AT&T is set to pick up 868 spectrum licenses in the 28 GHz and 39 GHz bands it plans to use for upcoming 5G services in $1.6B deal.
AT&T is looking to continue bolstering its millimeter wave spectrum holdings, announcing a deal to acquire Straight Path Communications for $1.6 billion.
Straight Path currently holds the rights to 868 spectrum licenses in the 28 GHz and 39 GHz spectrum bands covering most of the United States, including spectrum in the country’s 40 largest markets. AT&T said the deal includes $1.25 billion in stock and the assumption of Straight Path liabilities, has been approved by the board of directors at both companies and is set to close within one year.
AT&T said the deal complements its announced acquisition earlier this year of FiberTower, which holds spectrum licenses in the 24 GHz and 39 GHz bands and provides wireless services to carriers, enterprises and government entities. Carriers typically use FiberTower’s services for wireless backhaul.
FiberTower said its 24 GHz and 39 GHz spectrum can provide more than 200 high capacity links per square kilometer, and the company has been actively marketing the solution to carriers. The company holds licenses in most states and in several major metropolitan areas, including Washington, D.C., Boston, Baltimore and Detroit.
AT&T has been aggressively looking to plow its millimeter wave spectrum holdings into “5G” trials. The carrier in February announced plans to launch its first “5G Evolution markets” in the coming months in Indianapolis and Austin, Texas. The test beds are said to include dedicated outdoor and indoor testing locations that will include “flexible infrastructure to allow modifications and updates as 5G standards develop,” and include spectrum support below 6 GHz, and in the 28 GHZ and 39 GHz bands.
AT&T in February also noted a recent trial with infrastructure partner Nokia in streaming DirecTV content using millimeter wave spectrum in the 39 GHz band and fixed wireless equipment at the AT&T Labs facility in Middletown, New Jersey.
The carrier earlier this year announced plans with Ericsson and Qualcomm to conduct interoperability testing and over-the-air trials based on what they expect to be 5G technical specifications and using millimeter wave spectrum bands. The companies said the tests will tap spectrum in the 28 GHz and 39 GHz bands in an effort to bolster their expectations for the 5G “New Radio” specifications being worked on by the Third Generation Partnership Project as part of the expected LTE Release 15 standard.
Both spectrum bands are also included in the Federal Communications Commission’s Spectrum Frontiers proceedings, which has the federal government looking to open up nearly 11 gigahertz of spectrum above the 24 GHz band in support of mobile telecom services. The 28 GHz band has been receiving more attention from operators, with Verizon Communications, Sprint, T-Mobile US, C Spire and U.S. Cellular all announcing use of the band for 5G network trials.
Straight Path cashes out
For Straight Path, the deal is set to conclude what has been an eventful couple of months as the company earlier this year agreed to a settlement with the FCC over spectrum license build out requirements. As part of the settlement, Straight Path agreed to pay a $100 million civil penalty to the United States Treasury, surrender 196 of its spectrum licenses in the 39 GHz band, and sell the remainder of its license portfolio, with 20% of those proceeds also paid to the Treasury as “an additional civil penalty.”
The settlement stemmed from an FCC Enforcement Bureau investigation that began with an anonymous source publishing allegations that Straight Path falsified build out claims in obtaining renewal of its 39 GHz spectrum licenses. The FCC said it found equipment in support of the spectrum had only been deployed for a “short period of time at the original transmitter locations and that no equipment was present at the time of this investigation at the majority of the relevant locations.”
Straight Path in February scored $17.5 million in debt financing from a group of investors led by current shareholder Clutterbuck Capital Management. The loan was said to be senior secured, with the lenders having initially received approximately 252,000 warrants with a strike price at $34.70.
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