WASHINGTON, DC (WiMAX Day). Last week the Federal Communications Commission (FCC) in America approved the $80 billion merger of AT&T and BellSouth.

In a letter to the FCC one day earlier, AT&T agreed to a series of conditions that it would meet in order for the merger to be approved. Amongst the concessions to which AT&T agreed was the full divestiture of the 2.5 GHz spectrum owned by BellSouth.

The AT&T letter stated “AT&T/BellSouth shall assign and/or transfer to an unaffiliated third party all of the 2.5 GHz spectrum (broadband radio service (BRS)/educational broadband service (EBS)) currently licensed to or leased by BellSouth within one year of the merger closing date.”

The spectrum owned by BellSouth is the second largest swath of 2.5 GHz in America, located in most of the 50 largest markets, according to published reports. The largest amount of 2.5 GHz spectrum is owned by Sprint, and the third largest is owned by Clearwire.

The death knell for the BellSouth spectrum was sparked by intense lobbying from numerous American companies and US Senators Mike De Wine and Herb Kohl who argued that AT&T would seek to “warehouse” the 2.5 GHz spectrum. Amongst those who lobbied for the divestiture was Clearwire, who expressed concern that a merged AT&T/BellSouth would not make an effort to build out the spectrum.

The US Senators have urged that the FCC should auction the BellSouth 2.5 GHz spectrum to competitors, which would be primarily Clearwire and Sprint.

AT&T retains 2.3 GHz spectrum
Despite the loss of the 2.5 GHz spectrum, under the agreement with the FCC, AT&T is allowed to retain BellSouth’s 2.3 GHz spectrum (known as WCS) and AT&T agreed to utilise the spectrum with services that will cover up to 25% of the POPs by July 2010.

AT&T further agreed that it would offer broadband services to 100% of potential users living within the AT&T/BellSouth territory, and that up to 15% of this territory would be provided with broadband connectivity using WiMAX or satellite.

The 2.3 GHz spectrum was largely acquired by BellSouth at auctions in 1997, and a lesser amount is owned by AT&T.

BellSouth has been developing WiMAX services that utilise its 2.3 GHz spectrum, and had stated a goal of having 22 base stations deployed by early 2007 to comply with previous FCC rules, and is actively offering services in eleven states in the south-east coast of America.