Laying the groundwork for its anticipated 4G network next year, AT&T has signed a deal with San Diego-based mobile-device chipmaker Qualcomm to buy spectrum licenses in the lower 700-megahertz band, the carrier announced Monday.
That spectrum, currently used for Qualcomm’s FLO TV, covers more than 300 million people nationwide. Qualcomm acquired that spectrum, on which signals can travel long distances and penetrate walls, after television stations switched to digital transmissions last year.
FLO Didn’t Flow
The company reportedly invested $683 million to build a network that broadcasts video to mobile phones, but failed to gain enough subscribers and now plans to shut down FLO TV by March. FLO TV (an acronym for forward-link only) uses Qualcomm’s Media FLO technology.
Pending regulatory approval, the deal with AT&T should close in mid-2011, the companies said.
Qualcomm said Monday that restructuring costs from the failed venture are estimated at between $125 million to $175 million in fiscal 2011, primarily related to contractual obligations, but the company may have to pay more “depending on the outcome of the evaluation of strategic options for the business.” Shutting down the FLO TV network and associated business exit costs may add even more to the tab, the company said.
AT&T, which will pay $1.925 billion for the licenses, will deploy the spectrum as supplemental downlink, using carrier aggregation technology designed to deliver substantial capacity gains, the company said.
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The new spectrum covers areas where AT&T’s Apple iPhone users have complained about dropped calls, but it won’t affect current 3G users and may not affect voice users at all for some time, said Sue Rudd, director of tariff and revenue strategies at Strategy Analytics.
Long-Term Investment
“Qualcomm’s Media FLO spectrum is not adjacent to AT&T’s LTE spectrum, but it will be used with it next year for supplemental bandwidth,” Rudd said. “The spectrum will not be…