For most people, wireless spectrum is a topic best discussed right before bed with a warm glass of milk. It is boring. But it's important. While landline internet is, as we know, a series of tubes, wireless internet is more like a giant fleet of invisible flying trucks... or something.

To put it plainly, long-range, high-bandwidth spectrum usable with cell phones is a finite resource. Now, the scarcity of that resource in reality is very debatable - vast swaths of basically unused (or severely underutilized) wireless spectrum are in this range, much of it belonging to the military, public safety, television, and various executive agencies. This area of spectrum, commonly known as UHF, lies between 300 and 3000MHz. There are a lot of other things in there, too (like satellite radio and pagers), but that's the gist of it.

So, back in 2008, the FCC auctioned a big chunk of this spectrum in the 700MHz block. Like, most of the 700-800 range. This spectrum is valuable for three reasons.

First, it's on the low end of the UHF range, which improves its building penetration and signal strength characteristics (I don't claim to understand the science there), making it ideal for urban deployment. Second, an extra-wide block of spectrum was up for grabs in this particular auction, the Upper C Block. Compared to the next largest blocks of spectrum available in the auction, the Upper C Block was almost twice as wide, at 22MHz. Third, the C block was being sold basically nationwide. Because spectrum is leased as regional licenses (you lease control of that spectrum for a particular area, not everywhere), it's difficult to get nationwide control of a single block in one fell bank wire transfer. The Upper C Block auction was a rarity, and licenses were sold in massive regional blocks that covered basically all of the United States.

That's the spectrum Verizon bought, in full, and that Google attached those openness requirements to. That's a big part of why Verizon's LTE rollout has been so swift (and the network so fast) - they've been able to roll it out with no pesky regional frequency restrictions, on a single block of spectrum.

Verizon also bought licenses in the Lower A and B blocks of the 700MHz spectrum, even though everyone assumes at this point they'll probably never use it - it was an investment.

Today, they sold a large swath of those Lower B Block licenses to AT&T for a cool $1.9 billion. AT&T bought the licenses because it already controls a lot of licenses for the Lower B Block of the 700MHz spectrum in many regions. 39 licenses were sold to AT&T, adding major cities like Los Angeles, Chicago, and Miami to AT&T's Lower B Block repertoire. This will give AT&T a 'fat pipe' similar in size to Verizon's in some key markets, and help plug up some of the large geographical holes in AT&T's LTE spectrum portfolio. This is all still subject to approval by the FCC and DOJ, but Verizon selling the spectrum to someone who will actually use it is probably a good thing for consumers.

Verizon didn't just take the money and run on this deal, though. They wanted more. So, as part of the transaction, AT&T will be handing over the leases on big chunks of AWS (Advanced Wireless Spectrum - the frequency range T-Mobile uses). What exactly does Verizon want with that? Well, Verizon's current 700MHz LTE network is good enough for now with many customers still on CDMA, but eventually, it will become congested, especially in urban areas. That's where AWS steps in.

AWS LTE will form the data 'backbone' of Verizon's network in high-traffic areas, where the available 700MHz spectrum won't get the job done when the network is under heavy load. If this deal goes through, Verizon will be extremely close to having nationwide AWS spectrum available for use. This AWS spectrum could also eventually be a testbed for LTE Advanced or whatever wireless network tech comes next.

As part of the deal, Verizon also announced it will be leasing small regional licenses of its Upper C Block spectrum to carriers in rural areas. Which allows Verizon to make some money off the Block C spectrum it owns that isn't particularly valuable.

So, like the Joker said, it's all part of the plan.

Verizon Wireless