Dish Grudgingly Returns a Pile of Spectrum

DISH Network today came to an arrangement with the FCC to give back about a quarter of the AWS-3 spectrum it had won at auction.  They’ve returned some 197 licenses worth $3.3B, paying a $413M penalty for not following through.  But they’ll be keeping the other 505 licenses, valued at about $10B.

Dish ran afoul of the rules when it and its partners created new revenue-free companies to do the bidding, thus enabling them to compete as a very small new entrant rather than one with a $27B marketcap.  That let them get $3.3B in discounts to what they’d have otherwise paid.  It’s no surprise that the value of the discounts is about the same as the value of the spectrum they’re giving up, as it means little cash has to change hands to end the whole thing.  The funds Dish had already paid out now just cover fewer licenses than they did before.

While such a thing seems like an obvious sham, it’s been relatively common practice in the industry, albeit with a little more subtlety.  Whether the FCC’s crackdown in this case will successfully squash the “no really, I’m a small business, please ignore the man behind the curtain”  technique entirely remains to be seen.  Something tells me the lawyers will come up with another loophole, and something else tells me that it will take another decade for the FCC to rule against it.

As for Dish , it’s amazing how much we all talk about the wireless ambitions and other travails of a company that still has yet to actually enter the wireless business after all these years.  One wonders if Charlie Ergen will ever get this plan of his off the ground.  It’d be nice to see the spectrum actually get used someday for, say, bandwidth.

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Categories: Government Regulations · Wireless