US telco AT&T will pay $2.5 billion (E1.76bn) to Aloha Partners LP for a prized chunk of unused television frequencies, in a deal that sets the stage for a major upgrade of its nationwide broadband network.

The deal demonstrates the telecom industry’s interest in a large and valuable segment of broadcast frequencies known as the “700 megahertz band.” A large amount of 700-megahertz frequencies, traditionally set aside for analogue TV broadcasts, will be freed up in 2009, when the country switches to all-digital TV broadcasting. Industry analysts said AT&T’s purchase gives it an early start on launching a 700-megahertz network, and predicted the company would buy still more frequencies at the upcoming auction.

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