AT&T: On the Couch

During AT&T’s quarterly earnings call, CEO Randall Stevenson blasted the FCC over its leadership in making additional spectrum available to carriers, reports ReadWriteWeb.

Stevenson said that because of AT&T’s spectrum crunch it will be forced to raise prices and take additional actions against the highest data users.

Stevenson’s remarks come as AT&T announced that it sold 9.4 million smartphones including 7.6 million iPhones in the the fourth quarter of 2011.

AT&T is complaining about lack of spectrum. Who do they have to blame for that?

Verizon and Sprint acquired spectrum. AT&T didn’t.

AT&T wanted to buy T-Mobile for $39 billion. It smacked of hubris. AT&T accidentally let it slip, in a filing to the FCC (pdf), that the company was unwilling to spend the $3.8 billion it would cost to push LTE coverage from 80% of the country to 97% — yet the same argument was used to explain their need for a $39 merger with T-Mobile.

If AT&T wanted spectrum they could have bought it for one-tenth the cost – as Verizon did with cable’s AWS spectrum. The $3.6 billion Verizon/Cable deal valued the spectrum at $0.69 per MHz-POP (the number of people covered by each megahertz).

In psychoanalytic terms, Stevenson’s remarks resemble a phenomena known as transference. The facade is falling.

AT&T has to buy 2.1 GHz MSS spectrum from Dish Networks or buy 2.6 GHz from Sprint. There is no other option.

If AT&T goes with Dish:

  • AT&T would have to pay top dollar. Dish says they’re not after a quick buck, they want a hedge against satellite tv. Dish, no doubt, is getting offers from T-Mobile and tech companies like Google.
  • AT&T may have problems getting LTE-based iPhones to work on the odd, 2.1 MSS frequency and it will take them 2-3 years to build the network.
  • AT&T would have to spend $5B to construct 2.1 MSS infrastructure – and Dish doesn’t even have FCC approval (yet) for terrestrial ATC. T-Mobile might use their current AWS infrastructure. Way cheaper.

If AT&T goes with Sprint:

  • They could purchase 40 MHz from Sprint/Clearwire and offer wholesale partnerships with media companies.
  • They might offer TD-LTE iPhones, first as a Virtual Operator.
  • They would have to spend many billions building out their own dense 2.6 GHz network (and backhaul).

Clearwire and Sprint will offer TD-LTE devices and services this year. Huawei’s E589 personal hotspot uses TD-LTE and supports up to 10 Wi-Fi devices at once with compatibility for FD-LTE, UMTS and GSM. China Mobile’s TD-LTE iPhone will likely work on Clearwire’s network and the cross-compatibility would lower costs.

AT&T could also keep their powder dry and wait until unused television spectrum opens up. But can they afford to wait? Probably not.

AT&T blew it. They’re only human. The iPhone can’t solve their problems.

See Dailywireless: Verizon Buying Nationwide AWS Spectrum from Cable, Verizon-Cable Deal: Too Cozy?, Cross Marketing of Verizon & Cable Begins, iBooks: Cellular’s Big Bang?

Posted by Sam Churchill on .

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