AT&T buys FLO TV spectrum for $1.9 billion
December 30, 2010
As it turns out, spectrum was a good investment in 2004, when Qualcomm spent $683 million for spectrum in the 700MHz frequency band at auction. The spectrum — 12MHz of D- and E-block spectrum covering more than 70 million people in New York City, Boston, Philadelphia, Los Angeles and San Francisco and 6MHz of D-block spectrum covering approximately 230 million people across the rest of the United States — just sold to AT&T for $1.92 billion.
Qualcomm, of course, bought the spectrum to launch FLO TV, an experiment in mobile TV that brings to mind the adage about pioneers and arrows in the back. Although Qualcomm has publicly stated that it spent about $800 million to launch and operate FLO TV, which included simulcast and time-shifted content from ABC, CBS, NBC, Fox, ESPN, MTV and CNN, other sources place the figure considerably higher.
With the sale, Qualcomm can at least be said to exit the failed experiment in the black; although, the company states that its exit from the business will incur additional charges of between $125 million and $175 million in fiscal 2011.
Meanwhile, AT&T, which doesn’t garner high ratings for its network coverage, can sorely use the additional spectrum, especially as it plans to offer a 4G service by the end of 2011. (Verizon Wireless already launched its 4G network in 2010.) With the new spectrum purchase, AT&T will now hold nearly as much spectrum in major metropolitan areas as Verizon Wireless. FLO TV will be shut down completely in March.