The Fight Over 5G

 

On April 10, 2017, ATT made an offer to
buy Straight Path Communications (STRP)
for $95.63 per share in an all-stock deal
worth $1.25 billion. Before the AT&T offer,
Straight Path’s stock was trading around
$36 (April 7) for over a year. On April 25,
Straight Path announced it received another
offer of $104.64 per-share offer from another
telecommunications company. The new deal
was estimated to be 1.31 billion. Straight
Path’s share went up 6.4 percent to $118.
On May 11, the deal was closed with $184
per share and Verizon was the winner – five
times the trading price on April 7, 2017 and
was worth $3.1 billion. Additionally, Verizon
will pay a termination fee of $38 million to
AT&T on Straight Path’s behalf.

Prior to the acquisition, Straight Path was
worth around $400 million with less than
20 employees. Who is Straight Path and why
the bidding war? One of the key elements
in the wireless future is 5G which provides
high-speed, low-latency and low-cost connection
which will support IoT, big data and
analytics. This fifth generation of wireless
technology (sometimes referred to as mobile
networks) is the next big things after the 4G
LTE we have today. It is faster, much faster,
in the order of 10Gbps download using millimeter
wave band in the range of 20-60GHz.
Some says that range may go up to 300GHz.
Needless to say, all major carriers such as
AT&T, Verizon and T-Mobile are going after
the 5G. Straight Path, a start-up company,
owns 28 GHz and 39 GHz millimeter wave
spectrum. The figure shows the spectrum
owned by Straight Path, crown jewels of 5G.

Verizon is taking the lead in building its
wireless and online empire. It first acquired
AOL then Yahoo. At the end of March,
it launched the first Low-power WAN
(LPWAN) nationwide, M1 Network. With
Straight Path, Verizon is positioning itself to
be the king of 5G. Some analysts commented
the $3.1 billion price tag might be too high.
Only time will tell how it is going to play out.
No doubt 5G is where everyone is heading.
With the purchase of Straight Path, Verizon
has already started building the fiber optic
ground work. Milan-based Prysmian Group,
specializes in energy and a telecom cable
system has been awarded a $300 million Verizon contract to build a 5G network. Its
North America Prysmian Group with 10
plants employing more than 2.000 people
will be doing most of the work. (US revenue
was $1.4 billion in 2016). Expect to see more
investment in this technology from the carriers,
hardware vendors and integrators.

Behind the 5G activities is a bigger
scheme – Fog Computing. As Cloud Computing
started 15 years ago, Fog will take this
to the next level. It covers connections of the
cloud, edge devices, sensors and wearables.
The OpenFog Consortium backed by Cisco,
Microsoft, IBM and the like will drive this
forward. Everything under the sun will come
under Fog – IIoT, LPWAN, connected cars
application, medical devices, edge computing
and analytics. A Fog spec has been
released on February 2017 (downloadable
for free). As the wireless world expands, Fog
will grow, low-power WAN will expand and
so do cyber threats. In this issue, we have
invited experts to explain Fog, Edge, LPWAN
and how to protect ourselves from cyberattacks.
Additionally, an expert will explain the
different standards.