Verizon and Straight Path have paid $600 million to the U.S. Treasury as part of a settlement Straight Path entered in January 2017 with the FCC. The FCC said it’s the largest civil penalty ever paid to the U.S. Treasury to resolve an FCC investigation.
The FCC found Straight Path in violation of the FCC’s build-out and discontinuance rules in connection with approximately 1,000 licenses in millimeter wave spectrum bands. An investigation by the commission’s Enforcement Bureau found that the company had failed to deploy wireless services as required by the FCC’s spectrum licenses. Straight Path agreed to hand over 20% of its spectrum license in the 39 GHz spectrum band back to the FCC as a result of the violation, in addition to paying $15 million in 2016.
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“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, in a statement last year. “Wireless spectrum is a scarce public resource. We expect every person or company that receives a spectrum license to put it to productive use.”
As part of the settlement, Straight Path was also forced to sell its remaining spectrum licenses, which spurred a bidding war between Verizon and AT&T and ultimately helped boost the company’s share value. Verizon agreed to acquire Straight Path’s LMDS 39 GHz, 3650-3700 MHz and common carrier fixed point-to-point microwave licenses from Straight Path for $3.1 billion in 2017. As part of the FCC settlement, Straight Path handed over 20% of the overall proceeds of the transaction to the U.S. Treasury, too. The deal was approved by the FCC earlier this year.
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The ordeal underscores just how important millimeter wave spectrum has become to wireless carriers and their future businesses. Verizon, AT&T and T-Mobile have been snapping up licenses for mmWave spectrum, which is considered critical for building out 5G wireless service. That has drawn criticism from the Competitive Carriers Association, which has argued that consolidating the coveted mmWave spectrum among just a few wireless carriers will harm competition.
Wireless carriers aren’t the only ones who want access to those bands. Satellite providers have also asked the FCC to adopt more flexible rules around mmWave spectrum to accommodate satellite broadband systems that can serve rural communities.