AT&T’s LTE Prospects Lifted By The FCC’s WCS Spectrum Approval

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In a move that could address most of AT&T’s (NYSE:T) spectrum concerns, the FCC has unanimously given its approval for a plan that could lift restrictions and make WCS spectrum bands conducive for wireless broadband services such as LTE. [1] AT&T, which needs additional spectrum to improve its 3G network as well as augment its 4G LTE buildout, can now look to make use of a huge swathe of WCS spectrum that had until now been rendered useless due to interference concerns with satellite bands. The approval puts AT&T on a much better competitive footing with Verizon, which is not only the current LTE leader by a big margin but has also bolstered its future LTE prospects by buying spectrum from the cable companies.

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AT&T and its multiple spectrum deals

This is also a big positive for AT&T from a regulatory standpoint. The carrier had only last year seen its attempt at acquiring spectrum by merging with ailing competitor T-Mobile thwarted by the FCC which saw the move as anti-competitive and moved to block it. AT&T has since been targeting smaller deals or acquisitions to meet its spectrum needs. Over the past few months, AT&T has filed numerous applications with the FCC requesting permission to buy spectrum licenses in the 700MHz, AWS and WCS bands from a host of companies, including Comcast (NASDAQ:CMCSA), CenturyTel and Nextwave Wireless. (see AT&T Continues To Stitch Together Spectrum Deals As Verizon Races Ahead With LTE Plans)

The AWS and 700MHz spectrum licenses AT&T seeks will most likely be used to meet its near-term needs since they complement its existing spectrum resources in the same bands, some of which it had to part with as break-up fee for not being able to close the T-Mobile deal last year. The WCS spectrum, on the other hand, has been dogged by interference issues with nearby satellite signals owned by Sirius XM, making it near impossible to get any kind of wireless broadband to work on those frequencies.

LTE rollout to pick up steam

It is in this light that the FCC’s approval for the proposal that AT&T and Sirius XM co-submitted to tackle the interference issues is very significant. The interference-eliminating proposal requires the creation of ‘guard bands’ in blocks of WCS that AT&T doesn’t currently own but will, in due course of time, if its series of spectrum acquisitions are approved, meaning FCC approval for these spectrum deals is also on the way. Both the WCS proposal and spectrum acquisitions will then give AT&T the opportunity to gain 20 MHz of nationwide spectrum in the 2.3 GHz WCS band which it can then use to bolster its LTE network.

Of course, AT&T has some way to go before it can receive all regulatory approvals it needs. But what is clear is that the carrier is likely to face a little trouble, at least on the spectrum front, in transitioning its subscribers to the faster 4G LTE network. AT&T will look to use the additional spectrum to augment its LTE buildout  as well as catch up with the current LTE leader, Verizon, before LTE adoption starts rising and its network deficiencies become more apparent. Currently, Verizon, which started deploying LTE much earlier than AT&T, has its LTE network available to more than 250 million Americans in 419 markets across the U.S. In comparison, AT&T’s LTE network covers about 80 million Americans presently, but the carrier plans increase that number to 150 before the year ends.

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Notes:
  1. FCC approves AT&T’s 2.3 GHz WCS spectrum plan, FierceWireless, October 17th, 2012 []
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