Verizon Communications Inc. has topped AT&T Inc.’s offer for Straight Path Communications Inc., according to a person familiar with the matter, sparking a bidding war over a tiny company that controls a swath of wireless airwaves thought to be at the forefront of next-generation networks.

Verizon bid $1.8 billion for Straight Path, topping AT&T’s stock bid of $1.6 billion earlier this month. AT&T, which has until next week to respond, said Tuesday it was evaluating the situation. Verizon declined to comment. Straight Path didn’t immediately respond to a request for comment.

The competing offers show how wireless networks are changing. Both telecommunications companies surprised investors this month by largely sitting out a major government airwaves auction. The airwaves being sold were low-frequency, once considered “beachfront” property because they travel long distances and penetrate buildings—perfect for wireless carriers that want to cover large areas.

But consumers are now more likely to watch videos than talk on their smartphones. As a result, carriers must focus on expanding network capacity in targeted areas of high demand.

The airwaves controlled by Straight Path are in ultrahigh frequencies that were once considered all but useless for wireless carriers. These frequencies don’t travel far or penetrate walls—they are so sensitive, in fact, that they can be influenced by rain and falling leaves.