AT&T buys Verizon’s spare 4G spectrum so it can soup up its LTE networks

Verizon Wireless(s vz)(s vod) is making good on its promise to the FCC to return its extraneous 700 MHz to the market, and the principle buyer turns out to be the country’s other mega-carrier, AT&T(s t). Verizon will give AT&T 39 lower-700 MHz licenses in some of the country’s biggest cities in exchange for $1.9 billion in cash and four licenses in an alternate 4G band.

It took some time, but this transaction was destined to happen due to the present state of AT&T’s LTE network. The new 4G network AT&T has launched nationally in most cases utilizes 20 MHz of spectrum, making it a megahertz-for-megahertz Verizon match. But in a several key markets like Chicago, Los Angeles and Miami, AT&T had only has licenses adding up to 10 MHz, and has been forced to deploy half-capacity networks in those cities.

So it should come as no surprise that cities topping the sales receipt are Chicago, LA and all of the other markets where AT&T doesn’t have a full complement of 4G airwaves. AT&T will now be able to normalize its LTE bandwidth in all of the country’s major cities before it even has to start thinking about its next stage LTE deployment. Speaking of which, AT&T just closed its purchase of NextWave’s Wireless Communications Service (WCS) airwaves this week, which will give it the frequencies to deploy an entirely new LTE network in the 2.3 GHz band.

Verizon not only comes out of this with almost $2 billion, but it gets some key licenses in the Advanced Wireless Services (AWS) band, which is where Verizon plans to deploy phase 2 of its own LTE network (the current 4G rollout is in the upper 700 MHz). Specifically it’s getting 10 MHz spectrum in Los Angeles; Phoenix; Fresno, Calif.; and Portland, Ore.

Verizon also announced it is selling 700 MHz licenses to private equity firm Grain Management for $189 million in the North Carolina markets of Charlotte, Greensboro and Raleigh-Durham. It will also lease an AWS license from Grain in Dallas.

While today’s deals were obviously blockbuster sales, Verizon has now closed 35 of them with companies across the company. Back in April, Verizon promised regulators it would sell off its lower 700 MHz holdings in order to coax the FCC and Department of Justice into approving its massive cable spectrum buy. As of today, Verizon said in its policy blog, that sale process is now over.