The Lower 700 megahertz (MHz) spectrum frequency band AT&T is buying covers more than 300 million people in the United States, the companies said in a joint statement.
As part of its longer-term 4G network plans, AT&T intends to deploy this spectrum as supplemental downlink, using carrier aggregation technology, the company said in the statement.
AT&T expects to begin deploying this spectrum once compatible handsets and network equipment are developed.
The 700 MHz airwaves are considered valuable because they travel long distances and can penetrate thick walls.
The 700 MHz band was formerly used by U.S. television stations, but the U.S. Congress voted in late 2005 to require stations to vacate the spectrum and move to all-digital broadcasts.
U.S. TV stations exited the 700 MHz spectrum in 2009.
In 2007, AT&T bought wireless airwave licenses in the 700 MHz frequency band from privately held Aloha Partners LP for about $2.5 billion.
San Diego-based Qualcomm, which currently uses the licenses to support its FLO TV unit that broadcast live television directly to phones, expects to shut down the FLO TV business in March 2011.
Qualcomm had been trying to sell the spectrum and was in talks with wireless operators including Verizon Wireless (VZ.N).
AT&T and Qualcomm expect the sale to close during the second half of calendar year 2011.
AT&T shares were trading up 22 cents at $29.43 on Monday on the New York Stock Exchange in trading before the bell. Qualcomm shares were up 63 cents or 1 percent at $49.75 on Nasdaq.
Reporting by Supantha Mukherjee in Bangalore; Editing by Prem Udayabhanu