AT&T Deals With Spectrum Crunch

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Trefis) -- After months of playing coy with critics of its throttling policy, AT&T ( T) has finally came clean on the stipulations of its unlimited plans.

The company said last Thursday that its support site for unlimited data plans now clearly states that consumers who use more than 3GB of data on an unlimited 3G data plan and 5GB on an unlimited 4G LTE data plan will see slower speeds than usual in what it calls part of its "network management" policies.

However, users on tiered-data plans will not be affected by this policy. AT&T, along with Verizon ( VZ) and Sprint ( S), has been struggling with a spectrum crunch as demand for data services continue to soar with an increasing adoption of 3G/4G smartphones and tablets.

See our complete analysis for AT&T here.

AT&T's spectrum problems are well-documented. It first started throttling users' data speeds last year and maintained that only the top 5% of its users were going to be affected by the change.

But such a subjective and sliding measurement scale led to the restriction for many users who claimed to have used less than 3GB in a month. This left many unlimited data users exasperated as those using similarly priced 3GB tiered plans were left unaffected. AT&T's clarification now should help matters as users are going to be warned before their speeds are throttled for the first time. Moreover, they are now assured of 3 GB of data at higher 3G and 4G speeds.

To deal with its spectrum issues, AT&T tried to acquire T-Mobile last year. However, anti-competitive concerns caused the FCC to block the deal, forcing AT&T to back out and fork over $1 billion of spectrum in addition to $3 billion in cash to T-Mobile.

At the same time with Verizon pulling away in the LTE race, AT&T has had to find additional spectrum for its LTE plans. AT&T's LTE network is available in 28 markets and covers only 74 million U.S. citizens. In comparison, Verizon covers 200 million customers in 195 U.S. markets with its LTE network.

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