The remaining frontier is in the sky, as you might guess, and AT&T’s buyout of Aloha’s chunk of 700 MHz spectrum in advance of January’s government auction is a strategic move to conquer that frontier.
AT&T announced today that they will pay about $2.5 billion for Aloha Partner’s 12 MHz of spectrum, which covers about 196 million people in the United States, or 72 of the top 100 markets and all of the top 10 markets.
The company says demand for mobile services, like voice, data, and video spurred their interest in the spectrum, but the purchase may signal some swift strategy to get around the government auction, along with rules and rivals associated.
With the purchase, Om Malik notes, they’ve just doubled and in some cases tripled the going rate. That leaves the question: Why would AT&T want to raise the reserve auction price with such an aggressive acquisition?
Well, it’s a slick move in that it offers a fair amount of control of the market hitherto under the fickle thumb of the government. They set the price, and limit the bidders.
That there are private licenses of this band of spectrum available sans FCC auction might be a surprise in itself. Chalk that up to said fickle thumb of waffling administrations.
Qualcomm has another huge chunk of spectrum unbeholden to auction rules, but one might have trouble stealing that away from them. What’s left after AT&T buys up Aloha’s share, is for (perhaps) Google, Verizon, and Apple to fight over and pay top dollar – and for Verizon to whine about the rules after the fact.
However, as AT&T said in the press release about the purchase, it doesn’t cover over a quarter of the available market. The rest of it is right over Middle America, says Harold Feld of Media Access Project, which could mean that AT&T is hedging its bets.
Feld told Murdok,”Either it means AT&T has decided to chicken out of the auction and try to acquire the spectrum they want in the secondary market, or they’re gearing up to be a major participant in the auction.”
And in a way, it could mean both. The company grabs three-quarters of the spectrum it needs on its own terms for its own price, and grabs the remaining spectrum at auction to fill in the holes in coverage, which it has just set a price on.
Pretty shrewd, wouldn’t you say?
We’ll have to wait until January to find out for sure, though. AT&T couldn’t comment on whether or not they plan to participate in the auction. But that would seem like an awful waste of lobbying money, and a waste of all the effort sassing Google.
