The Wall Street Journal-20080205-Business Technology- FCC Allows AT-T-s Spectrum Deal

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Business Technology: FCC Allows AT&T's Spectrum Deal

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Associated Press

WASHINGTON -- AT&T Inc., already the nation's largest cellphone provider, won U.S. government approval to buy highly coveted airwaves licenses that cover 196 million people in 281 markets.

The Federal Communications Commission yesterday released an order approving the company's $2.5 billion cash buyout of Aloha Partners LP and its spectrum holdings.

The licenses are in the much-sought-after 700-megahertz band that is being vacated by television broadcasters. It is next to spectrum that is being auctioned by the FCC and has drawn record bids.

Sixty-two megahertz are up for auction. The Aloha transaction is for 12 megahertz.

AT&T provides wireless service to 63.7 million customers, according to the company. Aloha, which is based in Providence, R.I., acquired the licenses in previous FCC auctions and in the secondary market between 2003 and 2005.

Except for two limited market trials, Aloha never used the airwaves to build a wireless network.

The agency declared the sale would "not have an adverse effect on competition in the mobile telephony market." It noted there were no public comments in opposition to the merger, but FCC Commissioner Michael Copps voted against the transfer.

Mr. Copps said the FCC order constitutes "a rush to judgment" on the part of the FCC using a method of analysis that includes "sloppy math and inaccurate assumptions." He said the transfer "seems destined to reduce competition and diversity in the wireless marketplace."

AT&T told the FCC the transaction would allow the company to "meet the growing demand for spectrum-intensive wireless data and content services and to provide these services more cost effectively."

Aloha acquired the licenses with 35% bidding credits, meaning it got them at a deep discount. AT&T will have to make payments to make up for the discounts, plus interest, before the companies can complete the transaction.

AT&T is also a qualified bidder in the continuing spectrum auction.

As of late yesterday afternoon, bids totaled nearly $19 billion. In 2001, bids topped $17.6 billion in a controversy-plagued contest that was largely invalidated by the Supreme Court over a bankruptcy case.

Since then, the highest bid total was $13.9 million in 2006.