With all of the attention being placed on the frequency spectrum currently leased by Verizon Wireless, AT&T, and spectrum internet service plans, it’s easy to miss the nuances of what this actually means. Anyone with even a passing interest in the communications business has probably heard of “spectrum” at some point or another. In essence, spectrum refers to the range of frequencies that can be used to transmit signals from one point to another. There’s also a wide range of sub-categories within the spectrum as well. For example, radio waves are just one type of electromagnetic spectrum, which is a subcategory of spectral analysis (another subcategory). It can get pretty confusing, but it all makes sense once you break down each individual term.
AT&T’s Current Spectrum Holdings
As anyone who has closely followed the wireless industry over the last decade knows, the use of certain spectrum frequencies has become a hectic and controversial topic. Basically, certain frequencies were deemed “more valuable” than others in the early days of wireless technology. This fact has come to play an important role in the entire history of the cell phone industry. Spectrum is essentially the invisible “highway” that allows the signals in our cell phones to travel from one point to the next. The higher the frequency a signal is transmitted at, the shorter the distance it can travel. AT&T’s current spectrum holdings are as follows:
What is the Importance of Spectrum?
Spectrum is incredibly valuable due to the simple fact that it is limited. Most commonly, spectrum is described using the term “slots.” Each particular spectrum frequency has a “slot” that it fills and can transmit signals within. Similar to a highway, the more slots there are available, the more traffic you can accommodate. The fewer slots there are, the more traffic is delayed. A good analogy for spectrum is the highway system. The highway system has a finite amount of space to accommodate an infinite number of drivers. If the highway system has 4 lanes, and there are 4 cars on the road, the trip is incredibly quick. On the other hand, if the highway system has 4 lanes, but there are 10,000 cars on the road, no one is going anywhere quickly.
What is AT&T’s Plan?
As mentioned above, AT&T’s current spectrum holdings are far from ideal. This is because the only frequencies that are considered “premium” are those that are high-frequency. AT&T’s current spectrum holdings do not consist largely of high-frequency frequencies. This has resulted in a dilemma for AT&T. The company has long desired to add more premium frequencies to its portfolio, but it has been unable to do so. Due to anti-trust laws, AT&T cannot simply buy the frequencies it wants. Instead, it must wait for the frequencies to be auctioned off. The FCC is currently in the process of auctioning off some of the country’s most premium spectrum frequencies. This is the spectrum that Verizon Wireless has been using to build out its 5G network. AT&T, along with other carriers, is excited about the potential to buy this spectrum.
Differing Perspectives: Why Everyone Is Talking About Spectrum
As we’ve discussed, spectrum frequencies are incredibly valuable. It is because of this fundamental fact that everyone has been talking about the spectrum for the last decade. The problem is that, as mentioned, there are only a finite amount of spectrum frequencies, and AT&T has been at a disadvantage due to its current spectrum holdings. With the advent of 5G technology, the demand for premium spectrum frequencies has increased immensely. This is because the higher the frequency a signal is transmitted at, the shorter the distance it can travel. This means that as the demand for 5G grows, the need for shorter distances grows as well. This is why the FCC has been auctioning off the highest-frequency spectrum it can find. It has been doing this with the hopes of finding the companies with the deepest pockets.
AT&T Fiber: The Company’s Actual Broadband Strategy
While it may seem as though AT&T is desperate to get its hands on the most expensive spectrum it can find, this is not actually the case. While AT&T package deals do want to add more spectrum to its portfolio, the company does not need the highest-frequency spectrum in order to do so. This is because the company’s primary broadband strategy revolves around the use of fiber-optic cables.
The Bottom Line
Spectrum frequencies are incredibly valuable in the world of telecommunications. This is why AT&T has been trying to acquire the highest-frequency spectrum it can for years. However, this is only one small part of AT&T’s entire business strategy. The company is far more interested in investing in fiber-optic cables, which are capable of transmitting data at incredibly high speeds. Ultimately, there is a lot of hype surrounding spectrum frequencies, but the future of AT&T’s business relies more on the company’s fiber-optic cables.