Analysts: FCC's rulemaking favors Dish's LTE network plans

The FCC's draft rules for the terrestrial use of Mobile Satellite Service (MSS) spectrum appear to favor Dish Network's plans to build an LTE Advanced network, according to some analysts. However, they cautioned, the rules are not final, may change before year-end and could result in Dish's spectrum allocations being altered.

The FCC voted 3-0 to issue a notice of proposed rulemaking that explores how the S-band of MSS spectrum, which the FCC has renamed "AWS-4," should be designed so that the satellite spectrum can be repurposed for terrestrial use. Dish currently owns 40 MHz of S-band spectrum--specifically from 2000-2020 MHz and 2180-2200 MHz--and is seeking waivers from the FCC to use it for terrestrial mobile broadband. Additionally, the FCC will look at repurposing the 1695-1710 MHz band for commercial mobile broadband, which analysts said could mean Dish's spectrum holdings might get shifted.

In a research note, Credit Suisse analyst Stefan Anninger wrote that the rulemaking, known as an NPRM, should be a positive to Dish for four key reasons. For one, the buildout requirements appear modest, and should work out to around 95 million POPs within three years and 220 million POPs within seven years. The targets are not as stringent as the buildout requirements the FCC had set for LightSquared's network. Additionally, Anninger wrote that any potential spectrum "giveback" scenario seems to be limited to around 5 MHz of spectrum.

The FCC also does not appear to be imposing significant restrictions on Dish from wholesaling its spectrum to others. Finally, Anninger wrote that "while the language regarding ownership and partitioning restrictions is complex, we do not see language that proposes to prospectively prohibit Dish from transferring its spectrum holdings (note that all transfers of spectrum do require prior FCC approval)."

TMF Associates analyst Tim Farrar wrote that the FCC's inquiry into the 1695-1710 MHz band, which explores the option to "extend the AWS-1 and PCS spectrum with 65 MHz of usable bandwidth," could change Dish's spectrum position. He wrote that this might mean that the 1995-2025 MHz band would be turned into additional PCS downlink spectrum. In exchange, Dish could be granted access to the 1695-1710 MHz band, which would be paired with 2180-2200 MHz as an AWS extension band. "This hardly seems to be something that Dish would be keen on, given that it would involve defining another non-standard band class, and would not be compatible with the existing 2 GHz satellite services, which Dish might at some point want to explore in Europe," Farrar wrote.

For its part, Dish said it was pleased the FCC had opened the proceeding. "Dish looks forward to working with the commission on this critical NPRM, and we hope the process will move forward expeditiously so that more wireless innovation can be introduced to American consumers," the company said in a statement Wednesday.

Still, not every analyst thought the NPRM augured well for Dish. The rulemaking means Dish will be delayed in whatever it tries to do with its spectrum. "Relative to building its own network, Dish faces a long and very expensive path to getting a network sufficiently operational to become competitive with today's already well-established, much larger wireless carriers," Town Hall Research analyst Jamie Townsend wrote in a research note. "With Verizon (NYSE:VZ) and AT&T (NYSE:T) already far along in building out their LTE networks and Sprint (NYSE:S) moving forward with its own plans, a delay of six to nine months will not necessarily spell doom for such a competitive product but it further reduces the probability that it will be successful. Additionally, the list of potential partners and/or wholesale customers for such a venture is decreasing and we believe will decrease even more before year end."

For more:
- see this FCC document (PDF)
- see this Reuters article
- see this TMF Associates post

Related Articles:
FCC moves forward on 700 MHz interoperability and MSS spectrum rules
Dish won't face LightSquared's GPS issues, but spectrum's fate still uncertain
LightSquared to FCC: 'We are not going away'
Analysts: Dish may be bluffing about LTE Advanced network buildout
Dish's LTE network to sit on the launch pad till year-end

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