Spectrum: Not Reason Enough for ATT Merger

Posted by Sam Churchill on

AT&T is pitching the T-Mobile merger proposal with a carrot of more LTE coverage. But T-Mobile owns no 700 MHz frequencies itself, and the company is currently using most of their AWS frequencies for HSPA+. Skeptics might say it’s a pitch to sell the merger rather than offering anything substantial.

AT&T is sitting on $1.3B in AWS spectrum. Unused. They don’t need a merger to expand LTE coverage. It’s a great merger pitch. But it’s more sizzle than steak.

Engadget notes that the slide deck (pdf) accompanying AT&T’s press conference this morning, shows that the company is apparently interested in augmenting its 700MHz LTE spectrum with T-Mobile’s AWS coverage.

T-Mobile is already deploying HSPA+ in their AWS frequencies.

T-Mobile says their HSPA+ reaches more than 100 major metropolitan areas and more than 200 million people nationwide. AT&T says the merger would the company deploy LTE to 95 percent of the American population.

But AT&T, under Cingular brand, already spent $1.3 billion, for (still unused) AWS frequencies. T-Mobile may have excess AWS spectrum in New York, Chicago, Phoenix, LA, and Seattle, where they have 30MHz. Some might be re-purposed to LTE.

AT&T doesn’t say how much of T-Mobile’s spectrum would be used for LTE, which can load more users onto one tower. That’s a big economic incentive. The LTE pitch is faster speed. The catch is higher prices.

While load balancing between T-Mobile and AT&T will help, the specter of spectrum shortage remains. They’ve got two immediate options, Clearwire (at 2.6 GHz) and ICO/Terrestar (at 2.1 GHz). Lightsquared, with GPS interference issues (at 1.6 GHz) is looking increasingly problematic.

Unfortunately for AT&T, AWS in the United States isn’t globally interoperable. Only Sprint’s 2.5 GHz spectrum fills that 4G niche. AWS works in Latin America though.

With the T-Mobile parent now out of the picture, some might argue that the need for a globalized 2.6 GHz LTE system is now less urgent for T-Mobile USA.

Why strengthen a competitor like Sprint? Perhaps a merged AT&T/T-Mobile is now more likely to seek out 2 GHz satellite.

Verizon Wireless, 45% owned by European-based Vodaphone, may be another story. An LTE world phone, at 2.6 GHz, might be just the ticket for them.

Posted by Sam Churchill on Monday, March 21st, 2011 at 9:01 am .

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