T-Mobile Getting $1 Billion Worth of Spectrum from AT&T

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The FCC has given its approval to a huge transfer of wireless spectrum from AT&T and T-Mobile. This is costing T-Mobile nothing, but will significantly aid in its plans to offer 4G LTE service next year.

T-MobileAT&T isn’t doing this out of the goodness of its heart. Last year, it attempted to buy its smaller rival, and to get it to agree promised to compensate T-Mobile for lost business and customers if the deal didn’t go through. Part of this was about $1 billion worth of spectrum in the AWS bands.

When that proposed deal collapsed in December in the face of mounting disapproval from U.S. government agencies, AT&T was obligated to make this transfer. And now the FCC has put its imprimatur on it.

Bring on 4G LTE

T-Mobile is getting mobile spectrum in 128 Cellular Market Areas (CMAs), including 12 of the top 20 markets. The carrier has big plans for this bounty. Neville Ray, T-Mobile’s chief technology officer, said “Securing this additional spectrum was a key catalyst for our plans to launch LTE in 2013 and is therefore good news for our customers.”

Going forward, the company says it will invest $4 billion on network modernization to improve existing voice and data coverage, and broadly deploy LTE in 2013. As it happens, AT&T is picking up the cost for much of this too — in addition to the AWS spectrum, it had to give T-Mobile $3 billion in cash.

T-Mobile vs. Verizon

T-Mobile is still trying to get its hands on more spectrum for its 4G efforts. Specifically, it wants the FCC to prevent Verizon from buying some AWS spectrum from cable companies. T-Mobile is accusing Big Red of buying this simply to prevent its smaller competitor from fully deploying LTE.

In some businesses, a big company buying a resource to block a rival from having it is fine. But the U.S. government treats wireless spectrum as a limited natural resource that must be used for the benefit of American citizens. T-Mobile is arguing that Verizon has no intention of using its current (and potentially growing) stockpile of AWS spectrum for anything but preventing competition.  

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