By Aaron Pressman
January 28, 2019

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The Federal Communications Commission just concluded its latest spectrum auction and, on its face, it seems like a flop. In a sale of licenses to operate in the 28 GHz band, suitable for new and faster 5G wireless networks, the agency raised only $702 million. And the highest winning bids totaled only $12.5 million and $11.4 million for licenses covering Dane, Wisconsin, followed by $10.3 million and $10.1 million for Honolulu. Many licenses went for just $200, like those covering Glasscock, Texas, and Dundy, Nebraska. Not very impressive, given that the FCC’s 2017 600 MHz auction raised $20 billion.

But after examining last week whether one pie-in-the-sky tech dream from the 1990s can finally come to fruition, let’s consider another and see what really happened at the 28 GHz auction.

As part of the government’s effort to crack open monopoly telecom markets in the late 90s, the FCC sold off airwave licenses for high frequency bands like 28 GHz. Cell phone networks use much lower bands like 600 and 700 MHz, which can travel further and more easily penetrate foliage and buildings. The so-called millimeter wave bands were, at the time, thought to be useful for building networks of point-to-point communications, say for when a company needed to send all its weekly sales data from the Kansas City branch back to HQ in Dallas, for example. A load of startups with names like Winstar and Teligent bought the licenses. It turned out to be tougher than expected. You remember what happened next: bankruptcy city.

But recently, as the big carriers started building the next generation of faster 5G networks, the millimeter wave bands started to look interesting again. An early deal that grabbed the industry’s interest was when Verizon bought parts of XO Communications in 2016 for $1.8 billion. XO was billionaire Carl Icahn’s holding pen for various telecom assets that had survived the boom and bust telecom era. The main deal was for XO’s 26,000 miles of fiber optic lines, but Verizon also got a $200 million option to buy 102 of those spectrum licenses in the 28 GHz and 39 GHz ranges that the government had sold back in the 90s.

Then came the 2017 bidding war over Straight Path Communications, which was spun off from telecom operator IDT in 2013 with licenses covering the entire country in the 39 GHz band and additional licenses for the 28 GHz band (IDT had itself acquired the licenses from bankrupt wireless pioneer Winstar back in 2001). AT&T offered almost $96 per share, triple the then-price of Straight Path’s stock price, in a deal valued at $1.6 billion, but that was just an opening gambit. Eventually, Verizon grabbed the company for $184 per share, or more than $3 billion. Last year, AT&T bought another survivor, FiberTower, and its 39 GHz licenses for $207 million. T-Mobile also has some 28 and 39 GHz licenses acquired when it bought MetroPCS in 2012.

So, the reason why the sale of 28 GHz licenses raised “only” $702 million is that most of the rights, including covering just about every major U.S. city, weren’t up for sale. They’re already owned by Verizon, AT&T, and T-Mobile. But the FCC has a lot more millimeter wave bands to sell off, including 24, 37, 39, and 47 GHz. Those bands should be available in a lot more big cities, so the dollars raised could be a lot higher. Seems like the 90s are back. Maybe it’s time for an R.E.M. reunion tour, too?

Aaron Pressman
@ampressman
aaron.pressman@fortune.com

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