AT&T is buying wireless backhaul provider FiberTower for its millimeter wave spectrum assets, which could be used for 5G services in the future.
FiberTower Corp. has licenses for 24GHz and 39GHz spectrum that cover over 30 towns and cities in the US. 39GHz is one of the four high bands identified by the Federal Communications Commission (FCC) as future 5G bands. Millimeter wave (mmWave) spectrum is expected to be one of the building blocks of 5G, offering the speed and capacity to allow users to do things like download an HD movie over the air in seconds.
The terms of the buyout were not disclosed.
FiberTower filed for Chapter 11 in July 2012, with $527 million in debt. Ironically, this was because it lost business with customers like AT&T. FiberTower re-emerged in 2015 and has lately been talking up its spectrum as a 5G asset, even going as far as to pitch a 1-gig wireless system on 24GHz to the FCC. (See FiberTower Receives Termination Notice.)
The move to buy FiberTower comes as Verizon Communications Inc. (NYSE: VZ) closes its $1.8 billion XO deal. This means that AT&T Inc. (NYSE: T), T-Mobile US Inc. and Verizon all now have either some 28GHz licenses, 39GHz holdings or both. (See AT&T Takes 'Different Approach' With 5G, ECOMP, Big Data and Verizon Completes XO Fiber Buy; 5G Stage Set.)
No carrier, though, has the 5G spectrum assets to offer a nationwide service, but they could instead deploy the next-gen services in some cities in the US. And most of the early testing action is happening in the 28GHz band, not 39GHz. (See Islands in the Stream: Don't Expect Full mmWave 5G Coverage in US, Says Nokia.)
Nonetheless, with an FCC auction of 5G spectrum still off in the future at an as-yet unspecified date, it probably seems prudent to acquire licenses that can be used to start 5G deployments in the US in a couple of years. (See 5G in US: Will Spectrum Be the Speed Bump?)
If a rush for 5G spectrum is happening then that will likely put Straight Path Communications Inc. back under the spotlight. The company holds 39GHz licenses across the country and has 28GHz holdings across the country.
Straight Path has been shilling the concept that it holds the 5G spectrum cards for a while now. Unfortunately, it may not find it as lucrative as some investors have been hoping.
On Tuesday, a firm called Kerrisdale Capital put out a report claiming that Straight Path's spectrum holdings were worth $260 million tops, with 20% of that going to the FCC. Straight Path currently has a market cap of $414.7 million.
A spectrum bidding war might prove to be Straight Path's best hope of getting its much hoped for big 5G payday.
— Dan Jones, Mobile Editor, Light Reading