FCC Fines Straight Path $100M to Settle Wireless License Probe
Wow-FCC enforcement actions don't get any juicier than this: an anonymous whistleblower, alleged misrepresentations to the FCC, and a complex $100 million fine to Straight Path Communications, Inc. for apparently misrepresenting that it had constructed 28 and 39 GHz licenses on applications to renew those licenses! All this is revealed in a Consent Decree between Straight Path and the FCC's Enforcement Bureau.
This is a situation that has been brewing for years. When the FCC auctioned 39 GHz licenses back in 2000, applicants bid over $400 million for the opportunity to operate in this band. But initial equipment shortages, and a lack of a clearly profitable business plans, led many winning bidders to seek construction extensions or default on their licenses. As off-the-shelf equipment became available, and millimeter wave fixed microwave began to be seen as useful for backhaul, particularly of cellular telephone traffic, construction and use of this band commenced. More recently, though, the FCC has acted with urgency to make more spectrum available for so-called "5G" services, and opened up bands above 24 GHz, specifically including 28 and 39 GHz.
The case began in November 2015 when someone using the pseudonym "Sinclair Upton" published a report alleging that Straight Path obtained FCC renewal of its 39 GHz band licenses by submitting filings claiming incorrectly that the company had built and presumably was operating systems that were actually not constructed. The FCC abhors spectrum squatters; the agency requires license holders to actually use their licensed spectrum and verify that use in "substantial service" filings to the Commission. In July 2016, an internal investigation by Straight Path concluded that equipment, if deployed at all, had been deployed only for a short period of time at the original transmitter locations, but the equipment had vanished from "most of the relevant locations" when the investigation was conducted, according to the agency, and the FCC was never notified.
The Enforcement Bureau investigated allegations that Straight Path violated the Commission's buildout and discontinuance rules in connection with approximately 1,000 licenses in the 39 GHz and Local Multipoint Distribution Service 28 GHz spectrum bands, which are valuable for use in deploying next-gen 5G wireless services. To settle the case, Straight Path will pay the U.S. Treasury up to a $100 million civil penalty, surrender to the Commission 196 of its licenses in the 39 GHz spectrum band, sell the remainder of that license portfolio, and remit 20 percent of the proceeds of the sale to the Treasury as an additional civil penalty.
Straight Path agreed to surrender approximately 20 percent of its 39 GHz 5G licenses to the FCC. For the $100 million civil penalty, Straight Path will pay $15 million upfront with an additional $85 million owed unless Straight Path sells all its 39 GHz remaining licenses or surrenders them to the FCC within 12 months.
Of course, it is never a good idea to be anything less than truthful on an FCC application. Doing so opens up the licensee to risks of fines, loss of licenses, and disqualification for holding other FCC licenses. If there's ever any doubt about a licensing or application matter, be sure to seek appropriate counsel.