AT&T (NYSE:T) and Sirius XM made a joint proposal to the FCC regarding the 2.3 GHz Wireless Communication Service (WCS) band that would open up a portion of it for LTE use, giving AT&T another band for its 4G efforts.
The proposal would change the rules governing WCS spectrum while protecting Sirius XM from interference. AT&T is the largest holder of WCS spectrum, followed by spectrum holding company NextWave Wireless. The proposed changes could give AT&T the ability to deploy LTE covering roughly 40 percent of the country.
In May 2010 the FCC voted unanimously to approve an order that changes rules governing the 2.3 GHz WCS band. The FCC said the spectrum can be made available for mobile broadband use, and mandated that rules be put in place to avoid interference issues. However, AT&T and many others took issues with the new rules.
"Our concern, quite simply, was that the newly-adopted service rules did not permit the deployment of an efficient mobile broadband service in the band, something that AT&T deemed vital for the spectrum to be fully and effectively utilized," Joan Marsh, AT&T's vice president of federal regulatory affairs, wrote in a blog post.
An FCC spokesman did not immediately have a comment.
According to an analysis by Credit Suisse analyst Jonathan Chaplin, currently there is 30 MHz of WCS spectrum broken into two 5x5 MHz paired channels (the A and B Block) and two 5 MHz unpaired channels (the C and D Block). The C and D Block is next to the spectrum used by Sirius XM. AT&T owns 12 MHz on average of WCS across the country.
Under the new proposal, AT&T would not use the C and D Block spectrum for mobile service in exchange for more liberal rules on the A and B Block spectrum, thus allowing AT&T to deploy FDD-LTE service in that band. AT&T would essentially give Sirius XM a so-called guard band to block against interference.
Additionally, AT&T proposed extending the buildout requirements on the WCS band (currently licensees must serve 40 percent of a license area's population within 42 months, and 75 percent within 72 months).
Chaplin estimates that if the FCC adopted the proposal, it would take three to five years for AT&T to make the spectrum usable. He also wrote in a research note that, if the proposal is approved, the WCS spectrum would give AT&T equal spectrum footing in LTE with Verizon Wireless (NYSE:VZ). "We believe AT&T will act to close the gap [with Verizon] as quickly as possible. WCS doesn't really narrow the gap because of the time it will take to deploy; however, starting the process now provides a path to using this spectrum at some point in future," he wrote. "AT&T probably has to buy NextWave's WCS licenses, which cover the Northeast and much of the upper Midwest, before trying to deploy this spectrum."
TMF Associates analyst Tim Farrar noted AT&T's proposal could create downlink connections in both halves of the WCS A and B Blocks. "In other words, AT&T would gain yet more downlink spectrum, in addition to the Qualcomm (NASDAQ:QCOM) 700 MHz spectrum that it acquired last year 'to allow support of asymmetrical data bandwidth allocation,'" he wrote. "Of course, the obvious unanswered question is where would the uplink spectrum to be paired (under the proposed FDD configuration) with both the Qualcomm and WCS A&B Block spectrum come from?"
- see this FCC filing (PDF)
- see this AT&T blog post
- see this ExtremeTech article
- see this TMF Associates blog post
Analysts: Including acquisitions, AT&T thinks it has spectrum for next 5 years
FCC frees up 25 MHz of spectrum for mobile broadband
NextWave staggers toward bankruptcy despite spectrum holdings