Is AT&T a wireless spectrum hog?

AT&T is pinning its future on getting its hands on more wireless spectrum. But should regulators allow AT&T, which owns more wireless spectrum than any other wireless operator across the nation, to gobble up even more of this scarce resource? That's the big question that the Federal Communications Commission is grappling with as it scrutinizes the planned merger between AT&T and T-Mobile, which will transfer all of T-Mobile's spectrum to AT&T. The FCC is also in the middle of considering AT&T's plan to buy spectrum in the lower part of the 700MHz band of spectrum from Qualcomm.

Wireless spectrum is like valuable real estate, and what's going on right now in the wireless market is akin to a good old fashioned land grab. The last major wireless auction for the 700MHz band of spectrum, which was considered beachfront property, was only a few years ago. Unfortunately, for wireless operators all the good "property" has already been bought. And until the FCC can free up more spectrum for auction, the only way for operators to get their hands on new spectrum is to buy it.

In the top 21 markets in the U.S., AT&T has about 284 MHz more spectrum than its closest competitor, Verizon Wireless, according to data provided by Verizon. To put this in context, the FCC's National Broadband Report calls for an additional 500 MHz of spectrum to be made available for auction in the next decade to fulfill the needs of all wireless broadband providers. The FCC has proposed TV broadcasters to give up about 120 MHz in incentive auctions for wireless broadband within the next five years. And AT&T hasn't even touched about 832 MHz of new wireless spectrum in the top 21 markets. This spectrum, which sits in the AWS and 700MHz bands, will be used to build AT&T's 4G LTE network. The company is building the network and has plans to launch it commercially this summer with a target of reaching 70 million to 75 million potential subscribers by the end of this year. Verizon Wireless, which is also building a 4G LTE network using the AWS and 700 MHz spectrum, has about 918 MHz of this spectrum in the top 21 markets. Verizon launched its 4G wireless service in December, and it expects to serve 200 million people with the service this year. And by the end of 2013 it will be available to more than 285 million potential customers.
The 700MHz spectrum that AT&T and Verizon Wireless are using to build their LTE networks was the last bit of spectrum to become available. It had originally been allocated as analog TV spectrum. It was given back to the government after TV broadcasters were forced to start transmitting signals digitally to make their spectrum use more efficient. It's considered prime real estate in terms of wireless spectrum because the low frequency means that it can send data longer distances and penetrate buildings more easily than spectrum at higher frequencies.

AT&T and Verizon currently own more than 90 percent of the licenses for this spectrum in major cities throughout the U.S. And AT&T is hoping to add to its 700MHz coffers by buying an additional 12 MHz of 700 MHz spectrum that Qualcomm is selling.