Straight Path to pay up to $100M in penalties tied to falsifying build out claims for 28 GHz and 39 GHz millimeter wave spectrum core to 5G plans.
Straight Path Communications is looking to restart its business as a holder of vast millimeter wave spectrum assets following a settlement with the Federal Communications Commission concerning build out requirements.
The FCC said the settlement involves Straight Path paying a $100 million civil penalty to the United States Treasury, surrendering 196 of its spectrum licenses in the 39 GHz band and selling the “remainder of its license portfolio,” with 20% of those proceeds also paid to the Treasury as “an additional civil penalty.” The settlement fee includes $15 million up front, with the rest coming from the 20% share of sold licenses or an additional $85 million in fines should Straight Path not announce a deal to sell licenses within one year. Straight Path can also return its licenses to the FCC and not pay any additional fine.
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.”
The FCC requires license holders to use licensed spectrum and verify that use in “substantial service” filings to the government agency. The agency typically places yearly timelines for license holders to use their spectrum resources, which has led to creative deployment plans.
“Squatting on spectrum licenses without any meaningful effort to put them to good use in a timely manner is fundamentally inconsistent with the public good,” said Travis LeBlanc, Chief of the FCC’s Enforcement Bureau. “Wireless spectrum is a scarce public resource. We expect every person or company that receives a spectrum license to put it to productive use.”
Straight Path put a slightly brighter spin on the settlement, noting it comes out of the decision with “the vast majority of its nationwide 39 GHz spectrum fully intact and its 28 GHz spectrum unchanged.” As for the civil penalty, the firm said it will pay the $15 million in installments over a nine-month period.
Specifically, Straight Path said it will continue to have control over 735 licenses, including 175 billion megahertz per potential customer in the 39 GHz band and 39 billion megahertz per pop in the 28 GHz band. The company said it’s returning 93 of its 39 GHz licenses to the FCC.
“We are pleased that we were able to achieve a comprehensive settlement with the FCC, which allows us to move forward as the largest holder of 39 GHz spectrum, with about 95% of the total licenses commercially available at this time, as well as a significant holder of 28 GHz in major markets, including New York and San Francisco,” explained Straight Path CEO Davidi Jonas, in a statement.
While stating plans to remain a “leader in the next frontier of telecommunications,” the company said it was also moving on a “review of strategic alternatives to maximize shareholder value,” and had retained investment banking advisory firm Evercore.
Straight Path last October signed a deal with Windstream to lease 39 GHz spectrum in a move to bolster its service offerings. The deal included current Windstream deployments in Chicago, New York City, Boston, Cleveland, Philadelphia, Milwaukee and Little Rock, Arkansas, with an option to add 32 more markets based on Straight Path’s spectrum holdings.
The 28 GHz and 39 GHz spectrum bands are central to the FCC’s “Spectrum Frontiers” proposal launched last year in an effort to free up gigahertz of millimeter wave spectrum resources in support of “5G” services. The FCC plan includes 3.85 gigahertz for licensed use in the 28 GHz, 37 GHz and 39 GHz bands, and 7 gigahertz for unlicensed use across the 64 GHz to 71 GHz bands.
A number of domestic operators have already begun to trial next-generation services using millimeter wave spectrum. Verizon Communications, AT&T, T-Mobile US, Sprint, U.S. Cellular and C Spire are all working in the 28 GHz band.
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