AT&T acquires 700 MHz airwaves from Aloha posted by Joe on October 10th, 2007 - 9:00 am | 700 MHz spectrum, AT&T
Well, this is going to shake up the 700 MHz spectrum auction in January. AT&T, knowing that it would have to pay a premium if in a bid against fierce competitors like Verizon and Google, has struck a $2.5 billion deal with Aloha Partners. This is $2 billion less than the reserve bid set by the government, leaving AT&T plenty of money left over to take part in the auction. However, this move gives them a clear upper hand in their dealings. As much as we dislike AT&T in principle, they made a very astute move with this one.
The spectrum covers 196 million people in 281 markets, including the top 10 in the U.S. So this isn’t just posturing; it’s really going to help them deliver better service to their customers, especially their metropolitan ones. Of course, they themselves wouldn’t comment on how this would affect their auction status.
“Customer demand for mobile services, including voice, data and video, is continually increasing,” said Forrest Miller, AT&T group president, corporate strategy and development. “Aloha’s spectrum will enable AT&T to efficiently meet this growing demand and help our customers stay connected to their worlds.”
However, analysts expect that this will mean AT&T will go for the smaller, closed-access portions of the spectrum that were supposed to be available for the bidding by the smaller, regional guys like MetroPCS, Leap Wireless, or even Alltel.
Two parties are not going to be happy with this one: Verizon and the government. True, it might allow Verizon to purchase the spectrum for a lower price, since one of their major competitors might not be bidding as much as originally thought. However, it puts the pressure on Verizon to acquire the spectrum, even if requires open access. They can’t afford to fall behind AT&T.
The government, of course, won’t be happy because they won’t be raising as much money. An enormous bidder just went from potentially bidding between $5 and $9 billion (estimates, of course) to maybe bidding $2 billion for smaller chunks of the spectrum.
Regional cell companies can’t be happy, either, because there’s no way they can bid against AT&T for the smaller chunks of the spectrum. So if you were expecting better service in the future from any of those regional brands, you’re probably out of luck. Looks like the big boys — AT&T, Verizon, Google (maybe), Sprint, and T-Mobile — will take home most of the auction.
We’re eagerly awaiting Verizon’s response to this one.
[Wall Street Journal]