AT&T buys NextWave spectrum hoping to create a new 4G band

AT&T may have just solved the problems that have plagued its Wireless Communications Services (WCS) spectrum, rendering the airwaves worthless since they were first auctioned in 1997. It plans to acquire NextWave Wireless, the next largest holder of WCS licenses, which would remove the primary obstacle to turning those 2.3 GHz airwaves into a viable 4G band.

AT&T will pay $25 million for the spectrum plus a possible contingent payment of up to $25 million, which is paltry. But in a separate deal with shareholders it has agreed to take over NextWave’s $600 $550 million in debt. In exchange AT&T will get WCS licenses covering 210 million people. To understand the implications of the deal, you first have understand why WCS is such a problematic band.