AT&T announced today that it will acquire NextWave Wireless for approximately $600 million in order to boost its spectrum holdings and, ultimately, its 4G LTE network.
NextWave owns spectrum licenses in the Wireless Communication Services (WCS) and Advanced Wireless Service (AWS) bands. At this point, WCS spectrum is not used for mobile Internet purposes because of rules intended to avoid interference with satellite radio users in adjacent bands.
In June, AT&T and Sirius XM submitted a joint proposal with the Federal Communications Commission that included a plan to protect satellite users while also allowing mobile Internet access to WCS spectrum for the first time.
AT&T said today that if the WCS proposal and its acquisition of NextWave are approved, AT&T will have an "alternative approach" to battling the spectrum crunch. AT&T said it would be able to start an initial deployment of WCS spectrum for its 4G LTE network in about three years.
Under the NextWave deal, AT&T will buy NextWave's equity and its outstanding debt for a total of $600 million.
The NextWave purchase is subject to approval by the FCC, and might also need approval from the Federal Trade Commission and Justice Department, AT&T said. The deal is expected to close by year's end.
AT&T is not the only wireless carrier trying to gain FCC approval of a spectrum deal. In January, Verizon Wireless announced plans to purchase 122 Advanced Wireless Systems (AWS) spectrum licenses from SpectrumCo, LLC, a joint effort from Comcast, Time Warner Cable, and Bright House Networks. The companies also agreed to offer each others' services via quad-play packages.
Verizon later said it would sell the 700-MHz spectrum it purchased in the A and B blocks back in 2008, as well as purchase and swap spectrum in the AWS band with T-Mobile - but only if the cable deal is approved.
Verizon's plans have drawn fire from rivals and members of Congress, who are concerned that the carrier will have too much control over the airwaves.
As more and more consumers pick up data-intensive devices like smartphones and tablets, wireless carriers have been begging for access to more spectrum so their networks do not become overloaded. The general consensus is that things work fine now, but could become more dire in the coming years - particularly as carriers switch over to faster, more bandwidth-hungry 4G LTE networks. How best to allocate available spectrum, however, is the big question, with carriers, Congress, and the FCC all trying to reach a workable solution.
One way AT&T hoped to boost its spectrum holdings was by purchasing T-Mobile, but that plan went down in flames last year after it was rejected by the FCC and DOJ for being anti-competitive. After that deal went south, AT&T had to hand over some of its AWS spectrum to T-Mobile as part of a breakup fee.
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