Just after our last pre-Christmas issue went to bed, Qualcomm announced that it had managed to sell off its 700 MHz unpaired MediaFLO spectrum to AT&T for a colossal $1.925 billion. The entire MediaFLO and FLO TV operation in the US, including spectrum payments, had cost Qualcomm under $1 billion.
We say colossal because only days earlier we were talking with our US financial partners TownHall Research about just what spectrum is worth right now, and this announcement shows just how smart the guys at Qualcomm are, and also just how moveable a feast spectrum valuation is.
We’re sorry to have to say that here at Faultline we said this very thing would happen the day that Qualcomm said it wanted to sell its FLO TV operation last year ‘ we suggested that no-one would take it on as is, and that the spectrum held all the value, not the mobile TV network. Who knows what will happen to all those transmitter sites that were used for FLO TV, though no doubt they can be repurposed in some way and sold on.
The key thing that Qualcomm did, and which created the upside in the valuation, was to promise AT&T to build out the technology for carrier aggregation in LTE, which is the process whereby multiple spectrum pieces can be used to upload data to phones, especially responses to wireless broadband requests.
What that does is change the very nature of spectrum. If lots of tiny pieces of one way spectrum can sit spare and waiting for the odd upload job, and some form of software defined radio is to shift the handset’s main stream of data to whatever spectrum is allocated, then tiny, previously useless, pieces of spectrum have greater value.
It’s not that Qualcomm is the only company that can do this, the idea is embedded in the LTE standard, but it was always going to take the commitment of someone like Qualcomm ‘ one of the global silicon majors ‘ to go to the effort of bringing that part of the standard to life. In effect, if Qualcomm puts this into its chips at some point, not only does it force all the other LTE chip suppliers to join in the effort and repeat that piece of R&D, but it makes spectrum everywhere more valuable.
The spectrum which it sold is a single 6 MHz clump over most of the country which goes up to 12 MHz in a directly neighboring channel, across around 70 million people, in five of top 15 US metropolitan areas ‘ New York, Boston, Philadelphia, Los Angeles and San Francisco.
AT&T says that it will deploy this spectrum as supplemental downlink, using this new carrier aggregation technology, once built, which should come into fruition in
3GPP Release 10. That could be any time in the next four or five years we guess, so don’t expect any other announcements along this line any day. This is an approach to overflow capacity that is more insurance than actual network, at this stage.