Breaking up is hard to do, and AT&T is finding out the hard way, shelling out not only $3 billion after its failed attempt to acquire rival wireless provider T-Mobile but also handing over spectrum licenses for 128 areas.

The FCC will have to approve the transfers, which will help struggling, fourth-place provider T-Mobile, owned by German concern Deutsche Telekom, compete in the booming mobile market dominated by AT&T and Verizon Wireless.

The move comes at a time when providers are desperate to get their hands on more spectrum from cable TV and broadcast operators and the Federal Communications Commission is warning of a spectrum crunch because of the viral adoption of data-hungry mobile devices.

FCC Chairman Julius Genachowski wants to hold an auction to drastically redraw current license allocation, to add more spectrum to those who need it most.

On the Bright Side...

The transfer was part of the deal between AT&T and T-Mobile in the eventuality that the merger failed, but could also work to AT&T's advantage by allowing it to acquire better licenses than the ones it is giving away, said technology analyst Rob Enderle of the Enderle Group.

"My guess is [AT&T is] trying to game the coming spectrum auction by lowering the number of existing licenses they control, thus appearing smaller and more eligible for the ones they now want to buy," he said. "It is believed that the cash-strapped government will make an unprecedented sale of spectrum and AT&T wants the lion's share of this effort, and might be blocked from participating fully due to their current holdings."

Still Working Together?

Enderle added that the provision means the No. 2 and No. 4 carriers aim to still cooperate after the Justice Department effectively killed their $39 billion merger, objecting to the plan on grounds that it would hurt competition and lead to higher prices. With a tough election under way, change could be in the wind in the form of an anti-regulation, Republican White House.

"This suggests that even though the merger wasn't approved, the two vendors are working together against a common competitive goal possibly in preparation for a future where another administration will be more favorable to the merger."

In the meantime, the analyst said, T-Mobile must find some way to stand out of the pack to survive, and the breakup fee could create some possibilities.

"The merger attempt hurt them a lot and they still lack the kind of phone depth, including the iPhone, that is driving sales," Enderle said. "They will need a substantial investment if they are to turn this around, but $3 billion could be that investment if they invest it back into the market.

"So while they are currently sinking, they are getting enough cash to make a credible new run at the market if they choose to use it that way."

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