It’s no T-Mo, but AT&T picks up Qualcomm airwaves

The Federal Communications Commission approved Qualcomm’s (s qcom) sale of its 700 MHz spectrum to AT&T (s t) on Thursday evening, with limited conditions. The approval is a small consolation prize for Ma Bell after the FCC helped stop the merger between AT&T and T-Mobile and then released a 109-page report that accused AT&T of everything from being a liar to being bad at math.

As part of the approval, FCC said AT&T would have to abide by certain interoperability and interference conditions, and notably Chairman Julius Genachowski said the agency would take up the issue of roaming and interoperability in the 700 MHz band next year. This is a highly technical issue that could help smaller operators compete with, or at least play on the same field, with Verizon (s vz) (s vod) and AT&T when it comes to offering service.

I want my mobile TV (but only when it’s convenient and cheap).

Two things strike me about this deal, with the first being the history of these airwaves and what it might mean for the upcoming battle for TV spectrum. The 700 MHz band originally was the analog band used for television broadcasts, but was transitioned for cellular use for the 2008 auction. Yet, Qualcomm bought these airwaves for its own mobile TV play known as Media Flo, which it said it would shut down in 2010. Perhaps MediaFLO was too early, too expensive or maybe just the wrong model (people didn’t seem keen to pay for watching scheduled broadcasts on their mobile).People did not flock to the service.

Ironically, the demand for video on mobile phones is what is now prompting AT&T’s purchase of this spectrum to help add capacity to its LTE network. Another irony in this case is that the FCC is now hoping to put more TV airwaves to use in delivering mobile broadband as part of its incentive auctions. While technically Qualcomm’s broadcast technology it developed with MediaFLO could have relieved the capacity crunch somewhat, it would have relied on consumers deciding to follow the herd and watch videos for the masses and at the same time on a tiny screen. That flies in the face of how people use the Internet, which is to watch their own content in their own time. When it comes to video consumers are willing to pay the price for their convenience.

Interoperability is just another word for competition.

The second striking issue about the spectrum approval was that the FCC decided not to require  AT&T to use equipment that would make it cheaper and easier for other operators to roam on its network in these bands. While AT&T can’t do anything to make such roaming impossible, smaller operators were hoping the FCC might force AT&T to be truly interoperable.

For a deep dive on this issue check out my colleague Kevin Fitchard’s post on the topic. For those who don’t want to go there, just think of the FCC as telling AT&T that it has to build a train track that other operators could use, but AT&T can build it with different gauge track.

So AT&T walks away with 6 MHz of nationwide spectrum in the Lower D block and 6 MHz of Lower E block spectrum covering 70 million people in the New York, Boston, Philadelphia, Los Angeles, and San Francisco metro areas. The other big E-block holder is DISH, which gives yet another impetus to AT&T to consider buying the satellite company. AT&T will use both Qualcomm blocks for downlink capacity.

And consumers get more spectrum to feed their broadband demand at the expense, perhaps, of more appropriate technological solutions for delivering video (but nothing the market wanted) and the promise that the FCC won’t let AT&T and Verizon make it too difficult for second and third-tier mobile operators to roam onto their networks. Merry Christmas.