(Bloomberg) -- About $20 billion worth of wireless airwaves are sitting dormant, public goods whose rights were acquired by Dish Network Corp. in government auctions over the past decade. Put to use, they could create more competition and supply millions more high-speed connections.
To finally unleash those airwaves, the government is being asked to place more trust than ever in Dish and its owner, billionaire Charlie Ergen.
Dish is on track to get even more airwaves and other assets this year, this time as part of a side deal to T-Mobile US Inc.’s purchase of Sprint Corp. The idea is set up Dish, known for its satellite TV service, as a nationwide wireless carrier, creating a new competitor after the $26.5 billion T-Mobile-Sprint merger subtracts one provider from the U.S. market.
Any airwaves transfer would need approval from the Federal Communications Commission, which has been pressuring Ergen to use the spectrum he already has. The FCC has said it will move to take away licenses if Dish doesn’t meet requirements to begin offering mobile service on its existing airwaves holdings by 2020.
Those warnings may be overtaken by events. Talks among T-Mobile and Sprint, the Justice Department and Dish are at an advanced stage, Bloomberg News reported July 3. The Justice Department could decide to back the deal as soon as next week.
“It would be foolish to have him spend money on a network build that no longer makes sense by the spring of 2020,” Blair Levin, a Washington-based analyst for New Street Research, said in an interview.
The Justice Department appears to see Dish as a credible new competitor in the wireless market. T-Mobile and Sprint would let Dish use their infrastructure for six or seven years until Dish can build its own network, people familiar with the matter said this week. That might appeal to the FCC because it would let Dish immediately enter the market, even though it might take more time to use its airwaves.
“The FCC will hesitate to cripple what the DOJ views as a critical fourth competitor,” Matthew Schettenhelm, a Bloomberg Intelligence analyst, said in a June 19 note.
FCC Chairman Ajit Pai in May announced his support for T-Mobile’s merger, and in the following days, so did the remaining two members of the agency’s Republican majority. The statements preceded news in June of the Justice Department’s desire to create a new wireless competitor and Dish’s interest in bidding for T-Mobile and Sprint assets.
Dish has had other misadventures at the FCC that may be fresh in Pai’s mind as he weighs whether to entrust Ergen with the fate of the wireless market. The agency is considering whether to grant a $3.3 billion discount on airwaves claimed at auction in 2015 by two Dish partners that said they were small businesses. The FCC denied the discount, saying the firms weren’t independent of Dish -- with Pai at the time saying he was “outraged.”
Now the partners say they’ve reduced their ties with Ergen’s company, and the FCC is weighing whether to restore the discount. The issue may remain separate from the other airwaves considerations, Levin said.
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