AT&T’s announced purchase of 700 Mhz spectrum for $2.5 billion may alter the competitive landscape for both mobileTV and mobile broadband. The implications impact companies like Qualcomm on the mobileTV side as well as smaller regional and rural carriers who intend to participate in the upcoming (more on this point later). Aloha’s subsidiary, HiWire was poised to be a leading mobileTV operator in the U.S., utilizing the . AT&T has committed to offering mobileTV as well, but through Qualcomm’s , a competitor to HiWire and DVB-H. The question on everyone’s mind is will AT&T forgo mobileTV with its newly acquired Aloha spectrum, and use it instead for mobile broadband purposes. Regardless of AT&T’s intentions, the removal of HiWire from the is potentially good news for Qualcomm and MediaFLO.

This development also complicates the already complex jockeying for the upcoming 700 Mhz auction, scheduled to take place on January 24, 2008. This pre-emptive move by AT&T signals they intend to be a major player in 700 Mhz. The 12 Mhz of spectrum (C block of the lower band) the Aloha purchase provides AT&T is not adequate enough for a robust nationwide network. That implies that AT&T intends to gain additional spectrum at the auction, and because of Aloha’s band placement, may “muddy the waters” as to where the players will fall. AT&T is kind of a wild card now, because they may want to expand their holding in the , which pairs nicely with the Aloha spectrum assets. That would be somewhat of a new development, because previous thinking had the larger players like AT&T and Verizon more interested in the . The lower band is attractive to smaller regional and rural carriers because the auction rules has the lower bands broken into smaller geographic regions, whereas the upper band is broken into much larger geographic regions, and thus more attractive to larger national providers. But AT&T may now see the lower band, smaller geographic license areas as attractive, and simply outbid regional and rural carriers. Many of those smaller carriers were looking to the 700 Mhz auction as a way to get a foothold in the mobile broadband arena. There is potential that they may not get that opportunity now. If AT&T does decide to swallow the lower band, they could remove the potential for many additional mobile broadband carriers to emerge after the auction, thus significantly altering the competitive landscape for mobile broadband.

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