Dish Network won't be launching an LTE network anytime soon. The FCC last Friday rejected Dish's request for a necessary waiver that would allow it to use its 2 GHz S-Band spectrum for terrestrial mobile broadband use.
Instead, the commission intends to engage in a lengthy rulemaking proceeding that could take till year's end to complete in order to set guidelines for the terrestrial use of Mobile Satellite Service (MSS) spectrum, which is the spectrum that Dish and also LightSquared had hoped to use for mobile broadband services.
The FCC is likely to back Dish's use of its MSS assets for mobile broadband, but only after the rulemaking is complete. "This will prolong the time frame but I do not think it reduces the ultimate likelihood of approval," said Todd Mitchell, an analyst with Brean Murray, in a Reuters article.
Dish is hoping to deploy a nationwide LTE network over the satellite spectrum it is gaining via its acquisitions out of bankruptcy court of TerreStar Networks and DBSD North American. The FCC approved those deals on Friday, and Dish is expected to quickly close on the acquisitions, which together are valued at $2.8 billion.
Yet Dish is smarting from the FCC's rejection of its waiver request. "We believe that the denial of those waivers will delay the advancement of some of President Obama's and the FCC's highest priorities--namely freeing up new spectrum for commercial use and introducing new mobile broadband competition," Dish said in a statement. "As we review our options, we will continue working with the FCC on the forthcoming 2 GHz Notice of Proposed Rulemaking (NPRM) to achieve those goals as expeditiously as possible. Dish is committed to helping the Administration and the FCC solve the existing spectrum crunch, and Dish believes that new competition is particularly critical given the expanding world of bit caps and restrictive data plans."
For many months, Dish had appeared optimistic of being allowed to quickly launch LTE in the S-band in order to expand broadband coverage across the United States. The company has said it wants to package mobile phone and broadband services with its satellite-based pay-TV products in order to compete with similar bundles from cable operators and telcos. In November, Dish filed trademark applications for a multi-pronged communications service it called "Ollo," a brand some suggested would be applied to the planned LTE network.
However, Dish Chairman Charlie Ergen said during a conference call with analysts last month that the company would likely write down the satellite spectrum assets if it did not receive immediate waivers for its LTE network, and he noted that without the requested waivers, the assets "probably wouldn't be worth the $3 billion or so we paid for them."
The change in Dish's fortunes is due to the fact that the FCC is taking no chances after being burned by the LightSquared debacle, in which it granted a controversial waiver for the company to use satellite spectrum for an LTE network only to reverse course after findings indicated LightSquared's planned network would interfere with Global Positioning System devices.
Dish's proposed network uses different frequencies than LightSquared's and likely would not impact GPS, but AT&T (NYSE:T) and other mobile operators have contended Dish's network could impact their existing cellular networks. However, AT&T may have an ulterior motive in that it is often cited as a potential buyer of Dish's spectrum should it opt to sell.
FCC to tackle MSS spectrum rules, leading Dish to worry about its network
LightSquared's Ahuja jumps ship, company remains committed to network buildout
Dish's Ergen: We may sell spectrum if FCC doesn't approve waiver
Harbinger, LightSquared face investor lawsuit, $56M payment
Report: AT&T searching for spectrum from Dish, Leap, MetroPCS
Dish grooming 700 MHz spectrum for mobile TV play? Don't bet on it
Canada endorses Dish's LTE Advanced network, but FCC still on the fence
Battling AT&T, Dish outlines LTE Advanced buildout timeline, retail ambitions
AT&T circling Dish? Carrier argues against restrictions on Dish's spectrum
Great Spectrum Chase of 2012 begins