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Clearwire buys 2.5 GHz spectrum from AT&T

Feb 23, 2007 11:56 AM, By Donny Jackson

Wireless broadband provider Clearwire has agreed to pay AT&T $300 million cash for 2.5 GHz spectrum previously owned by BellSouth, AT&T announced this week.

As a condition of the $80 billion merger between AT&T and BellSouth, the FCC required AT&T to divest BellSouth’s 2.5 GHz spectrum, which included Broadband Radio Service (BRS) licensees and the leasing of Educational Broadband Service (EBS) spectrum, which is used by accredited educational institutions and noneducational organizations. Under FCC rules, EBS licensees can lease part of their spectrum to commercial entities.

Clearwire, chaired by cellular pioneer Craig McCaw, uses “WiMAX-class” technology to deliver wireless broadband service to 33 U.S. markets and is scheduled to conduct an initial public offering next week. With the acquisition from AT&T, only Sprint Nextel has more 2.5 GHz spectrum than Clearwire.

Although “still patching together spectrum,” Clearwire could prove to be a disruptive alternative broadband provider, said Robert Syputa, senior analyst for Maravedis Research. On the surface, the price for the spectrum seemed reasonable, he said.

“Clearwire is certainly no fool, and it doesn’t sound like an onerous amount to pay for it, because the opportunity’s close enough to be realized,” Syputa said.