­Moody's Investors Service said that this week's FCC ruling regarding WCS (Wireless Communications Service) licenses is positive for AT&T because it will provide, in a very affordable manner, much needed capacity for future wireless traffic growth.

On October 17, the FCC issued a ruling that could allow AT&T to utilize up to 20 MHz of near-nationwide wireless spectrum licenses for its 4G network. Moody's believes that AT&T is likely to incorporate this WCS band spectrum into its 4G network in the 2015 timeframe.

The WCS band covers 30 MHz of spectrum in the 2.3 GHz range, broken into 4 blocks; two 10 MHz blocks (paired 5 MHz) and two unpaired 5 MHz blocks. The WCS band is adjacent to spectrum used by satellite radio service provider Sirius XM, with 15 MHz each above and below Sirius's 25 MHz block (called SDARS - Satellite Digital Audio Audio Radio Service). The FCC's ruling allows AT&T to set aside a 5 MHz guard band above and below the SDARS band to avoid interference between it and the WCS band. The ruling also establishes the operational rules for the use of the WCS band by wireless carriers.

AT&T currently holds a large set of WCS (Wireless Communications Services) licenses, but does not have full nationwide coverage for the entire 20 MHz of usable spectrum. In August, AT&T announced three transactions that would expand its WCS license portfolio to cover approximately 275 million people. AT&T's $600 million planned acquisition of Nextwave Wireless, and separate deals for WCS spectrum from Comcast and wireless start-up Horizon Wi-Com would give AT&T near nation-wide coverage of 20 MHz of usable WCS spectrum.

Moody's believes that this transaction improves AT&T's spectrum position, but that Verizon Wireless still has superior spectrum holdings due to its 700 MHz C-block and recently acquired AWS licenses. However, Verizon's planned sale of its B-block 700 MHz spectrum licenses could provide an opportunity for AT&T to further close this gap. Moody's believes that AT&T will be an aggressive bidder for these licenses, as they would complement its existing set of 700 MHz B-block licenses.

This FCC ruling is positive, yet difficult to quantify because the industry is opaque regarding its true wireless spectrum utilization. This is due to several factors, including the complexity of the spectrum license framework, the patchwork geographic coverage of most license holders and the uncertainty around demand growth versus technology evolution.

Moody's also believes that the industry is motivated to exaggerate its spectrum problems in order to justify high service pricing and influence industry regulation.