The future is 5G: Verizon buys Straight Path for $3.1bn

12 May 2017

Image: Dina Julayeva/Shutterstock

New Verizon acquisition aims to accelerate the introduction of 5G.

Verizon is acquiring Straight Path Communications for $3.1bn in an all-stock deal, which gives it vital access to licensed 5G spectrum in the US.

While 5G has yet to be formally defined as a technology standard, many companies and regions such as the EU are marshalling their forces to be seen as forerunners in the next generation of telecoms.

‘Verizon now has all of the pieces in place to quickly accelerate the deployment of 5G’

Virginia-based Straight Path holds spectrum licenses for the 39GHz spectrum, critical to the future of wireless broadband.

Gaining the edge in 5G

Straight Path secured its share of the 39GHz band more than 15 years ago, but failed to build a working network off the back of this access.

The Federal Communications Commission levied a $100m fine against Straight Path, to be reduced to $15m (plus 20pc of sales from licenses) if the company could find a buyer.

Straight Path’s spectrum could be seen as a game-changer in the telecoms market which, if harnessed correctly, could enable higher speeds, shorter response times and increased capacity.

The implication is that wireless players such as Verizon and AT&T could compete with high-speed broadband provided by cable companies, with potential speeds of in excess of 1Gbps.

AT&T said in April that it would buy Straight Path for $1.25bn in an all-stock deal. However, Straight Path subsequently said that it had received an offer from an unnamed bidder, which it now turns out was Verizon.

“Verizon now has all of the pieces in place to quickly accelerate the deployment of 5G,” said Hans Vestberg, president of global network and technology at Verizon, in a statement.

In August last year, Verizon revealed its acquisition of Irish software company Fleetmatics for $2.4bn, to give it an edge in the internet of things and vehicles space.

Updated, 2.42pm, 12 May 2017: This article was amended to clarify that the FCC fine would be reduced from $100m to $15m.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years