AT&T buys FLO TV spectrum for $1.92B

It turns out Qualcomm Inc.’s (QCOM) spectrum for FLO TV is actually worth more on its own — at least to AT&T Mobility (T).
The carrier has agreed to buy licenses for the 700 MHz spectrum that the service ran on for $1.92 billion. Qualcomm gets an exit from its failed FLO TV business, selling off its most valuable asset, and AT&T picks up more “beach front property” spectrum for its future LTE network.
The deal between the two companies, which was first reported more than a month ago, would have been much more interesting if AT&T had also bought (further) into the FLO TV network and infrastructure in an effort to offload video traffic.
Although the service never picked up the scale it needed to make a large enough impact, the mobile broadcast TV network did present an early use-case for the 700 MHz spectrum that carriers are now using to roll out LTE. AT&T did this before with another mobile TV pioneer though, buying Aloha Partners L.P.’s 700 MHz spectrum holdings that it used for a DVB-H trial.
Though Qualcomm clearly wanted more than a return on its investment in spectrum. Between 2003 and 2008, the San Diego company paid $683 million for spectrum that reaches a potential 300 million people. The licenses being sold to AT&T include rights to 12 MHz of lower 700 MHz D and E block spectrum that covers more than 70 million people in New York, Boston, Philadelphia, Los Angeles and San Francisco, and 6 MHz of lower 700 MHz D block spectrum that covers more than 230 million people across the rest of the country.
The former Aloha spectrum holdings include 12 MHz in the 700 MHz band covering 72 of the top 100 and all of the top 10 markets in the United States. AT&T also holds licenses for 700 MHz spectrum that it bought rights to via auction in 2008.
The deal, which is likely to close in the second half of 2011, is still subject to approval by the Federal Communications Commission. Even though the FCC might be concerned about AT&T holding too much spectrum after this deal it will in all likelihood get much more use as an LTE network, regardless of the owner. All told, FLO TV only racked up about 1 million customers over a 45-month span.
Earlier this month Qualcomm announced plans to shutdown the FLO TV service on March 27, 2011. The company has also opened a rebate program for some direct-to-consumer customers and said it expects to take on charges of $125 million to $175 million in the coming year related to the shut down.