Technology 3 min read

How AT&T Bought This Wireless Carrier for 3x its Stock Price

Jonathan Weiss |

Jonathan Weiss |

We all know that AT&T is a big name in the wireless communications industry, but a recent move has shown us how willing they are to make a big purchase. And the reason they did so? Well, it’s a pretty big deal.

Earlier this week AT&T purchased Straight Path Communications for a whopping $1.25 billion USD, giving them control over high-frequency airwaves covering the 28-39 GHz millimeter wave band, and if you don’t understand why that’s significant then I have one letter and one number that might pique your interest: 5G.

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That’s right, folks. The next wave in wireless technology is something that every telecom worth their salt will want. Analysts say that AT&T’s purchase may be tied to their plans to start providing the fancy new service, and if it is then their investment might just give them gargantuan returns.

But how could they afford it? They’re big, sure, but we’re talking about $1.25 billion, and that’s not chump change.

Watching the Past to see the Future

Let’s get into our time machines and go way back to December of 2016 when AT&T CEO Randall Stephenson made his opinions on net neutrality public, and those opinions were not favorable.

And of course, they weren’t favorable. After all, net neutrality rules were “stifling investment,” as Stephenson said at the Business Insider Ignition conference. While he agreed with the regulations on data privacy, it was the strong language against zero-rating that gained the most ire.

Some of you may remember zero-rating from our previous articles on net neutrality (you can see them here and here), but let me give you a quick refresher on the topic.

Zero-rating basically allows an ISP to not charge for data that is considered ‘privileged’ for one reason or another. Usually, this means that online services that have made specific deals with an ISP or MNO can stream data to customers without incurring any cost, which is especially important for customers who are on a limited data plan. It could also mean that an ISP or their parent company could provide their own services for free, edging out third party content providers like Netflix or Hulu.

The FCC was pretty hard on zero-rating. Regulations disallowing it were almost in action but with a new administration comes change. The net neutrality regulations were repealed in March. As a result, companies like AT&T saw an opening to use the practice, ostensibly boosting their projected revenue.

And let’s not forget the Hemisphere Project, which was reported on by the New York Times in 2013 and showed that AT&T was amenable to selling cellular data to law enforcement agencies. With the repeal of the net neutrality regulations, it seems like there is little to stop such a practice from making the telecom giant even more money.

Despite all of this, one thing remains clear: AT&T wants to get a leg up on the oncoming 5G storm. When it hits, the notion of where they got that money may fade away.

At any rate, there is little doubt that they will be in the 5G market, so that leaves us with important questions as we look ahead to the future of net neutrality: how are zero-rating and data selling going to make a huge comeback? When and if that happens, how is the market going to be fair and equal?

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William is an English teacher, a card carrying nerd, And he may run for president in 2020. #truefact #voteforedgy

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