The Dallas Morning News

With eye on 5G, AT&T grabs firm for spectrum

- By MELISSA REPKO Staff Writer mrepko@dallasnews.com

Dallas-based AT&T is racing to build a 5G network with the faster speeds and reliabilit­y to support video streaming; virtual and augmented reality; connected home, car and health devices; and self-driving cars.

The telecom giant says it’s getting a step closer by acquiring Straight Path Communicat­ions. The Virginia company owns a large nationwide portfolio of spectrum, or airwave, licenses. The acquisitio­n, announced Monday, has a total value of $1.6 billion. That total includes the liabilitie­s and amounts that Straight Path must pay the FCC from a previous settlement.

Straight Path shareholde­rs will receive $1.25 billion, or $95.63 per share, paid in AT&T stock, according to an AT&T news release.

The Federal Communicat­ions Commission will review the acquisitio­n. AT&T said it expects the deal to close within 12 months.

AT&T said that Straight Path’s portfolio will complement the spectrum licenses that it got in January through

the acquisitio­n of FiberTower.

Straight Path had an incentive to seek buyers after a settlement with the FCC, said Matthew Kanterman, a tech and telecom analyst with Bloomberg Intelligen­ce. The FCC penalized the company for not meeting infrastruc­ture build-out requiremen­ts for its spectrum licenses. It faced a $100 million fine or a lesser fine of $15 million plus 20 percent from sales of its licenses if the company was sold.

The company’s spectrum portfolio appealed to AT&T as the company looks to a 5G future. Straight Path owns large numbers of 39- and 28-gigahertz licenses, the two primary high-frequency bands of spectrum planned for use in the 5G rollout in the U.S.

AT&T got some of those licenses with FiberTower but will get a much larger swath with the Straight Path acquisitio­n. “This is their [AT&T’s] land grab,” Kanterman said. “This is them staking their claim to a position in the market.”

With the Straight Path deal, he said AT&T is “future-proofing their spectrum portfolio for the eventual rise of 5G.”

Wireless carrier rival Verizon made its own 5G land grab. It recently finalized its $1.8 billion acquisitio­n of XO Communicat­ions, a deal that included 28-gigahertz and 39-gigahertz licenses.

AT&T has been testing 5G technology. Last fall, AT&T and Ericsson worked together in demonstrat­ions. In February, AT&T and Nokia delivered AT&T’s live video streaming service, DirecTV Now, over a fixed wireless 5G connection during a test.

AT&T is in the middle of a $108.7 billion merger with Time Warner. The New York media and entertainm­ent company owns a treasure trove of content and networks, including HBO, Turner’s channels of TNT, TBS and CNN, and Warner Bros. Entertainm­ent.

With the acquisitio­n of Straight Path, AT&T has become the U.S. carrier with the most 5G spectrum. It’s at the top of the list, along with Verizon, which is close behind.

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