In a move that could address most of AT&T's (NYSE:T) spectrum concerns, the FCC Chairman, Julius Genachowski, has given his approval for a plan that could lift restrictions and make the WCS spectrum bands conducive for wireless broadband services such as LTE. The rest of the FCC board needs to sign off on the proposal before the so far useless bands can be put to any use. But the fact that the Chairman himself is pushing AT&T's request through the commission seems like a major coup for the wireless carrier that had only last year seen its T-Mobile acquisition attempt thwarted by the same regulatory body.
AT&T innovates to solve spectrum crunch
Having learned from the T-Mobile debacle however, AT&T has been targeting smaller deals or acquisitions to meet its spectrum needs. Over the past two 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.
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.
It is in this light that the FCC Chairman's recent decision to put his weight behind the plan that AT&T and Sirius XM (NASDAQ:SIRI) co-submitted to tackle the interference issues is very significant. If the proposal is approved by the FCC, which seems very likely now, AT&T could find the answer to its spectrum crunch situation and get its hands on enough spectrum for its long-term LTE plans. 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 as well. Both the WCS proposal and the spectrum acquisitions will together give AT&T an 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 the regulatory approvals it needs. But it is clear that the carrier needs to 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 a LTE network available to more than 230 million Americans in 371 markets across the U.S. By the year-end, Verizon expects to cover around 260 million people in more than 400 markets across the country. In comparison, AT&T's LTE network covers about 80 million Americans presently and the carrier plans increase that number to 150 before the year ends.
Disclosure: No positions.