AT&T snaps up Aloha's 700 MHz Licenses for $2.5bn

U.S. telecommunications corporation AT&T announced on Tuesday that it has agreed to pay about $2.5 billion in cash to buy the wireless airwave licenses of privately held Aloha Partners, which is the largest holder of licenses in the 700 megahertz frequency band.

The move would put the American telecom giant ahead of rivals like Verizon and Google, who reportedly have expressed an interest in a hotly anticipated wireless auction that is slated to happen sometime in January 2008.

After obtaining the spectrum licenses in the 700-MHz range from Providence, Rhode Island-based Aloha, AT&T will get spectrum coverage of 196 million customers in 281 markets, including the 10 largest and 72 of the top 100 U.S. markets in the 700-megahertz frequency band.

The move will also make AT&T the largest owner of licenses in the 700-MHz to 800-MHz range of the spectrum, which Aloha used to claim before selling it to the nation's largest phone company.

"Customer demand for mobile services, including voice, data and video, is continually increasing," AT&T senior executive Forrest Miller said. "Aloha's spectrum will enable AT&T to efficiently meet this growing demand.”

AT&T would use the new spectrum to deliver the video or two-way communications, like voice or text messaging to mobile-phone users. According to AT&T spokesman Michael Coe, the spectrum licenses in the 700-megahertz frequency band, the same general airwaves that the Federal Communications Commission plans to sell in late January, will let the company add capacity to its network in areas where it already provides coverage.

"More and more people are using our network and making more calls, sending more data and watching more video," Coe said. "The needs for these services continue to increase, and this spectrum helps us."

The San Antonio, Texas-based AT&T is Apple’s exclusive U.S. carrier partner for revolutionary iPhone, an all-in-one cell phone/iPod/pocket computer. The telecom company hopes to receive necessary government approvals soon and expects to complete the acquisition within six to nine months.

On September, 11, six years after the 9/11 terrorist attacks, the FCC had issued regulatory guidelines to handle the auction of the 700 MHz band radio spectrum. The new rules are designed to make it easier to locate people calling the 911 emergency number from a cellphone.

The 700-MHz spectrum would be able to carry signals that have the capability to penetrate concrete and beam through walls and floors. Companies who have expressed an interest include telecom giants like AT&T and Verizon Communications (VZ) as well as Google, the Internet search company.

The auction would be conducted for the purpose of handling the recent upsurge in wireless communication. The auction scheduled for January 2008 is expected to raise as much as $15 billion for the U.S. Treasury. However, the lobbying has already begun.

Last month, the Commission attached open-access requirements to one of the spectrum blocks to be auctioned, the large, 22-megahertz Upper 700 MHz C Block, as part of its controversial 700 MHz decision.

FCC’s decision has shaken up the wireless industry. Whereas the Verizon Wireless is abruptly opposing Commission’s auction guidelines, the other high-tech companies like Google Inc. and eBay Inc.'s Internet phone unit, Skype, had been aggressively pushing the FCC to adopt the conditions.