T-Mobile USA and MetroPCS (NYSE:PCS) are pushing the FCC to take back half of Dish Network's 2 GHz spectrum holdings in exchange for allowing the company to use the remainder for terrestrial broadband service.
Dish holds 40 MHz of S-Band mobile satellite services (MSS) spectrum--specifically from 2000-2020 MHz and 2180-2200--and is seeking FCC waivers that would enable it to use the spectrum for a terrestrial LTE-Advanced network.
In separate filings with the FCC, T-Mobile and MetroPCS both contended the waivers should be conditional upon Dish giving up 20 MHz of its spectrum for reauctioning by the commission. Further, both operators argued such a move is necessary to prevent Dish from enjoying a "windfall," apparently in reference to profits it might see if it were to sell all or part of its S-Band frequencies to a large mobile operator such as AT&T Mobility (NYSE:T) or Verizon Wireless (NYSE:VZ).
MetroPCS offered up a second alternative as well, suggesting the FCC could require Dish to relinquish 30 MHz of its 2 GHz MSS spectrum in the top 100 metropolitan statistical areas in exchange for being allowed to retain all 40 MHz outside the top 100 MSAs and use the spectrum for satellite-based or terrestrial-only services.
Both companies made their comments last week in response to the FCC's proposed rulemaking exploring how the S Band of MSS spectrum, which the FCC has renamed AWS-4, can be repurposed from satellite to terrestrial use.
Dish's S-Band spectrum is a hot property, with operators both large and small reportedly eyeing it to boost their spectrum positions, though Dish has repeatedly affirmed its commitment to using the frequencies for a wireless broadband network. A competitive auction of half of the company's holdings could gain support among politicians as it would certainly boost federal government coffers. And if an auction were restricted to non-dominant mobile operators, the spectrum they would gain might improve their competitive positioning.
Many of those commenting on the rulemaking proposal expressed concerns regarding the potential for Dish to partner with dominant operators AT&T and Verizon or the likelihood that Dish might sell its S-Band spectrum to either operator, further concentrating the nation's spectrum holdings and putting smaller operators at even more of a competitive disadvantage.
The Rural Cellular Association argued in its filing that if Dish is granted the waivers it seeks, the company should be required "to make a minimum portion of its network available to competitive carriers at cost-based wholesale rates, and to provide roaming at cost-based rates to any competitive carrier whose network is technologically compatible." But the group also wants the commission to preclude Dish "from entering into wholesale or roaming agreements with either of the two largest wireless carriers" without prior FCC approval. It also wants Dish to suffer penalties if it transfers or assigns its licenses to either of the two largest carriers within the next 10 years.
The association also said it agrees with LightSquared that the agency should expand the scope of its Notice of Inquiry to include the MSS portions of the L Band, in which LightSquared holds licenses, "to harmonize the regulatory treatment of those bands and to consider cross-band options that could maximize the use of spectrum."
Several commenters urged the commission to apply stringent buildout requirements to Dish's planned terrestrial broadband network. However, in its own filing with the FCC, Dish contended that it will not be able to launch its proposed network until 2016 or later. This is about 12 months longer than the FCC's current proposed buildout schedule, which requires Dish to launch its network in three years covering 30 percent of the U.S. population.
In its comments, CTIA called the commission's proposed penalties for failure to meet AWS-4 buildout requirements "unprecedented." The penalties, which would include automatic license terminations, "are contrary to the public interest and unduly burdensome and potentially harmful not only to licensees but also to potential consumers of the new service," said CTIA.
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