Wireless Interests Push FCC on EchoStar's Unpaid Buildout Bills
EchoStar and SpaceX arguments that the FCC has no role in contract disputes over EchoStar's now-aborted terrestrial wireless buildout plans ignore the fact that the companies are citing agency action as the reason for those plans' demise, said critics of the EchoStar/SpaceX spectrum deal in reply comments last week. Wireless infrastructure interests have urged the commission not to approve SpaceX's purchase of EchoStar terrestrial spectrum licenses until the latter company commits to fulfilling contracts related to its wireless buildout (see 2512160006).
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Meanwhile, American Tower and Crown Castle are suing EchoStar subsidiary Dish Wireless because it tried to get out of wireless tower lease contracts with the two companies after it ended its terrestrial wireless network operator plans.
Wireless deployment lawyer Jonathan Kramer told us in an email that the FCC isn't likely to condition the EchoStar license transfers on honoring the Dish cellsite leases. "The FCC’s federal domain is ensuring the best, highest, and most valuable use of the frequency spectrum." He added that the commission will probably treat the cellsite leases as private land-use contracts under state laws, "leaving aggrieved landlords to battle Dish in state courts."
Among the filings posted Friday in docket 25-302, Pittsburgh networking provider DQE Communications said that while the FCC has deferred on private disputes in the past, EchoStar in this case is saying that it's voiding its private contracts due to the agency's actions. The spectrum transfer "is intrinsically intertwined" with the contractual disputes, DQE said. The FCC "cannot ignore or defer on the consequences to DISH's vendors from its own actions."
FirstLight Fiber said EchoStar's basis for reneging on its contracts is the FCC's investigation and anticipated approval of the license transfers, making the contract issues transaction specific. While EchoStar contends that the FCC has no jurisdiction since EchoStar won't be a licensee after the sale, the agency can sidestep that argument by not approving the license transfers until EchoStar provides assurance that it will honor its contractual obligations, FirstLight said.
The Wireless Infrastructure Association floated the idea of requiring that the spectrum sale proceeds be put in escrow. It noted that EchoStar has never refuted WIA's thesis that the company will make a lot from its spectrum licenses and use that sale to exit the facilities-based wireless business, while claiming the transaction makes it impossible for it to meet its preexisting agreements. Without FCC scrutiny, EchoStar plans to use the transaction as a shield from having to pay the contracts it's breaching, WIA said. Spectrum sale proceeds in escrow pending resolution of vendor claims against EchoStar would ensure that those obligations could be paid while also avoiding the agency getting tangled in any particular dispute, the group added.
NATE said EchoStar avoiding its payment obligations to infrastructure providers "would have a devastating impact on the entrepreneurs and small businesses on the front lines of broadband deployment and connectivity." The association, which represents infrastructure builders, called on the FCC to "make clear that the agency has provided no such excuse" to avoid making those payments.
While SpaceX says it's willing to work with rural wireless carriers on supplemental coverage from space service, it has ignored efforts to engage by Rural Wireless Association members, the group said. It also said SpaceX and EchoStar haven't refuted RWA arguments that the spectrum deal would mean that rural wireless carriers won't be able to access AWS-4 and AWS-H block spectrum, which should be auctioned off if the FCC finds that EchoStar didn't meet its buildout requirements. The FCC informally closing its twin probes into EchoStar isn't enough to show that the company complied with its terrestrial wireless buildout obligations, and the commission should release an official finding, RWA argued.
SpaceX claims that the 2 GHz mobile satellite service authorizations that it's buying from EchoStar will let it preempt Liberty Latin America's use of its terrestrial AWS-4 spectrum, Liberty said, but that's "patently incorrect and deeply troubling." The FCC should require SpaceX to meet EchoStar's AWS-3, AWS-4 and AWS-H block terrestrial buildout deadlines and mandate that SpaceX won't deploy 2 GHz MSS in Puerto Rico or U.S. Virgin Islands.
Frequency Forward, which has opposed the EchoStar/SpaceX spectrum deal based on SpaceX's and Elon Musk's ties to China (see 2510300035), said that while Chinese investors have less than a 10% stake in SpaceX, the Chinese government "has the power to financially cripple Tesla," giving it "significant leverage over Musk."