Getting geared up for the 4G era, AT&T announced today that it has agreed to acquire 700MHz spectrum licenses from Qualcomm for $1.925 billion.
Qualcomm has been using the lower 700MHz frequency band for its Flo TV service, which provides broadcast programming to mobile handsets. The service is scheduled to be shut down in March.
According to the companies, Qualcomm owns 12MHz of the lower 700MHz D and E block spectrum, covering over 70 million people in several cities around the U.S., including New York, Los Angeles, and Boston. AT&T has also acquired Qualcomm's 6MHz of Lower 700 MHz D block spectrum, which caters to 230 million people across other areas in the U.S.
With that many people covered, AT&T could go a long way in asserting itself in the 4G market. The company said that the spectrum will play a key role in its 4G plans, acting "as supplemental downlink, using carrier aggregation technology."
The battle for prominence in the 4G space is likely to be a big story in 2011. Clearwire recently expanded its 4G service to five more markets, bringing its total to 68 markets. The offering, which is used by Sprint customers, as well as Clear customers, is available to 103 million people around the U.S.
Earlier this month, Verizon launched its own 4G LTE service to 38 markets and 60 airports. Within 18 months, Verizon hopes to have the entire country covered in 4G, providing its service to over 200 million people.
On the Qualcomm side, the sale to AT&T might actually be good news.
Although the Flo TV service didn't perform as well as it had hoped, the company at least saw a return on its investment. Qualcomm acquired its spectrum for $125 million, and soon followed that up with an additional $558 million outlay to buy more spectrum.
"This is a positive outcome for Qualcomm and our stakeholders," Qualcomm chairman and CEO, Paul Jacobs, said in a statement.
The sale of the spectrum is subject to regulatory approval. But if all goes well, AT&T expects to close the deal with Qualcomm in the second half of 2011.