AT&T is spending $23 billion on new spectrum, but what will it do with it?

AT&T announced a new agreement with Boost Mobile and Dish Network’s parent company, EchoStar. A key piece is a $23 billion spectrum purchase by AT&T, covering roughly 30 MHz of nationwide 3.45GHz mid-band and 20MHz of nationwide 600 MHz low-band airwaves. There are also agreements to enhance their long-term wholesale network services agreement between the two companies, which Boost uses to fill coverage gaps where Dish’s own 5G network isn’t available.

While the companies were vague about what the “enhanced” wholesale agreement includes, the takeaway is that Boost will likely rely even more on AT&T for broader coverage in areas outside of its own 5G network. It’s also possible that AT&T will provide Boost with higher-priority access or other QoS improvements, but that’s just speculation for now.

Why spend so much for “only” 50 MHz? Simply put, AT&T needs more spectrum, and keeping it out of competitors’ hands is part of the game, too.

It’s no secret that AT&T’s brand has slipped from its once-loftier perch. T-Mobile is now the default pick for many, thanks to savvy marketing and major acquisitions (including the recent U.S. Cellular deal), with Verizon spoken in the same breath or just behind it. Meanwhile, AT&T has quickly become the third wheel, at least in the minds of consumers. With that in mind, AT&T may simply be looking for any opportunities left that others haven’t pounced on.

There are several ways AT&T could deploy these bands. If the low-band block is 20 MHz, that likely maps to n71 at 10×10 MHz, since Dish’s only other low-band holding is 5 MHz of Band 29. This could potentially bolster fallback coverage in places where Band 12 is congested, just to name one possible use case. AT&T might also pursue spectrum swaps with its rivals, or simply bank capacity for the future.

For now, it’s unclear exactly how AT&T will use the new spectrum or what additional terms it agreed to with EchoStar. That said, AT&T says the deal will:

• “Maintain long-term leadership in advanced, high-performance connectivity,” which is a vague way for saying they will use the bands to improve the network without going into detail.
• “Give American consumers more choice when selecting home internet and wireless services the way they prefer – together,” which basically means that they will be able to expand advanced fixed wireless and other internet solutions alongside mobile.
• “Drive improved and capital-efficient long-term growth,” corporate-speak for better ROI on network investments.

Will this deal ultimately make a major difference to AT&T customers? Probably not in any majorly noticeable ways. But over time, this should help keep AT&T’s network strong and consistent in core markets. For what it’s worth, that really is Big Blue’s biggest advantage. In areas where it works well, it works really well. Better than the competition. The bigger the challenge is, making this level of performance more uniform nationwide.