Let the spectrum harvest begin: FCC okays AT&T’s purchase of Alltel

The Federal Communications Commission approved AT&T’s(s t) $780 million purchase of Atlantic Tele-Network’s wireless assets this morning and by this afternoon AT&T had closed the deal. Ma Bell now owns what’s left of the once mighty rural carrier Alltel, but AT&T won’t keep its old CDMA network around for long.

AT&T said it would begin immediately “upgrading” Alltel’s network, which is shorthand for shutting down its old networks and harvesting its airwaves AT&T’s HSPA+ and LTE networks. Ma Bell added that it would begin moving the first of Alltel’s 620,000 subscribers over to its new networks by mid-2014.

This shouldn’t come as surprise since spectrum is really the only reason a GSM operator would buy a CDMA carrier operator. Alltel holds between 10 MHz and 57 MHz of cellular, PCS and 700 MHz spectrum in mainly rural areas of Alabama, Georgia, Idaho, Illinois, North Carolina, Ohio, South Carolina, and Washington. And if AT&T does build LTE and high-speed HSPA+ systems in those areas as it’s promising, Alltel customers can expect to see far faster mobile data connections than they experience today.

fccthumbBut the FCC placed several conditions on the transaction to make sure Alltel’s current customers don’t get lost in transiton. As part of the deal AT&T has committed to putting HSPA+ and LTE into all of Alltel’s current cell sites within 18 months. But AT&T has also agreed to keep a portion of Alltel’s CDMA 2G and 3G networks alive until June 15, 2015, to support both Alltel’s current customers and CDMA carriers that have roaming agreements with the rural operator.

Finally AT&T has promised to replace any Alltel customer’s current CDMA handset – no matter how old or crappy – with a 3G-or-better or handset at no charge and no additional contract requirement. The FCC was very clear that the replacement handsets must match or improve upon the devices Alltel customers already own. For instance, it said that a customer with a CDMA iPhone would get the same iPhone model in a GSM version or a later model. Considering Apple just stopped selling any iPhone older than the 4S, some Alltel customers with first-generation CDMA iPhones might be in for upgrade.

Though the mounting decline of rural and regional carriers in the U.S. is getting scary, this could be an instance where rural customers wind up benefiting. AT&T isn’t exactly known for its focus on rural communities, but this deal could signal a new intent to bring high-speed mobile data services to the heartland.

AT&T hopes to close a much bigger deal in the next few months: buying Leap Wireless(s leap) and its 5 million Cricket Communications customers. Leap isn’t exactly rural though it runs networks in many smaller cities and towns, but it is a CDMA carrier, so AT&T’s intentions are the same. It wants to strip Leap’s network of their spectrum. Hopefully the customer-protection requirements the FCC imposed on the Alltel transaction will be repeated in the Leap deal.