FCC Order Clears Path for Dish $1.6 Billion H Block Bid
The FCC granted Dish Network the relief it sought to decide on the operations of its AWS-4 spectrum. The waiver, granted Friday, is conditioned on Dish’s bid of nearly $1.6 billion in the H-block auction next month. “Failure by Dish to comply with either of these conditions will automatically terminate the waivers granted in this order,” the Wireless Bureau said in its decision (http://fcc.us/1i8eU1M). Dish must elect no later than 30 months from the release of the order whether operations at 2000-2020 MHz will be uplink or downlink, the order said. The DBS company also was granted a one-year extension of the final buildout requirement, which gives it eight years to build a terrestrial network service, it said.
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One part of the order that is raising immediate concerns among those we interviewed is the tying of the waivers to Dish’s willingness to bid at least $1.564 billion in the H-block auction. Some industry officials said direct tying is almost without precedent for the FCC. “Given our public interest analysis of DISH’s bidding commitment in the H Block auction, we grant this waiver on the express condition that DISH fulfill its commitment to bid ‘at least a net clearing price’ equal to the aggregate reserve price of $1.564 billion in the H Block auction,” the order said.
"As the commissioner has said in the past, she believes that auctioning the H-block as part of the full 65 MHz identified by Congress in the [spectrum] law would lead to more interest, more bidders and, ultimately, more revenue,” said an aide to Jessica Rosenworcel. “If that had been the case, the bureau may not have felt so compelled to take this unusual step.”
Several observers said the order harkens back to then-FCC Chairman Kevin Martin’s administration, when the FCC approved rules for a 700 MHz D-block auction sought by Frontline Wireless, a company that was formed to launch a public safety network, though it dropped out of the running for the spectrum shortly before the 2008 auction began (CD Jan 9/08 p1), or M2Z, which proposed to build a free, national wireless network in the AWS-3 band.
"Any linkage between the waiver request and a bidding commitment is tricky business on a number of levels,” said Jeff Silva, analyst at Medley Global Advisors. “There’s a question of what is possible and desirable policy-wise. But it seems there’s also an issue of optics and potential regulatory/political implications that might flow from FCC action."
"Tailoring rules to fit a particular company’s business plan or promise of certainty is never a good idea,” said a wireless industry lawyer who doesn’t represent any of the companies involved.
"A condition tying a waiver grant to an auction bid is unprecedented,” said a former FCC spectrum official. “While Chairman Martin and his team started the troubling trend of establishing an auction reserve price based on the request of an individual company ... the condition goes even further.” A former FCC legal adviser agreed: “I think many observers are shocked. It looks untoward, as the FCC is essentially accepting payment in exchange for favorable rules.” Neither former FCC officials does work for Dish or others involved in the order.
Public Knowledge Senior Vice President Harold Feld doesn’t see the order as raising any troublesome issues. “I don’t see how it applies,” Feld said. “The [auction] statute prohibits the FCC from adopting any rule with regard to participation in the auction that is not a rule of general applicability. The FCC can adopt any rule it likes about anything else.” Under the order, Dish “is free to participate in the auction. They are free to bid whatever the heck they want.”
The order shoots down Sprint’s request to impose a specific cost-sharing payment condition upon Dish if it is the winning bidder. NTCH, which does business s Clear Talk, urged the FCC to deny Dish’s waiver request (CD Oct 3 p10).
The bureau granted the waiver based in part on the potential for reduced risk of interference between the lower AWS-4 band and the adjacent upper H block and Dish’s commitment to its bid, it said. In granting the waiver, the International Bureau reiterated the commission’s intent “to remove regulatory barriers in this band through a rulemaking to unleash more spectrum for mobile broadband,” the order said.
The Wireless Bureau decided that the technical rule waivers sought by Dish are warranted “based on the unique factual circumstances of Dish’s status as a license of both AWS-4 and 2 GHz MSS licenses,” it said. Rules designating the 2000-2020 MHz band for uplink operations and the 2180-2200 MHz band for downlink “were intended to minimize the possibility of interference between terrestrial and satellite services,” it said. Because Dish controls both of these networks and all of the associated spectrum and possesses the singular ability to design, integrate and direct operations of terrestrial and satellite services, the bureau concluded that “these unique circumstances warrant a deviation from the rule in light of the corresponding reduction of interference constraints between AWS-4 and H Block operations resulting from the alignment of downlinks in these two services, and the substantial additional public interest benefits from such a waiver,” it said.
"The flexibility to use the 2000-2020 MHz band for downlink operations will enhance spectrum utilization and serve the public interest,” Dish said in a statement. Because Dish is the sole 2 GHz MSS/AWS-4 licensee, it can manage coexistence of its integrated MSS/AWS-4 service, the order said. There are no other licensees in this band that might be adversely affected by the waivers sought, it said.
The bureau decided to waive technical rules around the AWS-4 frequency pairings, uplink power limits, out-of-band emissions limits on AWS-4 mobiles and acceptance of interference in the 2000-2020 MHz band, it said. The commission agreed with Sprint “that AWS-4 licensees must continue to comply with all applicable commission rules not expressly waived by the order,” the order said. If Dish decides to use 2000-2020 MHz for terrestrial downlink operations, “it will be subject to any rules that are generally applicable to downlink operations, except to the extent they are expressly waived by this order,” it said. The bureau conditioned any use of the lower AWS-4 band for downlink operations on compliance with the protection and coordination requirements “for previously licensed BAS [Broadcast Auxiliary Service] and Cable Television Radio Service operations in the 2025-2110 MHz band.”
"On a number of levels, especially given the H block component and other considerations, the stakes in the Dish waiver request were significant,” Silva said. “While there are bigger matters before the FCC, the Dish waiver undoubtedly advances Chairman [Tom] Wheeler’s agenda on spectrum and competition."
Dish needs uplink spectrum to make a potential wholesale model work, said Guggenheim Partners analyst Paul Gallant. “Most people have focused on LightSquared as a potential source of spectrum.” The extension gives Dish “additional breathing room to explore options for entering the wireless business,” he added in a research note. ,