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December 29, 2006

A New Year's present for Clearwire

Posted by Tricia Duryee at 3:24 PM

With news today that AT&T got final government approval to purchase BellSouth, AP was nice enough to write a detailed report on how it may benefit consumers or other businesses.

One of the conditions of the merger was that AT&T was going to have to sell wireless broadband licenses held by BellSouth. The spectrum is good for rolling out WiMax, something both Sprint Nextel and Kirkland-based Clearwire pledge to do on a nationwide basis.

In January, I reported that BellSouth, which provides DSL service in the South, was interested in rolling out mobile WiMax in the markets were it held rights to spectrum. At the time, it was offering fixed wireless technology in six markets. Today, it is offering wireless broadband in parts of 15 cities in eight states.

The AP story surmised that Sprint Nextel would probably love to get its hands on the frequencies because it has committed to rolling out a WiMax network.

What the story didn't mention is that Clearwire may also want the spectrum, since it too, is rolling out a nationwide WiMax network and already has a proprietary network in more than 30 markets, including Seattle.

AP said there are no conditions to the sale, however, so BellSouth will likely sell it to the least-threatening buyer. Or, perhaps, sell to the buyer it has the closest ties to. That could be Clearwire, whose founder Craig McCaw also started McCaw Cellular Communications, which later became AT&T Wireless. Cingular Wireless, which bought AT&T Wireless in 2004, and is now owned entirely by AT&T.

Follow that?

If not, try and follow this: I'm not sure if either of them would even want the spectrum. I believe that BellSouth's spectrum holdings are in the 2.3 GHz band. Both Sprint Nextel and Clearwire own significant holdings in the 2.5 GHz band.

UPDATE: In an document filed with the FCC by AT&T, there's more information on this topic available, so I'd like to clarify the last statement about the two different bands. First, the document says that as a condition of the merger, BellSouth will assign or transfer all of the 2.5 GHz spectrum within one year of the merger closing date. Second, the document says this does not hold true for BellSouth's 2.3 GHz holdings. By July 21, 2010, AT&T/BellSouth will agree to offer service in the 2.3 GHz band to 25 percent of the population in the service area. In a nutshell, this means that the spectrum AT&T/BellSouth will be obligated to shed is very much of interest to Clearwire or Sprint, which both mainly own or lease 2.5 GHz spectrum. What I couldn't find in a quick search are details on how much BellSouth owns.

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Tricia Duryee
Tricia Duryee
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