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AT&T and Sirius work to make spectrum available

The two companies file a proposal to the FCC that offers a solution to interference issues, so AT&T can use spectrum adjacent to Sirius satellite radio.

AT&T is looking to put some of its unused spectrum to work in a move that could reshuffle the wireless spectrum deck.

On Friday, the carrier filed a joint proposal to the Federal Communications Commission with satellite radio provider Sirius. In the filing, the two companies proposed a solution to some longstanding interference concerns between AT&T's unused WCS spectrum, which is in the 2.3 GHz band and Sirius's satellite radio service. As part of this new proposal, AT&T agreed to give up about 10MHz of this Wireless Communication Services or WCS spectrum as a "guard band" to prevent interference with Sirius's satellite transmission.

The proposal will also change the rules of spectrum in the 2.3GHz band, making it easier for AT&T to use this spectrum for its 4G LTE network. If the FCC goes along with the plan, it would be a huge boost for AT&T, which already owns a significant portion of the WCS spectrum. And it would help give the company near nationwide coverage.

But the move could hurt other spectrum holders that were hoping to capitalize on AT&T's desperation for new spectrum. Namely satellite provider Dish Network and wholesale 4G wireless provider Clearwire could be hurt by this move, says Guggenheim Partners analyst Paul Gallant. In a research note today to investors, he said that if AT&T can use its 2.3MHz spectrum for LTE, it may not need to buy spectrum from Dish. And it may not need to partner with Clearwire, which has adopted a strategy of wholesaling access to other carriers.

"If AT&T wins approval for its joint proposal -- and if it can acquire some of the other WCS licenses from parties that currently appear unlikely to build, for example NextWave, Dish and Clearwire could become less attractive spectrum targets for AT&T," he said in his note.

In exchange for giving up a big chunk of spectrum for a guard band, AT&T is also asking the FCC for more lenient rules on the rest of the spectrum it plans to use to build its LTE network. AT&T also wants the FCC to extend the build-out requirements on this spectrum.

But even if the FCC adopts AT&T's suggestions, it could still be three to five years before the spectrum is available for use, some analysts predict.

Still, the move would put AT&T on closer footing with Verizon Wireless, which has a large store of unused spectrum it plans to use for its 4G LTE network. Verizon already owns a significant nationwide chunk of 700MHz wireless spectrum as well as some Advanced Wireless Services spectrum it hasn't used yet. It's now trying to buy about 20 MHz of unused AWS spectrum from several cable companies to add to its coffers.

The spectrum in question was first auctioned off in 1997. But from the start there were interference issues between users of that spectrum and the neighboring satellite radio owners. In May 2010, the FCC suggested rules changes for the 2.3GHz WCS band. These changes would have made it possible for the spectrum to be used for wireless broadband services. And it would have protected against interference. But AT&T and others objected to the finer points of the FCC's proposal at the time.

"Our concern, quite simply, was that the newly-adopted service rules did not permit the deployment of an efficient mobile broadband service in the band, something that AT&T deemed vital for the spectrum to be fully and effectively utilized," Joan Marsh, AT&T's vice president of regulatory affairs, said in a blog post yesterday.

Marsh admitted in her post that the problems the FCC was trying to solve are complex. And she explained that as technologies and companies' priorities have changed, it's now been able to strike a mutually beneficial deal with satellite radio license holders. But she said that there were still compromises made by parties to reach this agreement.

"To be sure, neither party to this proposal got everything it had asked for and perhaps wanted," she said in the blog. "But both AT&T and Sirius XM are confident that they have developed a set of technical rules that will allow each service to flourish while ending the uncertainty that has plagued both bands for far too long. We are hopeful that the commission will agree."

The FCC is likely to rule on the proposal by the end of the year.