The latest US spectrum auction wound down in April, raising $19.8bn — less than half of what the US government expected — for 70 MHz of spectrum.
Comcast, T-Mobile and Dish Networks bid heavily.
But incumbent mobile operators, AT&T and Verizon usually starved for spectrum and willing to spend big, barely made a showing.
Instead, AT&T and Verizon are investing in spectrum of a different sort.
In February 2017, AT&T quietly bought a company called FiberTower; AT&T also has bid to acquire Straight Path Communications. For its part, Verizon has a standing offer to acquire the spectrum licenses formerly held by XO Communications.
FiberTower? Straight Path? Behind these brands are companies known as Teligent, Winstar and WNP.
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Twenty years ago, those companies paid a premium to acquire huge numbers of US government spectrum licenses in the 28- and 38-GHz millimeter wave range during the dot-com boom.
All three experienced dot-com bust bankruptcies, and subsequent owners have been in search of a cash cow business plan ever since.
Finally that cash cow is here.
The 5G specifications include a high-frequency component that could turn high-speed/low latency millimeter wave communications into a desirable mass market asset.
US regulators have paid attention to this 5G spec: In 2016, the FCC promised to free up 10.85 GHz of millimeter wave spectrum in 28-, 38- and 60+GHz bands for that purpose.
But AT&T and Verizon rightly recognise that an auction is costly, and there are winners and losers.
If 5G’s millimeter wave specification opens up a new revenue opportunity, isn’t it easier and safer to buy companies that already own big bundles of these spectrum licenses?
For the same reason, AT&T has found its $1.25bn offer for Straight Path Communications counter-bid by a mystery player offering $1.31bn.
Until recently, it was unthinkable that these unappreciated millimeter spectrum assets could possibly start a bidding war. But market players are willing to bet on them, even if it is betting on the unknown.
Successful mobile radio devices need to be tiny, inexpensive and power-efficient.
Millimeter waves are a performance powerhouse that operate in a nosebleed part of spectrum where gear has not been cheap or low-power. But the risks of missing out on this key 5G element are too high to sit out.