Dish Network (NASDAQ: DISH) said it plans to "meaningfully" participate in next year's planned incentive auction of 600 MHz broadcast TV spectrum. The company could grab yet more airwaves to add to its existing stockpile, though it remains unclear exactly what Dish will do with its spectrum.
Dish disclosed its intentions in an FCC filing detailing recent meetings Dish executives, including Chairman Charlie Ergen, had on July 7 with all five of the FCC's commissioners, including Chairman Tom Wheeler.
"The incentive auction offers opportunities for competitive providers and new entrants to bid on and win much-needed low-band spectrum, which will facilitate the deployment of mobile broadband services," Dish wrote. "The framework established in the Report and Order offers a win-win for broadcasters to generate revenue and continue to broadcast over the air, while ensuring that consumers will benefit from more robust competition among wireless carriers."
The FCC in May voted 3-2 along party lines for rules in the 600 MHz incentive auction to prevent AT&T and Verizon from acquiring all the available spectrum up for grabs, thereby saving that spectrum for smaller carriers like Sprint (NYSE: S), T-Mobile US (NYSE:TMUS) and Dish. According to the rules, the FCC will withhold, or reserve, up to 30 MHz of spectrum for carriers that currently hold less than one-third of the available spectrum below 1 GHz in a market. Thus, any nationwide carrier with 45 MHz or more of low-band spectrum wouldn't be able to bid on the reserved spectrum--Verizon and AT&T are the only carriers that own more than 45 MHz of low-band spectrum. The goal is to ensure that smaller carriers without relatively low amounts of low-band spectrum are able to acquire 600 MHz spectrum in the auction.
Dish only holds around 5 MHz of 700 MHz spectrum in markets across the country and is nowhere near close to the threshold.
Neither Sprint nor T-Mobile owns more than around 20 MHz of low-band spectrum in any market in the country, and therefore will be able to bid on reserved spectrum. AT&T and Verizon, too, will be able to bid on reserved 600 MHz spectrum in markets where they do not own more than 45 MHz of spectrum below 1 GHz.
Dish now has around 50 MHz of mid-band spectrum. In February it was the only serious bidder in an FCC auction for the 1900 MHz PCS H Block; Dish paid $1.56 billion for the spectrum. The H Block is a 10 MHz block of paired airwaves that runs from 1915-1920 MHz (for the uplink) and from 1995-2000 MHz (for the downlink).
Dish also controls spectrum adjacent to a portion of the H Block, called AWS-4; Dish's 40 MHz of AWS-4 spectrum specifically runs from 2000-2020 MHz (for the uplink) and 2180-2200 MHz (for the downlink). Dish asked the FCC to let it use the 2000-2020 MHz band for downlink operations instead of uplink as a condition for agreeing to bid the reserve price in the H Block auction.
In its most recent FCC filing, Dish also said it plans to participate in the AWS-3 spectrum auction, set for this November. The AWS-3 auction will span 65 MHz and will include 1,614 licenses in the 1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz bands.
One of the AWS-3 bands set to be auctioned, 2155-2180 MHz, sits below Dish's AWS-4 downlink spectrum. In its filing, Dish urged the FCC to adopt separate bidding eligibility, activity waivers and auction-stopping rules for the different spectrum bands available in the AWS-3 auction.
"The 1695-1710 MHz licenses and the 1755-1780/2155-2180 MHz band licenses appear to not be interchangeable in terms of their characteristics and likely uses, and it is thus unlikely that the two bands offer licenses that could be used as close substitutes," the company wrote. Therefore, Dish wrote, "there is no legitimate, pro-competitive reason for the Commission to combine bidding eligibility, activity waivers and auction stopping rules. And there is a significant downside to doing so."
Dish added that a bidder could bid on items "they have little interest in winning during the first part of an auction to draw attention away from the licenses they are interested in, and then moving to their real interests late in the auction." In the context of the AWS-3 auction, Dish noted, "strategic parking could be used to disadvantage smaller competitors and new entrants, and it may diminish interest in specific bands."
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