Verizon Grabs Straight Path from AT&T

By Paula Bernier, Executive Editor, TMC  |  November 20, 2017

Cellular spectrum has really become a game of musical chairs in recent years as the Internet of Things expands and companies jockey for control of the airwaves that will help connect the IoT.

Earlier this year, just after we got news that AT&T would be buying Straight Path Communications in an effort to expand its spectrum holdings to ready for 5G, Verizon swooped in and took over, snagging the millimeter wave spectrum holder for more than $3 billion.

Verizon’s (News - Alert) acquisition of Straight Path involves an all-stock deal valued at $3 billion, or $184 a share. Verizon also will pay AT&T (News - Alert) a $38 million termination fee.

An April 28 Verizon blog expressed the importance of millimeter wave spectrum to 5G, which is what’s next in cellular networking. “The next big technological innovations are coming in 5G to serve the future needs of business, education, government, and consumers,” Nicola Palmer wrote for the Verizon blog. “Enhanced fixed and mobile broadband, low-latency services, and massive IoT scale will thrive on mid-band and millimeter wave spectrum, which is where we are focused for growth.”

The blog was Verizon’s effort to explain why it didn’t buy 600MHz spectrum during the recent spectrum auction, in which T-Mobile captured 45 percent of all the low-band spectrum sold. But Verizon’s Palmer said Verizon wasn’t interested in that, but rather is more interested in mid-band and millimeter wave spectrum, and already has “strong spectrum holdings in the 700, 850, 1900MHz/PCS, AWS 1 and 3 spectrum bands.”

5G is a new kind of cellular that will be noteworthy due to its parity with wireline speeds and its ability to address the Internet of Things with such capabilities as ultra reliable low latency communications.

Straight Path Communications is interesting to these two tier 1 cellular service providers because it has 735 millimeter wave licenses in the 39 gigaHertz band and 133 licenses in the 28 gigaHertz band. These licenses cover the U.S., including all of the nation’s top 40 markets.

According to Bloomberg (News - Alert) Intelligence, Straight Path Communications is the third largest holder of 28 gigaHertz spectrum. Bloomberg says Verizon is the largest, with a nearly 200 billion megahertz POP; next is T-Mobile (News - Alert), with a 97.4 billion megahertz POP. Straight Path Communications comes in at No. 3, possessing a 39.7 billion megahertz POP.

IDT Corp. bought the spectrum from now-defunct wireless service provider Winstar Communications Inc. in 2001. Twelve years later IDT spun off the company now known as Straight Path and the spectrum holdings.

But Straight Path Communications recently got into trouble with the Federal Communications Commission for “squatting on spectrum licenses without any meaningful effort to put them to good use in a timely manner,” as Travis LeBlanc, the chief of the FCC’s (News - Alert) Enforcement Bureau, described it. The FCC bureau in January fined Straight Path Communications $100 million to settle the case. That included an upfront payment of $15 million.

Edited by Erik Linask