A large and growing group of voices, including those from legislators, journalists, FiberTower shareholders and trade associations, argues that AT&T’s purchase of FiberTower’s millimeter wave licenses is a sweetheart deal that undervalues that spectrum—spectrum those in the industry believe is critical to the rollout of 5G.
Most recently, Rep. Anna Eshoo, D-Calif., in a letter to the FCC, claimed that the agency signed off on AT&T’s FiberTower purchase without holding an open debate about the transaction. The Competitive Carriers Association, a trade group for small wireless operators, agreed, arguing that the transaction gives AT&T “a first-mover advantage in coveted 5G spectrum at the expense of American taxpayers.”
Those complaints about AT&T’s purchase of FiberTower’s licenses extend to Verizon’s purchase of Straight Path’s millimeter wave spectrum licenses. Verizon agreed to pay $3.1 billion for Straight Path in 2017, and earlier this year Verizon and Straight Path paid a $600 million fine because Straight Path didn’t meet the FCC’s spectrum license buildout requirements.
But AT&T’s purchase of FiberTower’s licenses is much less clear. As noted by Android Headlines, AT&T revealed early last year it entered an agreement to acquire FiberTower—which filed for bankruptcy in 2012—in one sentence at the bottom of a press release about a largely unrelated technology. Earlier this year, AT&T said it paid just $207 million to complete its acquisition of FiberTower.
According to AllNet Insights & Analytics, AT&T obtained around 479 of FiberTower’s 39 GHz spectrum licenses and none of the company’s 24 GHz licenses. AT&T said only that it gained roughly 360 MHz of spectrum in the 39 GHz band from FiberTower.
Now, however, some FiberTower shareholders are raising concerns about value ascribed to some of the company’s licenses. In recent filings with the U.S. Bankruptcy Court for the Northern District of Texas (where FiberTower’s bankruptcy proceeding started in 2012), some FiberTower shareholders are urging the court to reconsider AT&T’s purchase of FiberTower. They claim that hundreds of FiberTower spectrum licenses were assigned a value of $0.00.
The full details of AT&T’s purchase of FiberTower have not yet been made public, and therefore AT&T’s final price tag for FiberTower’s licenses may change. Indeed, in her letter, Rep. Eshoo estimated AT&T paid roughly $2 billion for the licenses, based on the price Verizon paid for Straight Path. But AT&T’s purchase of FiberTower may now face complications due to the ongoing debate in the bankruptcy court.
AT&T declined to comment on the situation beyond its press releases.
But the debate over the value of FiberTower’s licenses is just one piece in a larger puzzle. The CCA and Rep. Eshoo are arguing that the FCC shouldn’t have approved AT&T’s purchase of FiberTower—and Verizon’s purchase of Straight Path—in the first place. They argue that neither FiberTower nor Straight Path met its spectrum buildout requirements and, therefore, the companies’ spectrum licenses should have reverted to FCC ownership—and then those licenses should have been auctioned off.
“Industry, the economy and consumers would all benefit from an auction of the valuable high-band spectrum, as opposed to going down the path of further spectrum consolidation by already dominant wireless incumbents,” CCA’s Steven Berry said in a statement.
“The transactions in question will allow high-band spectrum licenses to be put to productive use, facilitate the prompt deployment of next-generation wireless services and thus help the United States lead the world in 5G," a spokesperson for FCC Chairman Ajit Pai said in response, according to Multichannel News. "Moreover, the consent decree that allowed Straight Path to sell its licenses rather than return them to the commission was signed under the prior administration and no commissioner objected to it. So any attempt to turn this into a partisan issue is utterly baseless.”
Hanging over this whole issue is the fact that the FCC has promised to conduct a public auction of 28 GHz spectrum by November. That proceeding will likely provide a much clearer look at the value of millimeter wave spectrum licenses in general.
5G and national security
But, to be clear, the value of spectrum continues to be a moving target. For example, the AWS-3 spectrum auction in 2015 raised more than double the money analysts had expected, while the 600 MHz incentive auction in 2017 raised just a third of some expectations. Thus, there’s no telling what T-Mobile, Dish Network and others might pay for 28 GHz licenses in an open auction, considering such millimeter wave spectrum behaves much differently than lower-band spectrum like 600 MHz.
Finally, it’s fair to assume that the U.S. government in general is going to work to get those millimeter wave spectrum licenses—and other spectrum licenses for 5G—released and put into action as quickly as possible. After all, the U.S. role in the development of 5G technology was a key reason why President Trump made the mostly unprecedented moved this week to ban Broadcom from acquiring Qualcomm before the companies had even entered into a final merger agreement. Separately, Trump’s FCC has been moving to pave the way for the rollout of 5G technology. At issue are the estimated 3 million jobs that will be created through the deployment of 5G.
So, even if there is a legitimate argument to be had over the ultimate value of millimeter wave spectrum for 5G, it may well get steamrolled in the coming months because, apparently, 5G is now a matter of national security. – Mike | @mikeddano