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Data Sheet—Just How Much Are 5G Wireless Networks Worth?

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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

NEWSWORTHY

Mishmash. Amid calls to break apart Facebook’s various services and apps, CEO Mark Zuckerberg is looking to go the other way. He wants to integrate Facebook, Instagram, and WhatsApp more closely, allowing users to send messages to each other across the three platforms. The company said it is “considering ways to make it easier to reach friends and family across networks.” Meanwhile, Facebook is terminating its photo and video sharing app, Moments, which never caught on.

Towed away. Virginia-based startup Urgent.ly, which provides roadside assistance programs integrated with mobile apps and connected cars, raised $21 million of private backing from investors including the venture capital units of BMW, Jaguar, and Porsche.

Clarity for the cloud. Federal courts have ruled over the past few years that software developers can copyright application programming interfaces, thwarting competition and killing interoperability efforts. Google last week asked the Supreme Court to review the question of whether APIs can be copyrighted (and overturn judgements against Google in favor of Oracle). If the court accepts the case, arguments would likely take place in the fall.

China syndrome. Very rich guy and Microsoft co-founder Bill Gates recently lost a partnership with China to develop a new kind of nuclear reactor. Now he’s lobbying the U.S. Congress, promising to spend $1 billion of his own money if lawmakers will fund some pilot projects.

Fizzling on the launchpad. It’s not a straight shot to get a new space race off the ground. Virgin Galactic, the Richard Branson unit trying to launch tourists into space, laid off 40 people, or about 5% of its workforce. The cuts will “position our organization for the drive to commercial operations following our successful recent spaceflight,” the company said. That follows news of layoffs at SpaceX and Stratolaunch.

FOOD FOR THOUGHT

Some of the online media companies announcing cutbacks last week were in part pulling back on podcasting. But Wall Street Journal media reporters Benjamin Mullin and Joe Flint spent some time with sports commentator and entrepreneur Bill Simmons to see how his new-ish company, The Ringer, is getting along with its podcast-forward strategy.

Advertisers pay between $25 to $50 for every 1,000 people who hear each ad on The Ringer’s podcasts, according to people familiar with the matter. The Ringer keeps at least two-thirds of the money, with the rest going to Midroll, the audio-advertising vendor that sells much of The Ringer’s ad space, the people said. Mr. Simmons has avoided serialized true-crime shows, in part because advertisers are wary of that terrain. “The subjects are dicey,” he said. “It’s like, ’this girl vanished from her farm. What happened?’ Presented by Sprite!”

IN CASE YOU MISSED IT

Google and Ad Industry Accused of ‘Massive’ Abuse of Intimate Personal Data By David Meyer

Microsoft’s Tech Chief Talks A.I., Mixed Reality, and Sod Farming By Jonathan Vanian

Social Media Sites Could Face a Ban in the U.K. Over Harmful Content By Veronica Neto

This New Podcast Aims to Give ‘Emerging Leaders’ in Business Some Savvy Advice By Aaron Pressman

Amazon Can Now Get a New Private Brand Within Three Months By Erik Sherman

YouTube to Tweak Its Runaway Recommendation Engine That Can’t Stop Serving Up Conspiracy Theory Videos By Kevin Kelleher

Samsung Will Start Using More Sustainable Packaging By Veronica Neto

BEFORE YOU GO

Speaking of podcasts, the latest episode from writer Craig Mod’s program On Margins about the book industry, great books, and other generally bookish topics features an interview with Lisa Brennan-Jobs. It’s a worthy hour discussing her autobiography, Small Fry, about her relationship with her dad, Steve Jobs.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.