AT&T’s Qualcomm Deal Aims To Improve 4G Growth

Under pressure to offer better wireless service for iPhone customers, among others, AT&T has invested $1.925 billion to acquire Qualcomm’s spectrum licenses in the lower 700-MHz frequency band.

AT&T expects the move to help the company provide an advanced 4G mobile broadband experience in the coming years. But could it ward off Verizon Wireless as rumors continue swirling that the carrier will pick up the iPhone in the first quarter of 2011?

“With the fact that the Qualcomm spectrum includes significant assets in New York, Boston, Philadelphia, Los Angeles, and San Francisco — the first and last of which have been particularly sore spots for iPhone users — you can see the strategy behind the deal,” said Charles King, principal analyst at Pund-IT.

“But it isn’t just the iPhone — the continuing success of the iPad and the likely emergence of other 3G- and 4G-enabled tablets will put additional strain on wireless networks,” he added. “Buying existing spectrum from Qualcomm, while expensive, should help AT&T become more quickly competitive with Verizon and other vendors.”

Discontinuing FLO TV

Qualcomm uses the licenses to support the service business of its FLO TV subsidiary. The sale follows Qualcomm’s previously announced plan to evaluate strategic options for FLO TV. Qualcomm expects the FLO TV business and network will be shut down in March 2011.

The spectrum covers more than 300 million people nationwide. Twelve MHz of Lower 700-MHz D and E block spectrum covers more than 70 million people in five of the top 15 U.S. metropolitan areas: New York, Boston, Philadelphia, Los Angeles, and San Francisco. And six MHz of D block spectrum covers more than 230 million people across the rest of the U.S.

As part of its longer-term 4G network plans, AT&T said it plans to deploy the spectrum as supplemental downlink, using carrier-aggregation technology. This…

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