The Federal Communications Commission (FCC) is reviewing
AT&T Inc
.'s (
T
) proposal to ease rules for the 4G LTE deployments. The commission
is planning to sanction the use of the 2.3 GHz Wireless
Communication Services (WCS) band into spectrum for deployment of
LTE services. The final approval is expected by the end of this
month.
The second-largest U.S. mobile service provider will be the biggest
beneficiary from the approval, as it holds the most unused WCS
licenses for years. According to the FCC current rules, operators
cannot use WCS spectrum for mobile internet purposes in order to
avoid interference with satellite radio users in adjacent bands.
AT&T has been on a WCS acquisition spree. In June, the company
collaborated with
Sirius XM Radio Inc.
(
SIRI
) to deploy LTE services in the 2.3GHz WCS band, while minimizing
interference problems. Then in August, AT&T plans to acquire
NextWave Wireless for $600 million to boost its WCS spectrum
holdings and strengthen its 4G LTE network capacity. The
acquisition, awaiting approval from the regulators, is expected to
close by the end of the year.
AT&T will also receive licenses in the Advanced Wireless
Service (AWS) band from NextWave purchase. If FCC changes the LTE
deployment rules, the acquisition could provide AT&T with WCS
spectrum coverage to 212 million people, while AWS spectrum will
cover only 6 million people. Further, the company intends to buy
WCS spectrum from
Comcast Corp
. (
CMCSA
) and Horizon Wi-Com.
AT&T can easily tackle the current spectrum crunch with the WCS
spectrum, should FCC gives the approval. Additionally, AT&T is
expected to deploy 4G LTE network using WCS spectrum within three
years of approval.
The WCS spectrum would enhance AT&T's capacity and provide a
competitive edge against its major rival Verizon Wireless, a joint
venture between
Verizon Communications Inc.
(
VZ
) and
Vodafone Plc
(
VOD
) in deploying 4G LTE services.
We are maintaining our long-term Neutral recommendation on
AT&T. The company retains the Zacks # 3 (Hold) Rank for the
short term (1-3 months).
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