Last Thursday, the FCC signaled its intolerance for spectrum warehousing in announcing a consent decree with Straight Path Communications (SPC) through which the company agreed to pay fines of up to $100 million and surrender or divest its license portfolio for claiming “substantial service” for wireless facilities that had never been built.   

On a nationwide basis, SPC holds more than 1,000 “millimeter wave” licenses in the 28 GHz and 39 GHz bands that are slated to provide the foundation for future fifth-generation (5G) wireless services.  Observers indicate that the company’s holdings represent nearly 95% of commercially available spectrum in the 39 GHz band and a significant portion of available 28 GHz spectrum resources in top U.S. markets that include New York and San Francisco.  Ultimately, the settlement—which requires SPC to immediately surrender 196 licenses in the 39 GHz band and to sell or transfer control of its remaining spectrum assets in the 39 GHz and 28 GHz bands—is expected to provide additional spectrum opportunities for Verizon, AT&T and other carriers that are gearing up for 5G network services.   

The FCC launched its investigation in late 2015 after receiving a tip from an anonymous source that SPC had obtained FCC consent to the renewal of various licenses in the 39 GHz band by submitting showings of “substantial service” for systems that were never built.  As stated in an FCC Enforcement Bureau press release, a subsequent internal investigation conducted by SPC revealed that “equipment had been deployed only for a short period of time at the original transmission locations, and that no equipment was present at the time of this investigation at the majority of the relevant locations.”  Under the consent decree, which includes no admission of wrongdoing, SPC agreed to submit a fine of up to $100 million to the U.S. Treasury, with the first $15 million to be paid in installments over the next nine months.  SPC will immediately surrender for cancellation specified licenses in the 39 GHz band, and payment of the remaining portion of the fine ($85 million) will be suspended for twelve months pending assignment or transfer of control of remaining licenses in the SPC portfolio.  According to the consent decree, if SPC fails to transfer or assign these licenses within the specified period, “the remaining $85 million shall become due immediately, or [SPC] shall surrender to the Commission all of the licenses in its license portfolio.”  Payment of the remaining portion of the fine will not be required if the licenses in question are assigned or transferred in a timely manner.  The U.S. Treasury will also receive 20% of the sale proceeds.   

Describing wireless spectrum as “a scarce public resource,” FCC Enforcement Bureau Chief Travis LeBlanc declared that “squatting on spectrum licenses without any meaningful effort to put them to good use . . . is fundamentally inconsistent with the public good.”  Meanwhile, SPC CEO Davidi Jonas told reporters “we look forward to continuing our role in the important development and deployment of 5G technology,” adding: “with this settlement, we have cleared the way for a review of strategic alternatives.”