Dish Network has amassed a sizable portion of spectrum, and it looks ready to strike a deal of some kind with carriers who might need the extra airwaves to sustain growth. Leasing its spectrum will likely constitute a profitable use for the billions of dollars’ worth of spectrum the company has won at FCC sponsored airwave auctions. CEO Charlie Ergen has gone as far as to suggest that wireless carriers who don’t at least consider Dish’s spectrum would “strategically commit malpractice.” Ergen is confident that a partnership with Dish would represent an important advantage over rivals who might be working with smaller quantities of available spectrum.
The company has been able to collect its substantial airwave licenses at auctions through it designated entity partners, which includes Northstar Wireless and SNR Wireless. During the FCC’s previous spectrum auction, Dish spent $13.3 billion to acquire 702 licenses, making it the second highest bidder of the night. AT&T was the only other participant to spend more, meaning Dish gained more spectrum than the other major wireless carriers, such as Verizon Wireless or T-Mobile. However, controversy followed when Dish attempted to claim a 25% discount for small businesses through their designated entities. The FCC decided that both Northstar and SNR were too close to Dish to receive the discount that would shave $3.3 billion off the total amount due. A case was opened and is still presently in court. However, the designated entities relinquished about a third of the licenses won at the auction. The licenses will be re-auctioned sometime within the next couple of years. Nevertheless, Dish will likely participate in the next FCC auction, which is scheduled for early next year.
Ergen has expressed the company’s desire to lease or sell its airwaves instead of building a traditional partnership with a carrier. As a result, Verizon Wireless seemed likely to take advantage of the offer and lease Dish-owned spectrum, but the rumor is filled with uncertainty. Verizon CFO Fran Shammo’s comments at an investor conference suggest that the company is not looking to expand its offerings through a connection with Dish. There have also been rumors that Dish will partner with others prior to the FCC’s deadline for applying to the next auction. If Dish does not succeed is leasing their spectrum beforehand, anti-collusion rules will trigger, meaning it will be unlikely for Dish to get a deal with anyone. Nonetheless, Ergen said, “I would say the odds are greater that we wouldn’t do something before the deadline than we would. But you just never know right?”