AT&T Acquiring & Shifting 2G Wireless Spectrum to Support LTE Network Buildout

AT&T has taken two major steps to gather additional wireless spectrum to build out its Long Term Evolution (LTE) network  over the next five years.  AT&T has repeatedly stated that it will soon run out of the necessary airwaves to adequately meet the wireless demands of its customers if it doesn’t get more spectrum.  The company made two announcements last week to gain more spectrum.

1.  On Aug. 2, AT&T agreed to acquire NextWave Wireless, a failing carrier with spectrum that the Federal Communications Commission has been trying to repurpose for years.

The plans for the NexWave LTE spectrum are also a ways off. While NextWave is in dire financial straits, the use of its spectrum for LTE data services has yet to be approved by the FCC. However, the owner of the adjacent spectrum, Sirius XM and AT&T filed a joint proposal that would clear up a number of engineering issues and as a result would open the 2.3GHz Wireless Communications Service (WCS) to use as an LTE data band. The FCC filing outlined a number of limitations on WCS operations that would prevent AT&T’s WCS operations from interfering with Sirius XM’s audio services.

AT&T bought NextWave at the bargain-basement price of $25 million, plus a contingent payment of about $25 million plus cash and other assets to pay off NextWave’s debt, for a total of $600 million. NextWave originally bought the WCS spectrum in 1997, but was involved in a protracted legal battle with the FCC after NextWave declared bankruptcy and defaulted on its payment for the spectrum. NextWave got the rights to the spectrum in 2004, but has been unable to use the spectrum because of the potential for interference with Sirius XM.

2.  In an Aug. 3 FCC filing, AT&T announced that it would phase out its 2G data network by the beginning of 2017.  This  will enable the company to free up spectrum for added capacity on its 3G and LTE mobile Internet network. 

“Throughout this multi-year upgrade process, we will work proactively with our customers to manage the process of moving to 3G and 4G devices, which will help minimize customer churn,” the company said in the filing.

As of June 30th, roughly 12 percent of AT&Ts contract customers were still on its 2G network, which is primarily designed for voice and text messages, with relatively low data speeds.  An AT&T spokesperson told eWEEK that AT&T will be working with customers who are still using 2G services to provide options that will meet their needs. AT&T has relatively few customers who currently depend on 2G data, and that number is expected to diminish through attrition by 2017. AT&T no longer sells 2G devices.  By freeing up 2G spectrum, AT&T will have more space available for LTE, in much the same way that Sprint is phasing out its iDEN spectrum so it has room for LTE. Currently, it’s unclear which of its services AT&T considers 2G and plans to shut down. ( eWEEK questions to the AT&T spokesperson did not provide details as to what services in AT&T’s spectrum are planned for shutdown when support for 2G ends.)

GSM, which is what AT&T uses for its voice technology is the international standard and is used throughout the world, is technically a 2G standard, but the 2G data standard that AT&T uses is General Packet Radio Service (GPRS), which is not widely used although it is widely available on the AT&T network.

 

For more information, please see this eWEEK article:

http://www.eweek.com/c/a/Mobile-and-Wireless/ATandT-Preparing-for-Major-Wireless-Spectrum-Shift-Within-Five-Years-490107/?kc=EWKNLEDP08072012B

Comment & Analysis

 

Key point is that AT&T is phasing out its cash cow 2G network (mostly used for voice, texts & email) by 2017.  Market Research firm Infonetics Research states: “Mobile broadband demand will push mobile services to $976 billion by 2016; SMS, voice will persevere.”
AT&T has upgraded the software of its nationwide mobile broadband network with HSPA+ with enhanced backhaul, which enables speeds up to 4x faster than AT&T’s 3G-HSPA mobile broadband speeds. AT&T is evolving to even faster 4G speeds with the launch of AT&T’s 4G LTE technology in select markets.
“The mobile world is undeniably shifting from voice to data, as mobile operators migrate as many subscribers as they can to data service plans and smartphones. Already in North America and Asia Pacific, mobile operators derive over 40% of their mobile revenue from mobile broadband and messaging. But, while mobile broadband is no doubt the fastest growing revenue stream for operators, mobile messaging and voice aren’t dead just yet, not by a long shot,” according to Stéphane Téral, Infonetics Research’s principal analyst for mobile infrastructure and carrier economics. 

Mr. Téral adds: “The prophecies of doom for mobile operators’ SMS/MMS cash cow are being overplayed. Despite the popularity of over-the-top messaging applications like Apple’s iMessage and WhatsApp, our data shows SMS growing every year from 2012 to 2016, delivering a cumulative $1 trillion in operator revenue during those 5 years. And over that same period, voice revenue will decline only slightly, still making up a sizable chunk of operator revenues.”

 

Another issue with the spectrum swap from 2G to 3G/4G is timing.  Won’t AT&T need a lot more spectrum for 3G/4G and even LTE Advanced before 2017?

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

*

 
 

 

Recent Posts