FCC officially lets EchoStar off the hook
EchoStar no longer has to fill the big shoes of being the fourth facilities-based carrier in the States.
EchoStar is let off the hook by a federal judge | Image by EchoStar
It's a long and convoluted story. When T-Mobile wanted to acquire Sprint's 2.5GHz mid-band spectrum for its 5G build-out, it proposed a $26.5 billion acquisition of the carrier. The deal required regulatory approval from the Federal Communications Commission (FCC) and the Department of Justice (DOJ).
Do you remember when Dish and SoftBank had a huge fight over Sprint?
Other agencies, such as the Committee on Foreign Investment in the United States (CFIUS), also had to sign off on the deal because of SoftBank's 27% ownership of Sprint at the time of T-Mobile's bid. SoftBank was the winner of a takeover battle for Sprint in 2013, beating out Dish Network in a spirited battle.
Also signing off on the deal were several state public utilities commissions, especially the California PUC. State attorneys general also needed to approve the transaction. The main concern of the FCC was the reduction in the number of major US carriers from four (Verizon, T-Mobile, AT&T, and Sprint) to three (Verizon, T-Mobile, and AT&T).
The FCC wanted the US to replace Sprint with Dish
The FCC was worried that with less competition, the remaining three carriers would be able to raise prices more easily. So the regulatory agency demanded that a fourth facilities-based carrier replace Sprint. The FCC forced Sprint to divest its prepaid business, with Boost Mobile getting picked up by Dish, and the goal was for Dish to become the fourth facilities-based carrier.
Boost's 9.3 million subscribers moved over to Dish; the chairman of the satellite television provider, Charles Ergen, had long wanted to own a wireless firm, and Dish had $6.21 billion in winning bids in FCC Auction 1002. In that auction, Dish had the second-largest number of winning bids for the 600 MHz low-band spectrum. T-Mobile spent $7.9 billion for the low-band airwaves that have long-range propagation, making them perfect for nationwide 5G service despite having lower data speed.
Dish Wireless filed for bankruptcy last month. | Image by Dish
As part of the deal with the FCC, Dish promised to meet certain goals for its 5G buildout. For example, by 2026, Dish's 5G service had to reach 99% of the population (90% in rural areas) while reaching speeds of at least 100Mbps to at least 90% of the population.
Dish started building a standalone 5G network, and things were moving along like the FCC planned, although Dish Wireless was losing subscribers. Needing cash to continue building the standalone 5G network, Dish worked out a deal with EchoStar to get access to EchoStar's $1.9 billion in cash reserves. On the last day of 2023, EchoStar bought Dish.
The FCC threatened EchoStar, already facing severe financial difficulties, by saying that it would investigate EchoStar's 5G buildout compliance (inherited from Dish) and whether the company was using all of its spectrum or just holding it. There was speculation that FCC Chairman Brendan Carr, a friend to the Trump Administration, wanted to force EchoStar to turn over some of its spectrum to SpaceX.
EchoStar sold off most of its spectrum to AT&T and SpaceX
SpaceX is trying to build a direct-to-cell service that would act like a cell tower in space to offer LTE connectivity to smartphones. SpaceX happens to be owned by another friend of the administration, Elon Musk.
EchoStar subsequently sold 30 MHz of 3.45GHz mid-band spectrum, and 20 MHz of 600MHz low-band spectrum to AT&T for approximately $23 billion. It also sold 65MHz of AWS-4 and H-Block to SpaceX for approximately $17-$19 billion. These transactions ended EchoStar's build-out of its standalone 5G network thus ending any chances of EchoStar or Dish becoming the nation's fourth facilities-based carrier.
Last week, U.S. District Court Judge Timothy Kelly signed off on the DOJ's request to take EchoStar off the hook by ending its commitment to build and operate a mobile network. Dish Wireless and Dish DBS went bankrupt on June 30, leaving Boost Mobile and Gen Wireless to continue to operate as normal.
Boost Mobile is now a hybrid MVNO
With the hopes of becoming an MNO (Mobile Network Operator) all gone, Boost Mobile is now a hybrid MVNO (Mobile Virtual Network Operator). It combines a cloud-native 5G core
run by Boost with primary connectivity to AT&T's cell towers. If you are outside of AT&T's 5G/LTE coverage area, you will be connected to the T-Mobile network.
Do we really need a fourth facilities-based wireless carrier in the US? Considering that prices are going up, not down or even staying steady, I'd say that we really do need another MNO to keep the others' prices in line.
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