AT&T Gets Heat on MediaFLO Spectrum

Cellular South, Dish Networks and the Rural Cellular Association are asking the FCC to block AT&T’s proposed $1.9 billion purchase of Qualcomm’s Flo-TV spectrum. The deal would transfer 11 licenses for lower block spectrum in the 700 MHz to AT&T, in key markets like New York, San Francisco and Los Angeles.

AT&T acquired 700 MHz spectrum from Hiwire in a $2.5 billion deal in October 2007, and the FCC’s 700 MHz auction in 2008. AT&T plans to combine that spectrum, with their 12 MHz from Qualcomm to deliver LTE service. But since the spectrum is not contiguous, AT&T hopes to delay their LTE rollout until new multi-carrier LTE technology is available.

Cellular South, Disk Networks and the RCA contend that the Flo-TV spectrum licenses would hurt competition (FCC filing). AT&T claims that the companies have failed to demonstrate any competitive harm that will occur.

Qualcomm sold its 700MHz US spectrum licences to AT&T for US$1.93 billion in December, 2010. Qualcomm owned 12MHz of the lower 700MHz D and E block spectrum (UHF TV channels 54 and 55), covering over 70 million people in several cities around the U.S., including New York, Los Angeles, and Boston. Block “E” (Channel 55) adjoined MediaFLO (on Channel 54).

In 2008, AT&T bid $6.6 billion to acquire an additional 227 B Block licenses during the FCC’s 700 MHz auction. In a number of places AT&T bought both the B and C block licenses in the Lower 700 MHz band, giving them double the bandwidth – 24 MHz total. Later, AT&T acquired 700 MHz spectrum from Hiwire in a $2.5 billion deal and Qualcomm’s unpaired MediaFLO licences for $1.93 billion for 12MHz of the lower 700MHz D and E block.

AT&T also bought Paul Allen’s 700 MHZ Vulcan Spectrum licenses in Washington and Oregon that he acquired in 2003, for an undisclosed price. Vulcan Spectrum’s A- block licenses, which also cover the Seattle and Portland areas, weren’t included in the proposed sale to AT&T.

AT&T’s total investment in 700 MHz spectrum is therefore $6.6B (from the FCC’s 2008 auction) + $2.5B (Aloha Partners purchase) + $1.9B (Qualcomm purchase), or a total of $11 billion. Not including Paul Allen’s spectrum.

AT&T is currently using none of their 700 MHz spectrum or their AWS spectrum purchased in 2006.

Verizon spent $9.4 billion acquiring nationwide 700 MHz coverage, mostly using the upper C block, which is a full 22 MHz wide. The “A” and “B” blocks were 12 MHz wide. In total AT&T and Verizon collectively acquired 70% of the available 700 MHz spectrum.

AT&T argues that purchase of the Qualcomm spectrum will help “ease the looming spectrum crisis,” and that AT&T plans to bond the Qualcomm spectrum with paired spectrum in its LTE network as soon as the standards and equipment using innovative supplemental downlink technology are available, which AT&T expects to occur by 2014.

Qualcomm’s spectrum covers approximately 300 million people across the United States. Dish Networks has suggested that if the FCC approves the transaction, it should do so under the condition that AT&T be required to divest the lower 700 MHz E block spectrum. AT&T says such a condition is unnecessary.

Related stories on DailyWireless include; FCC Finalizes Rules on 700MHz: Limited Open Access, No Wholesale Requirement, Qualcomm Buys Flarion, Joint Commecial/Muni Proposed for 700Mhz, AT&T’s WiFi TV, Hiwire Moves on Mobile TV, Mobile TV War at NAB, Small Ops Squeezed Out of 700MHz?, HiWire: 24 Mobile TV Channels, Rural Broadband Gets A Plan, Verizon Makes its Move for Universal Service Fund, The Smartest Guy in the Room, 700 MHz On The Line?, 700 Mhz Worth $28B, 4G Auctions, RUS Funding for 700 MHz, The 700 Mhz Club, Channel 54: Where are You?

Posted by Sam Churchill on .

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