DISH Sees AT&T's Waiver Demands As ‘Setting It Up For Failure'

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DISH Network is pushing back against AT&T and other entities that are calling on the Federal Communications Commission to make a more aggressive buildout a requirement before granting the company a waiver to build a new mobile wireless network.

In a letter dated Feb. 2 and posted to the FCC website on Feb. 3, Dish Network general counsel Jeffery Blum noted "AT&T requests LightSquared-like buildout conditions on DISH's proposed 2 GHz ancillary terrestrial component ('ATC') network that would thwart DISH's efforts to bring these public interest benefits to consumers. AT&T also calls for unrelated and unwarranted conditions on DISH's 700 MHz authorizations."

DISH hopes to build an LTE Advanced network in 2GHz spectrum now assigned to mobile satellite service (MSS) use. While it has acquired licenses covering the nationwide spectrum, it must obtain an FCC waiver to use that spectrum for other uses.

DISH has proposed that any buildout requirement provide maximum flexibility, and be specifically linked to development and availability of LTE Advanced technology. LTE Advanced network equipment is not expected to be available in large quantities until 2013.

Handsets compatible with the new standard are expected in 2014. DISH puts "widespread availability of a terrestrial S-Band ecosystem" sometime in 2015.

According to Blum's letter, "building a 'green field' network using any standard other than LTE Advanced is simply not a competitive option," since doing so would require the company to invest in both the current generation of technology and then rapidly re-invest in LTE Advanced. The letter also makes explicit for the first time DISH's proposal is to build a retail network, rather than enter the market as a wholesale provider in competition with Clearwire and, potentially, LightSquared.

"Furthermore, building a retail service from the ground up takes time and careful planning,” Blum continued. “Among other things, putting a new service together will require DISH to lease tower space across the nation, develop devices in conjunction with consumer electronics manufacturers, devise competitive rate plans, extend its brand identity, expand its national retail presence, upgrade its nationwide customer support/billing system, and maintain a competitive position in device and service offerings as customer expectations and demands evolve".

DISH also brushes aside AT&T's request for the FCC to make waiver approval contingent on resolving potential interference between existing services and any new service launched on 700 MHz E-Block licenses held by DISH affiliate Manifest Wireless LLC. DISH states in the letter that it has not committed to using that 700 MHz spectrum for mobile broadband. Manifest has told the FCC that it is focused primarily on mobile video applications for that spectrum.

The most important point raised by DISH is that the "overly aggressive and unrealistic schedule AT&T advocates would likely set DISH up for failure or force DISH into unfavorable business arrangements with large Commercial Mobile Radio Service ("CMRS") carriers."

Whatever the specific outcomes of an accelerated schedule, the value of the spectrum to DISH would be reduced if it is forced to move ahead more quickly that it hopes. The company would, in fact, have to invest in older technology and then in deploying and making compatible a new generation of gear, adding significant costs and reducing its potential return on investment. If it has to spend that capital far in advance of any potential revenue, DISH will also be in a poorer negotiating position if it decides to sell off the licenses rather than build out a network in the spectrum.

Finally, any delay in obtaining a waiver from the FCC will also delay DISH's ability to settle on its final strategy for the spectrum licenses and greatly reduce its flexibility. And, as implied by the letter, though not stated explicitly, any of those negative impacts on DISH and on the value and salability of its licenses would be potentially positive for AT&T, which is increasingly anxious to find a way to recover from its failed merger with T-Mobile USA, counter Verizon Wireless' deal with SpectrumCo, or find some other affordable spectrum source in the absence of any firm plans to repurpose and auction any additional new spectrum.