With the threat of AT&T's merger with T-Mobile USA passed, the operator's competitors are turning their attention to its acquisition of 700 MHz spectrum used for Qualcomm’s discontinued Flo TV mobile television service.

The FCC said earlier this month it would approve the Flo TV deal with an unspecified set of conditions after AT&T pulled its application to transfer T-Mobile's spectrum licenses. The agency's review of the spectrum purchase had been held up by "a number of related issues" association with the T-Mobile deal.

Specific terms of the FCC's approval, such as divestments, have not yet been released, providing AT&T's competitors with a window of time to lobby the agency about conditions they'd like AT&T to have to agree to in order to get the deal passed.

The top issue: interoperability between AT&T's LTE network and LTE services deployed in different spectrum bands by its smaller competitors.

Sprint, U.S. Cellular, C Spire Wireless and Vulcan Wireless want the FCC to mandate new banding requirements for AT&T as part of its conditional approval for the Flo transaction.

Specifically, the operators want AT&T to make devices running on its Band Class 17 LTE network interoperable with Band Class 12 devices used in other LTE deployments.

"Before allowing AT&T to acquire additional 700 MHz spectrum, the Commission should take steps to ensure that AT&T does not implement a restrictive and anti-competitive band class in an attempt to indirectly control what little Lower 700 MHz spectrum AT&T does not already directly own and control," Sprint said in documents posted to the FCC's website on Monday.

Interoperability in the 700 MHz band has been a major concern for small operators. Because of the different band classes within the block of spectrum, devices running on one LTE network may not be able to roam onto another LTE network.

This leaves carriers with regional 700 MHz footprints unable to offer their customers nationwide LTE coverage through roaming deals with larger competitors such as Verizon Wireless or AT&T, thereby limiting the attractiveness of their service to subscribers. Smaller carriers like Cricket Communications have used roaming deals to keep their 3G services competitive against national operators.

Not surprisingly, AT&T is opposed to any conditions that would add an interoperability requirement to its LTE network. The operator says such conditions would hinder the deployment of its LTE network, be expensive, cause problems with interference and force substantial compromises on device design.

"If AT&T were required to abandon its current reliance on Band 17 and redesign the LTE network deployment around a Band 12 LTE deployment, there would be substantial disruption and delay to our current LTE deployment plans and significant additional costs," AT&T told the Commission last week.

The operator also said it would have to develop new chips, devices and radio equipment, "a process that usually takes years to complete."

AT&T’s competitors say its interference concerns are overblown.

“The anticipated interference circumstances were unfounded, and the underlying assumptions put forth for a separate Lower 700 MHz Band Class 17 were overstated,” C Spire Wireless recently told the FCC, citing a study on the issue commissioned by 700 MHz A-block licensees who would benefit from interoperability requirements.

Interestingly, AT&T told the FCC this week that it hadn't ruled out a migration to Band 12 – it just wanted to deal with the issue on its own terms.

"AT&T would not rule out a migration to Band 12 in the future and indeed anticipate that there would be increased opportunity under those circumstances for commercial relationships with A-block licensees," the company said in an ex parte document filed Wednesday. "AT&T should remain free, however, to plan and manage any such migration in a way that would not disrupt existing service or result in unnecessary cost or delay."

AT&T is paying $1.93 billion for Qualcomm's Flo TV spectrum. The 700 MHz D-block and E-block spectrum covers 300 million people and includes 12 MHz in New York, Boston, Philadelphia, Los Angeles and San Francisco. AT&T wants to use the airwaves to add supplemental downlink capacity to its LTE network.

The FCC has not said when it will vote on the Flo TV transaction.