AT&T Inc. will buy licenses allowing it to expand wireless services or enable video broadcasts in much of its coverage area.
The deal to acquire all the licenses held by Aloha Partners LP in the 700-megahertz range will give AT&T 12 MHz covering 196 million people in 281 markets. It will boost AT&T's presence in most of the top 100 markets in the United States and make it the largest owner of licenses in the 700-MHz to 800-MHz range of the spectrum, a claim Aloha held before agreeing to sell to AT&T.
America's largest wireless carrier could acquire still more licenses in January when the Federal Communications Commission is scheduled to auction a large chunk of the spectrum used by analog television. When broadcasters must switch completely to digital television in 2009, they no longer will need most of the spectrum they have used.
AT&T could use the new licenses, all reserved for third-generation network services, either to expand wireless phone and data services or to add video content for mobile phones.
Company spokesman Michael Coe said the company has not decided what it will do with the new spectrum. Some of it will be available immediately after the deal closes in six to nine months, the rest in 2009, he said.
How the company decides to use the additional spectrum will largely determine how the purchase affects wireless users, though people with Apple Inc.'s iPhones, for example, aren't likely to benefit because those are 2.5-generation devices.
AT&T already has begun exploring delivering video over wireless devices. Earlier this year, it announced a partnership with MediaFLO, a Qualcomm Inc. subsidiary, to roll out broadcast content. No date or details for that offering have been announced.
Providence, Rhode Island-based Aloha, was founded by Charles Townsend and Amos Hostetter, who each made a fortune in the wireless and cable businesses in the 1990s. Aloha bought most of the 700 MHz licenses it has sold to AT&T during auctions in 2001 and 2003.
Scott Wills, president and chief operating officer of an Aloha subsidiary, said the company initially bought the licenses thinking wireless broadband would be the best use for the spectrum.
Since then, however, mobile television has emerged as a promising use, he said.
Aloha launched early trials of mobile broadcasting in 2005, and interest in the spectrum has been heated as numerous companies, including some outside the telecommunications business, have shown interest in the upcoming FCC auction, which could raise $15 billion (10.69 billion EUR).
Patrick Comack, a Zachary Research Investment analyst, said AT&T probably will buy up as much of the spectrum as it can at good prices. The deal with Aloha is "a steal," he said.
"It's an absolutely incredible purchase," said Comack. "They really leapfrogged everyone else."
The deal allows AT&T to begin using the 700 MHz frequency right away, Comack said.
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