With mobile  consumers gobbling up spectrum at record rates, wireless carriers are hard searching for solutions. AT&T believes it has found a partial answer with its latest acquisitions, which will rely on yet-approved Wireless Communication Services (WCS) spectrum to help expand its 4G LTE network .
AT&T announced plans to acquire NextWave Wireless. NextWave holds licenses in the WCS and Advanced Wireless Service (AWS ) bands. Under the terms of the agreement, AT&T will acquire all the equity of NextWave for about $25 million plus a contingent payment of up to about $25 million. Through a separate agreement with NextWave's debt holders, AT&T will also assume the company's debt, which totals $600 million.
NextWave could be a risky buy. First auctioned in 1997, WCS spectrum has not been tapped for mobile Internet use. There are technical rules around WCS that aim to avoid the possible interference to satellite radio users in adjacent spectrum bands.
AT&T Gets Creative
"Eventually this is going to solve a piece of the spectrum shortage problem but it is not a magic bullet," Weston Kenderek, a principal analyst at Current Analysis, told us. "AT&T is exhausting all potential channels to address the concerns around increasing wireless data usage. AT&T is leaving no stone unturned to try to figure out any possible angle to add more spectrum."
In June, AT&T and Sirius XM filed a joint proposal with the FCC that would protect the adjacent satellite radio spectrum from interference and enable WCS spectrum -- for the first time -- to be used for mobile Internet service. This proposed solution on WCS spectrum, which is still under review by the FCC, effectively creates much-needed new spectrum capacity.
AT&T is proving that it is willing to try more unconventional routes to build up its spectrum position, Kenderek said. But, he added, this is not a short-term solution. If approved, the proposal will enable AT&T to begin initial deployment of WCS spectrum for added 4G LTE capacity in about three years.
Calculating the Risks
Despite the risks, AT&T is betting fairly big on WCS. The wireless carrier also plans to acquire WCS spectrum from Horizon and Comcast. AT&T has not yet publicly announced those deals, but Henderek said the company bought spectrum from both firms.
"I believe the Horizon licenses covered about 75 million people in the U.S. and the Comcast spectrum covered about 104 million people," Henderek said. "When you combine that with the NextWave licenses that covers about 212 million people. Add that up and it shows that AT&T is all in on this WCS spectrum. From a risk perspective, AT&T expects to get this deployed within that three-year time frame."
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