January 07, 2014, 3:54 PM — When AT&T technology and network chief John Donovan said on Monday that he felt good about the carrier's spectrum position, he had an extra reason for his optimism.
Donovan, senior executive vice president of AT&T technology and network operations, said at the Citi 2014 Internet, Media & Telecommunications Conference taking place near International CES in Las Vegas that his company had enough frequencies for now.
"In the short and intermediate term I think we feel pretty good about where we are with the spectrum," Donovan said.
On Tuesday, AT&T announced it had reached an agreement to buy 49 AWS (Advanced Wireless Spectrum) licenses from Aloha Partners. The licenses cover almost 50 million people in 14 states, including California, Texas, Illinois, and others in the West and Northeast, AT&T said in a statement. It did not say how much it paid for the spectrum. The deal is expected to close in the second half of this year.
Having enough frequencies to carry the data that subscribers generate and use has been a high agenda item for AT&T and other U.S. mobile operators for years. Last year, AT&T bought Leap Wireless in a deal valued at about $4 billion, citing in part the smaller carrier's spectrum holdings. However, it's also common to hear carriers say their spectrum needs are covered for the immediate future. Saying otherwise would raise questions about their ability to provide adequate service to current and prospective customers.
But the growing need for spectrum isn't over, as mobile data demand grows by about 50 percent per year, Donovan said. Asked about an earlier estimate that AT&T needs about 10MHz more spectrum every 12 months, he said that's about right for high-demand markets, though subscribers' mobile use varies by geography.
There are two simultaneous trends that are both driving up volume and complicating the demands on the network, he said: A growing number of small, non-phone devices from the so-called "Internet of things" are constantly sending small packets, while consumers are viewing and uploading streams of larger video packets.
Donovan had good news for the hardware vendors filling the CES show floor with new devices this week.
"Devices are starting to proliferate and fragment," he said. One reason is shared data plans such as AT&T's, in which subscribers can add another device for a few dollars a month and use their existing pool of data, he said. Over the next two years, there will probably be more "style statements" in devices, as well as in-car mobile gear, health monitoring devices and probably more so-called "phablets," he said.