions has become increasingly of interest to large wireless carriers as a way of expanding their networks.

U.S. carriers AT&T and Verizon on Tuesday announced an agreement to swap their wireless assets, following the carriers' acquisitions of smaller rural providers.

The agreement gives AT&T permission to acquire licenses, network assets, and subscribers that Verizon gained in its purchase of Rural Cellular Corp. in the Burlington, Vt., metropolitan service area and in rural service areas in New York, Vermont, and Washington. AT&T said it also will gain a cellular license from Verizon in Kentucky.

Verizon first announced plans to buy Rural Cellular for about $2.67 billion earlier this year, citing its interest in rural wireless services. As a result, the carrier said it would increase its customer base by more than 700,000.

AT&T runs a network based on a worldwide cellular technology called GSM, while Verizon's is based on CDMA, a technology developed by Qualcomm that's mostly used in the United States and some parts of Asia. Although the two technologies are incompatible, Rural Cellular uses both CDMA and GSM.

On the other side of the deal, Verizon gets permission to acquire from AT&T some former Dobson Communications licenses, network assets, and subscribers in Kentucky. Additionally, Verizon will receive 10 MHz of Personal Communications Service spectrum for wireless services in an unspecified number of markets.

This month, AT&T is in the process of transitioning Dobson Communications customers to its network, products, and services, following the close of its acquisition of the wireless carrier in November. With the completion of a $2.8 billion cash deal to acquire Dobson, which provides rural and suburban wireless services under the Cellular One brand, AT&T has gained an additional 1.7 million subscribers.

The agreement to swap wireless assets with Verizon is expected to widen AT&T's coverage and digital voice and data services in New York, Vermont, the state of Washington, and Kentucky, the carrier said.

The practice of gaining spectrum in rural markets through acquisitions has become increasingly of interest to large wireless carriers as a way of expanding their network coverage and gaining additional subscribers.

The agreement between Verizon and AT&T is expected to close sometime in the middle of next year.

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