T-Mobile Gets AWS Spectrum from Breakup

The FCC has approved the transfer of AWS spectrum from AT&T to T-Mobile (pdf). This was part of the breakup deal between AT&T and T-Mobile. AT&T was obligated to give wireless air waves and $3 billion cash to T-Mobile USA after AT&T’s $39 billion plan to buy T-Mobile USA failed late last year.

T-Mobile applauded the FCC approval:


“This week, the FCC approved the transfer of AWS spectrum licenses from AT&T to T-Mobile USA, agreed to as part of the breakup of the proposed merger between the two companies. This transfer provides T-Mobile with a large package of valuable AWS mobile spectrum in 128 Cellular Market Areas (CMAs), including 12 of the top 20 markets.

“We applaud the FCC for acting swiftly to approve the transfer of these spectrum licenses,” said Neville Ray, chief technology officer, T-Mobile USA. “Securing this additional spectrum was a key catalyst for our plans to launch LTE in 2013 and is therefore good news for our customers.”

When their proposed merger was sunk by Justice and the FCC, AT&T agreed to pay T-Mobile a cash payment of 3 billion dollars and the AWS spectrum, giving T-Mobile 128 Cellular Market Areas, including 12 of the top 20 markets. T-Mobile will use their new AWS spectrum to introduce LTE services nationwide.

Thank you, AT&T.

Carriers are forcibly migrating everyone to LTE because one tower can serve twice as many people. Speed is the sizzle. AT&T’s Breakup Fee will be largely tax deductible which may please some Republicans in Congress.

Meanwhile, Verizon announced in November it was buying Nationwide AWS Spectrum from Cable operators for $3.6 billion, taking out AT&T’s plan “B”. Cox Communications also agreed to sell its 20MHz slice of wireless spectrum to Verizon Wireless for $315 million. As part of the deal, Verizon and Cox will resell each others residential and commercial services.

In an effort to sweeten the deal for the FCC, Verizon has offered to sell a chunk of (unused) “A” and “B” block spectrum in the lower 700MHz band in exchange for approval of the AWS SpectrumCo deal.

So far most cellular companies aren’t biting. T-Mobile argued that Verizon doesn’t need more AWS spectrum because it hasn’t used the AWS spectrum it already owns. Sprint, DirecTV and seven other groups are asking the FCC to stall its review of Verizon’s $3.9 billion AWS purchase because of problems accessing documents about the transaction.

Steve Berry, the president of the Rural Cellular Association, said Verizon’s cable deals would have an “insidious and disastrous effect on competition“, transfering “at least 20 MHz of prime, unused, and nearly nationwide spectrum into the hands of a carrier that already holds as much as 44 MHz of unused spectrum in many markets.

The Verizon-SpectrumCo deal is subject to approval by the FCC and the companies did not give a timetable for when the deal is expected to close. If Verizon does get approval for the deal, the carrier may combine the spectrum with its other AWS holdings for 20 MHz channels, which coupled with LTE-Advanced technology could give it significant throughput gains.

While AT&T could benefit by buying more “B” block spectrum in the 700 MHz band, it would likely gall the operator to tacitly approve of the purchase of nationwide AWS spectrum to its biggest competitor.

AT&T still needs spectrum for LTE. All eyes are now on Dish Networks which has 40 MHz of MSS spectrum in the 2.1 GHz band.

But Dish CEO Joseph Clayton said recently that they’d prefer to keep the spectrum and work with an existing mobile partner, such as T-Mobile or Sprint.

Serious negotiations with Dish may begin when (and if) the FCC approves of the AWS spectrum purchase by Verizon. But first the FCC must rule to allow Dish to use the spectrum terrestrially.

Sprint plans to cover 123 million POPs with LTE by year-end, and 250 million POPs by the end of 2013. That year-end 2012 coverage target is less than half of what Verizon is promising and less than AT&T Mobility’s projected 150 million POPs. T-Mobile plans to launch LTE service in 2013 in 75 percent of the top 25 markets using AWS spectrum.

Sprint says it will keep its unlimited data plan with LTE iPhones and might even fall back to “China Mobile mode” – TD-LTE at 2.6 GHz.

Clearwire has announced that New York City, San Francisco, Los Angeles, Chicago and Seattle will be among the 31 cities where the company will launch its TDD-LTE network during the first half of 2013. Initial market launches are scheduled for early 2013, with remaining markets planned for mid-2013.

Growing demand for data should be no problem if Verizon gets its AWS spectrum from cable operators and T-Mobile utilizes their spectrum from AT&T. Sprint has spectrum to burn at 2.6GHz. AT&T is up the proverbial creek. They might benefit from Dish’s 40 MHz of 2.1 GHz – but would it work on an iPhone 3?

Probably not, huh.

See Dailywireless: Verizon Spectrum Deal Gets a Hearing, T-Mobile USA Launching LTE, Verizon AWS Spectrum Purchase Opposed, Verizon Buying Nationwide AWS Spectrum from Cable, Verizon-Cable Deal: Too Cozy?, Cross Marketing of Verizon & Cable Begins, AT&T: On the Couch, iBooks: Cellular’s Big Bang?

Posted by Sam Churchill on .

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