AT&T to pay Qualcomm $1.9bn in deal

City A.M. Reporter
AT&T plans to buy wireless spectrum from Qualcomm for $1.93bn (£1.24bn) and boost its 4G network, aiming to counter criticism over iPhone service quality and a threat from rivals like Verizon Wireless.

AT&T is the sole US carrier for Apple’s iPhone, but smaller rivals like Sprint Nextel and Clearwire have been adopting 4G, a new wireless standard that enables better Internet access including video.

It is the sort of wireless bandwidth AT&T desires – and will go with yesterday’s deal – given the strain iPhone has put on its existing network. At times, customers in cities like New York and San Francisco have complained of dropped calls and slow Web connections.

AT&T's move also comes as Verizon Wireless, the venture of Verizon Communications and Vodafone Group, has also adopted 4G service and is widely expected to gain rights to sell the iPhone in 2011.

The 700 megahertz (MHz) airwaves are considered valuable because they travel long distances and can penetrate thick walls. The license covers more than 300m people in the United States, the companies said in a joint statement.

In 2007, AT&T bought wireless airwave licenses in the 700 MHz frequency band from privately held Aloha Partners LP for about $2.5bn.

For San Diego-based chipmaker Qualcomm, the sale will mark the end of its FLO TV business, its mobile television service that never took off.

It had said in July that it would examine its strategic options for the business, and announced in October that it was suspending sales. It was trying to sell the spectrum and was in talks with wireless operators including Verizon Wireless.