AT&T announced today that it has purchased 12MHz of spectrum in the prime 700MHz spectrum band from privately-held Aloha Partners for close to $2.5 billion. Aloha purchased the spectrum in Federal Communications Commission auctions held during 2001 and 2003, but hasn't done much with the licenses since the auctions ended.

The licenses to the spectrum cover around 196 million residents of the US and 72 of the 100 largest metropolitan areas, including the ten largest markets in the US. AT&T isn't divulging much in the way of specifics for the bandwidth, other than saying that the company will use it for voice, data, and video. "Aloha's spectrum will enable AT&T to efficiently meet this growing demand and help our customers stay connected to their worlds," said Forest Miller, AT&T's group resident for corporate strategy and development.

AT&T's purchase gives it more options in the upcoming 700MHz spectrum auction. Set to begin on January 16, 2008, the auction carries a combined reserve price of $10 billion. Bidding could significantly exceed that number, should significant competition for the licenses materialize. The hope of FCC Chairman Kevin Martin—as well as just about everyone who has been stung by the lack of broadband competition in the US—is that the auction will lead to the creation of a viable wireless broadband network.

With 12MHz of Aloha Partners' spectrum in hand, AT&T could choose to sit out the auction altogether, or bid strategically on particular licenses. (The spectrum offerings are broken up by wavelength and geographic location). With spectrum covering just under 200 million residents, AT&T could use the auction to simply fill out its geographic reach. Best of all from AT&T's perspective, there are none of the pesky open access or public safety regulations attached to this 12MHz of spectrum.

Should AT&T take a reduced role in next January's auction, there still may be plenty of action—especially if Google decides to jump in. While the search giant hasn't exactly said outright that it intends to bid, it has taken a keen interest in the FCC's auction rule-making process. Last week, Google attacked Verizon over the telecom's attempts to have some of the open access rules overturned. If AT&T decides to scale back its bidding or take itself out of the auction picture entirely after today's purchase, it opens the door a bit wider for a new entrant like Google.