FCC 2 GHz NPRM May Complicate Dish’s Path

FCC plans to consider a rulemaking notice (CD March 1 p9) this month on flexible terrestrial use of 2 GHz mobile satellite service spectrum seem to complicate Dish Network’s plans for using that spectrum, said analysts. While there is disagreement over the actual impact to Dish, it may give the company some more regulatory certainty in terms of FCC expectations, they said. Dish is seeking FCC approval to take over 2 GHz licenses from DBSD and TerreStar and use the spectrum for terrestrial service through waivers of MSS rules.

Dish has been adamant that a quick turnaround on the waivers is necessary for it to enter the wireless business. “Concurrent with the NPRM, we believe that the Commission should grant our waivers,” said Dish. “Immediate grant of the waivers is essential for DISH to expeditiously put the S-Band spectrum to competitive use. Time to market is critical, and we need regulatory certainty to begin development of consumer devices and to design our state-of-the-art 100 percent 4G broadband network. A rulemaking alone would delay that process indefinitely.” During the company’s earnings call last week, Dish Chairman Charlie Ergen said it would have to revisit its plans for the wireless business if the FCC were to delay things by considering the issue in a rulemaking.

The FCC said it will consider an NPRM “proposing service, technical, assignment, and licensing rules for flexible terrestrial use of” 2 GHz MSS spectrum. The agency will also consider an inquiry on an alternative band plan involving additional spectrum at 1695-1710 MHz that the NTIA has proposed to reallocate from federal to commercial use. Still, it remains unclear exactly what the coming rules will propose and industry analysts seemed divided on the question. The FCC didn’t comment.

The NPRM announcement may be part of the FCC’s negotiating stance, said Wells Fargo analyst Marci Ryvicker in a note to investors. She said the FCC seems likely to grant the transfers of control and grant the waiver “contingent upon the outcome of an NPRM.” Stifel Nicolaus analyst Chris King said the NPRM may point to the agency’s concerns over a LightSquared-like situation, during which FCC critics have complained of the agency using a waiver to allow for terrestrial use in satellite spectrum. The complexity of the situation make a rulemaking more likely and the agency may seek to finish it this year, before presidential elections, so a change in FCC leadership wouldn’t derail the effort, he said.

The FCC may have far more complex plans, said MSS analyst Tim Farrar. The agency may seek to adjust Dish’s spectrum position to make better use of the H and J blocks, near the 2 GHz band. The agency is tasked with auctioning off the H block at 1915-1920/1995-2000 MHz, which would only be feasible if Dish moved its uplink band from 2000-2020 MHz to 2005-2025 MHz. In addition Dish might be asked to give up an additional 10MHz of spectrum in exchange for grant of the waivers, allowing the FCC to deal with concerns over the so called “windfall” issue, based on the concerns over the step-up in value when converting the satellite spectrum to terrestrial, said Farrar.