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The Federal Communications Commission and Verizon have reached a settlement for $614 million -- the largest such penalty ever paid -- stemming from Verizon's acquisition of Straight Path and its valuable portfolio of mmWave spectrum.
The FCC alleged that Straight Path failed to use spectrum that it was awarded before the Verizon acquisition, "and thus violated the Commission's buildout and discontinuance rules in connection with approximately 1,000 licenses in certain millimeter wave spectrum bands" that are crucial to the development of wireless 5G technology.
"The settlement required Straight Path to sell its licenses and remit 20 percent of the overall proceeds of the transaction to the US Treasury," the FCC wrote in its announcement. "Verizon and Straight Path entered into an agreement on May 11, 2017 to transfer the licenses, and on January 18, 2018, the Commission's Wireless Telecommunications Bureau approved the transfer."
Verizon bested AT&T in the bidding war for Straight Path last May, agreeing to pay $3.1 billion to take control of the company.
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Straight Path holds ownership of 735 mmWave licenses in the 39GHz band and 133 licenses in the 28GHz band. These high-frequency radio waves are considered essential for the next generation of wireless networks. Current international requirements stipulate that 5G networks must be capable of downlink peak data rates of 20Gbps and uplink peak data rates of 10Gbps.
In 2016, the FCC adopted rules to open up high-band spectrum frequencies above 24GHz for 5G wireless. The FCC heralded the move a "game-changer" that would provide wireless users with fiber-like capacity. For telcos, the 5G business is expected to by worth worth $1.2 trillion by 2026.
Verizon and Straight Path announced on Wednesday that the merger between the two companies was complete. Straight Path is set to become a direct subsidiary of Verizon and its shares delisted from the New York Stock Exchange.
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