By investing $1.925 Billion, AT&T has acquired frequencies from Qualcomm to provide superior wireless service. In the lower 700 MHz frequency band, Qualcomm’s spectrum licenses have been acquired. In the years coming ahead, AT&T intends to offer an advanced 4G mobile broadband experience with this acquisition. However, whether this move will bolster its position with the iPhone against archrival Verizon is still being questioned.
Charles King, Principal Analyst at Pund IT feels that the strategy behind the deal is clear as Qualcomm spectrum has significant control of iPhone users in New York, Boston, Philadelphia, Los Angeles and San Francisco. He states that additional strain will be added on wireless networks with the iPhone, the success of the iPad and the arrival of 3G and 4G enabled tablets. King believes that AT&T will be able to compete with Verizon and other vendors even if it is expensive due to the spectrum purchase from Qualcomm.
To support the service business of its FLO TV subsidiary, Qualcomm has been using the licenses. Qualcomm’s earlier announced plan of evaluating strategic options for FLO TV has been facilitated by this particular sale. Till March 2011, Qualcomm anticipates the FLO TV business and network to shut down. Throughout the nation, the spectrum covers more than 300 million people. Just in 5 of the top 15 U.S Metropolitan areas consisting of New York, Boston, Philadelphia, Los Angeles and San Francisco, twelve MHz of lower 700 MHz D and E block spectrum cover more than 70 million people. Across the rest of U.S, six MHz of D block spectrum covers more than 230 million people.
AT&T has stated that it intends to deploy the spectrum as a supplemental downlink by utilizing carrier-aggregation technology as a part of its long term 4G network plans. As AT&T finishes the next iteration of its network, this technology will function to offer substantial capacity gains and it will be activated soon too. As soon as compatible handsets and network equipment are developed, AT&T plans to start deploying the spectrum. To facilitate a supplemental downlink to address increased consumer need for rich mobile media content, Qualcomm plans to integrate carrier-aggregation technology in its chipset road map. To deliver a stronger mobile broadband experience for now and in the future, AT&T intends to deploy this technology.
Paul Jacobs, Chairman and CEO of Qualcomm feels that this will have a positive result for Qualcomm and its shareholders. To financially support increasing consumer demand for mobile TV and other rich media content, carrier aggregation, supplemental downlink and LTE multicast technologies are an interesting evolution of next generation wireless systems. Building on the technology leadership and immense experience with 3G, 4G and broadcast technologies, the development and delivery of these new capabilities will be driven ahead with aggressive efforts.
Most industry insiders argue that the Qualcomm acquisition will provide AT&T with enough firepower to compete with rivals like Verizon networks in the 4G technology space. Though the outcome of this competition isn’t clear, AT&T surely is stocked up well to utilize the growth of 4G devices with Qualcomm’s resources.