AT&T gains 5G spectrum in $1.6 billion acquisition of Straight Path

att straight path spectrum storefront
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If paying customers are carriers’ bread and butter, spectrum might be their lifeblood. It is the frequency where communications signals travel — the medium where text messages, phone calls, and data flow from your smartphone to a cell phone tower, and it is in demand if AT&T’s recent purchase is any indication.

On Monday, AT&T acquired Straight Path Communications, a spectrum holding company, for $1.6 billion. As part of the deal, AT&T will receive valuable licenses in the 39GHz, 28GHz, and 620MHz bands — frequencies ideal for the next generation of high-speed wireless. According to AT&T, Straight Path’s spectrum covers the entire United States.

“The merger of AT&T and Straight Path Communications marks a vital point for us,” Straight Path CEO Davidi Jonas said in a statement. “Importantly, this merger provides Straight Path shareholders with a compelling return since Straight Path’s spin-off to become an independent public company in 2013, with an initial price per share of $6.40 on July 31, 2013.”

It is absconsion for Straight Path, which previously came under fire for submitting fraudulent paperwork. In November 2015, the U.S. Federal Communications Commission (FCC) investigated the firm after an anonymous source alleged that Straight Path had obtained renewal of band licenses from the FCC by submitting filings incorrectly claiming that it had constructed systems that were never built. Straight Path launched an internal investigation that aligned with the agency’s findings.

Under the terms of a settlement, Straight Path will surrender 20 percent of its licenses to the FCC and pay two civil penalties. In addition, 20 percent of any sale proceeds must be paid to the U.S. Treasury.

The Straight Path purchase is yet another notch in AT&T’s spectrum belt. Earlier in 2017, the carrier acquired FiberTower, a bankrupt startup that owns airwaves in the 24GHz and 39GHz bands. It was recently awarded a contract to build FirstNet, the nation’s first wireless network for first responders, in 20MHz low-band spectrum.

AT&T is not the only one gobbling up frequencies. Dish Network recently traded assets to EchoStar for spectrum in the 28GHz band. Verizon finalized its acquisition of XO Communications, which includes spectrum in the 28GHz and 39GHz band. The FCC has also announced plans to offer licensed use in the 28GHz, 37GHz, and 39GHz bands; unlicensed use in the 64-71 GHz bands, and shared access in the 37-37.6 GHz band.

All of the movement is largely in anticipation of 5G. According to the FCC, the next generation of cellular could offer data speeds of up to a gigabit per second. The high-frequency spectrum is not without limitations, namely the inability to travel far distances or through walls. But that is not stopping companies like AT&T and others from charging full steam ahead.

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