Dish Mulls Throwing in Spectrum Towel

Ergen Says Could Sell, Lease Wireless Licenses

Dish Network chairman and CEO Charlie Ergen appeared readyto throw in the towel concerning its wireless spectrum, telling analysts and reported that in light of an expected regulatory order that would erase $3.3 billion in discounts won during the AWS-3  incentive auction, the satellite giant may be forced to sell or lease all of its wireless frequencies.

Dish came under fire for using “designated entities,” or small, minority-owned companies or rural organizations to bid on licenses during the AWS-3 auction. With those DE’s Dish was able to obtain discounts that would save it about $3.3 billion in its bids. Dish was the third largest bidder in the AWS-3 auction with about $13.7 billion in bidsnot including the discounts), behind AT&T and Verizon Communications.

But shortly after the auction, Verizon and other carriers complained that Dish had colluded with the DE’s during the bidding process.  Apparently, the FCC is listening.

Although it has not issued an official order, Ergen said he has been told by FCC officials that they will deny the discounts.  That, said the Dish chief, is the last straw.

On the call, Ergen said he holds no animosity toward FCC Chairman Tom Wheeler or his staff – he called them one of the best FCC lineups ever. But he was disappointed in what he sees is the direction of this commission, one that is moving away from competition.

“In general, I’m a pretty big fan of chairman Wheeler; this is a good commission,” Ergen said. “The most disappointing thing is we were fairly confident [thje FCC] was encouraging us in the auction to do exactly what we did. For whatever reason, they sided with the big guys.”  

“The decision was black and white: are you for competition or are you for the incumbents?” Ergen continued. “If you come down for competition, you say that Dish followed the rules and open up a lot of opportunity for M&A to get stronger people to compete. If you disallow the discounts, it makes it impossible.”

Ergen said that a sale or lease of its existing spectrum is just one of its options – it could sue the commission to reinstate the discounts, for example – but he said that decision hasn’t been made yet.

Dish spent about $3 billion over the past several years accumulating wireless licenses from several companies.

Dish stock was up about 4% ($2.56 each) to $67.96 per share in afternoon trading Wednesday.