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AT&T's T-Mobile deal shows importance of spectrum

Stephen Lawson | March 22, 2011
More frequencies to carry faster services are key to mobile success, and the T-Mobile buy will give AT&T a spectrum advantage

That would put the new carrier far ahead of both Verizon (with 85-90MHz) and Sprint (with 50-55MHz) in an average market, according to Marshall's estimate. Only Clearwire, with 120-150MHz, might rival the combined company in some areas. And Clearwire lacks the capital to take advantage of that spectrum.

If the acquisition is approved and AT&T takes control of T-Mobile, it plans to consolidate the 3G traffic of both carriers into a frequency band around 1900MHz. This will free up their AWS (Advanced Wireless Services) frequencies for LTE, Stankey said. Combining the AWS spectrum with some of T-Mobile's frequencies will create a band 20MHz wide that can be used to bring LTE to many rural and suburban areas, he said.

Meanwhile, AT&T's spectrum in the 700MHz range, which is prized for long reach and good in-building penetration, exists mainly in cities and will be used for LTE there, the company said. AT&T also continues to pursue an acquisition of a band in the 700MHz range that Qualcomm has used for its FLO TV service.

The scarcity of spectrum is in some ways a question of timing, according to Stankey and others in the industry. Though carriers may have enough spectrum to build out their networks over the next few years, there is a need for urgent action to make more frequencies available because it can take 10 years or more to translate spectrum into services, said Charla Rath, vice president of policy development at Verizon Wireless, who spoke on a panel before the CTIA trade show on Monday.

For spectrum-rich Clearwire, the T-Mobile-AT&T deal is bad news in the short term because it momentarily satisfies the need for spectrum at two carriers who were in need of it, Marshall said. But the market for spectrum in the medium and long term is still strong, he said.

AT&T sees a need for more frequencies in the future to meet explosive growth in demand for mobile data over the coming years. The carrier's mobile data volume has grown 8,000 percent in the past four years, and the 2010 demand is expected to grow by eight to 10 times by 2015, according to AT&T Chairman and CEO Randall Stephenson.

"There's just going to be a constant need for additional spectrum," Stephenson said.

 

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