Will Loss of Spectrum Licenses Affect AT&T's (T) 5G Launch?

AT&TT is reportedly terminating ownership of multiple millimeter wave spectrum (mmWave) licenses gained from the acquisition of FiberTower in February 2017. The company is returning the licenses to the Federal Communications Commission (FCC). Notably, the agency is likely to reauction the licenses in the near future.

Per a settlement, AT&T's FiberTower has agreed to return all of its 24 GHz spectrum licenses (total 121) and a portion of its 39GHz licenses to the FCC. AT&T will have access to 479 of FiberTower's 39 GHz spectrum licenses, estimated around 360 MHz of spectrum in total. Additionally, the company will have to pay $27 million to the U.S. Treasury to settle the FiberTower dispute.

However, AT&T continues to seek FCC's approval to win back those licenses. Other players like T-Mobile US TMUS and associations like the Competitive Carriers Association ("CCA") have opposed the return of the licenses on grounds of competency.

Notably, two major telecommunications service providers in the United States - AT&T and Verizon Communications VZ - own a significant chunk of the nation's available, licensed millimeter-wave spectrum. Through multiple acquisitions, the companies have strengthened their fiber-optic network assets. Further, the telcos are upgrading the aging copper network infrastructure with fiber and wireless network to support high-end mobile and wireline services for smart city, residential and business applications.

This has reduced the amount of spectrum available for other carriers in the secondary market and at auction, which will affect competition as well as consumers.

Apart from Verizon and AT&T, major wireline and wireless operators, such as Windstream Holdings WIN , Frontier Communications and CenturyLink are migrating to fiber-based network from copper.

Bottom Line

Millimeter wave spectrum is likely to play a major role in the deployment of 5G infrastructure. In recent years, they have gained popularity due to the industry's inclination toward 5G network technology. Notably, they can transmit more data at higher speeds with lower response times. Consequently, wireless carriers like AT&T, Verizon and other market incumbents are planning to centralize their 5G-related operations in millimeter wave bands. The recent loss of millimeter wave spectrum licenses, raises several questions on AT&T's plans to offer standards-based mobile 5G services in various U.S. markets by late 2018.

However, millimeter wave spectrum is not suitable for long-distance transmissions. Thus, the wireless industry has been focusing on dark fiber accumulation and small cell deployment, alongside.

Zacks Rank & Price Performance

AT&T carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

AT&T portrays an impressive price performance. In the past three months, shares of the company have rallied 11.3% compared with the industry 's gain of 7.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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