Straight Path Spectrum Taken to the Cleaners

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The Enforcement Bureau (EB) of the FCC has entered into a Consent Decree with Straight Path Communications, Inc., parent company of Straight Path Spectrum, LLC (collectively, Straight Path), to resolve an investigation into allegations that Straight Path failed to provide wireless service in violation of the FCC’s buildout and discontinuance rules in connection with approximately 1,000 LMDS and 39 GHz licenses. Under the settlement, Straight Path will pay $100 million dollars, surrender 196 of its 39 GHz licenses, sell the remainder of its license portfolio, and remit 20 percent of the proceeds of that sale as an additional civil penalty. In November 2015, a pseudonymous source, under the name Sinclair Upton Research, published a report alleging that Straight Path obtained renewal of its 39 GHz licenses by submitting filings falsely claiming construction of systems that were never built.  The report notes that it is prepared under a pseudonym due to danger of retaliation from the company/individuals involved. Under the FCC’s rules, licensees of this spectrum must demonstrate substantial service in a filing with the FCC. Failure to meet this condition results in termination of the license with no rights to regain it. Straight Path made substantial service filings with the FCC representing that it had met its buildout requirements in the 39 GHz bands. After an internal investigation, Straight Path concluded that while equipment had been deployed for a short period of time at the original transmitter locations, no equipment was present at the time of this investigation at the majority of the relevant locations. The EB notes that these high frequency bands are extremely valuable for use in 5G and that squatting on spectrum licenses is fundamentally inconsistent with the public good. The FCC’s construction and discontinuance rules are intended to promote productive use of spectrum and encourage provision of service to customers in a timely manner.

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