How AT&T can create a fat nationwide 4G pipe to match Verizon’s

AT&T’s(s t) LTE rollout plans are a bit of a hodgepodge. The problem is spectrum. It never managed to piece together the licenses to form a consistent nationwide 4G band like that owned by archrival Verizon(s vz)(s vod). Instead AT&T cobbled together 700 MHz licenses here and Advanced Wireless Services (AWS) licenses there. The result is a network that already has some big capacity shortfalls in key markets and could eventually have gaps in coverage.

But AT&T is trying to rectify that situation by tapping spectrum in the most unexpected places. On Thursday, AT&T announced its intentions to buy spectrum squatter NextWave and its big hunk of Wireless Communications Services (WCS) spectrum. Shortly afterward it filed notice with the FCC that it plans to pick up smaller WCS holdings from Comcast(s cmsca) and Horizon Wi-Com. UBS Investment Research analyst John Hodulik believes AT&T is now approaching Sprint(s s), which is the last remaining WCS licensee of note.

Hodulik said in a research note that those deals will give AT&T almost exclusive ownership of the WCS band, which ultimately would allow it to deploy a 20 MHz LTE network nationwide.

Getting all those licenses is key to AT&T’s strategy otherwise WCS will remain useless for mobile broadband services, as it has for the last 15 years. Interference problems with the neighboring satellite radio services have made the band a no-man’s land for terrestrial cellular technologies. But a compromise between Sirius XM Radio(s siri) and AT&T would solve the problem.

Their proposal to the FCC would designate 10 MHz of the 30 MHz WCS band as guard bands, which no cellular signals could cross, thus protecting satellite radio signals from interference. The problem is AT&T can’t tell a bunch of other WCS license holders that spectrum they paid for is suddenly off limits. It has to buy up all of their licenses to make its plan work. In addition, it needs to get as much of the usable WCS frequencies as possible to ensure it has consistent capacity and nationwide coverage for any new LTE network.

Why WCS is important to AT&T’s plans

So what would a 20 MHz network mean? For starters it would be the exact same size as Verizon’s current LTE network, which is rapidly nearing completion. While AT&T already has 20 MHz of 700 MHz of its own in many markets, it’s forced to deploy 10 MHz networks in key cities like Chicago and Los Angeles. WCS could provide a consistent blanket of capacity across all urban markets in the country.

AT&T’s LTE markets are marked by the orange dots

I say urban areas because WCS’s 2.3 GHz frequencies don’t have the propagation characteristics of 700 MHz, hardly making them optimal for rural or suburban deployments where cells are stretched for miles. A bit too much is made of 700 MHz’s reach, though. AT&T doesn’t need gobs of capacity on rural highways. It needs that capacity in cities where high demand and the density of subscribers mandate cells be packed closely together – regardless of what frequency they use.

AT&T still has to close these deals, get FCC approval for its spectrum retooling plan, standardize WCS as an official LTE band and deploy its network. Then it has to build a device market for what will essentially be an AT&T-exclusive band. That will take years. Its current LTE plans will have to move forward regardless of whether its WCS plans work out. Also, it will still be on the hunt for more airwaves.

As Fierce Wireless points out, Verizon would still be far ahead of AT&T in the airwave race, even if Ma Bell can pull off its grand plan. AT&T would have the spectrum for a nationwide high-capacity LTE network in several years. But Verizon has nearly completed the equivalent network already, and if its acquisition of the cable operators’ spectrum is approved, it will have enough spectrum to build a second network of similar size and breadth next year.

The Verizon-cable deal, though, is encountering growing opposition. What should have been an easy bid to buy and put to use spectrum that’s lain dormant for eight years has turned into a big political controversy. Verizon overreached by agreeing to co-marketing pacts with the Comcast and Time Warner Cable(s twc), which essentially amounts to the companies divvying up the wireless and residential markets in different regions.

According to Reuters, the U.S. Department of Justice is demanding some big concessions from Verizon before it will let the deal pass, including the dissolution of their co-marketing agreements.

Photo courtesy of Shutterstock user SSSCCC