The deal represents the second acquisition that AT&T has undertaken recently that will give it additional 4G spectrum. AT&T in December 2010 expanded its long-term evolution (LTE) downlink bandwidth by acquiring Qualcomm’s defunct MediaFlo mobile TV service.
The addition of T-Mobile’s spectrum will allow AT&T to immediately gain network capacity and to gain a better competitive position against Sprint Nextel and Verizon Communications in the key 4G area. The 4G segment represents a fast-growing portion of the wireless market in North America. Subscriptions to 4G in North America took off in 2010, and the service has become a competitive differentiator for AT&T and competitor Sprint.
AT&T has two options for how to use the T-Mobile spectrum. First, it could continue running the two companies separately, since the two have very distinct subscriber bases.
However, IHS believes AT&T is more likely to take another approach and use T-Mobile’s 1700 band spectrum for its LTE 4G service. This move will require the consolidation of the companies’ 3G networks, migrating T-Mobile 3G customers to AT&T's legacy network, as well as offering the option of a discounted upgrade to T-Mobile's existing 3G customers who don't have the devices to support AT&T's bands. This process could be lengthy.
For further information: www.ihs.com.