Weekly Wrap: What did the public gain from EchoStar’s spectrum gamble?

Charles Ergen, the billionaire owner of EchoStar, is a former professional blackjack player who began investing in spectrum assets in 2008. His initial foray involved spending $700 million on licences in the 700 MHz band.

Since then, the company (often under the DISH Network name) has acquired significant chunks of spectrum at several major auctions. However, EchoStar’s massive spectrum sell-off to AT&T and SpaceX suggests Ergen has decided to cash in his chips. 

There is no doubt this exercise was a financial success. In the sale to AT&T alone, EchoStar is expected to take home a premium of around $10 billion. The stock market was exhilarated. Following the AT&T sale, EchoStar’s stock price surged by over 80%.

Were there any other gains? Apart from a modest rollout of its mobile subsidiary Boost Mobile, beginning in 2022, there is little evidence that EchoStar made much use of its assets.

Aware of its mandate to ensure the efficient use of frequencies, US regulator the FCC has, over the years, tried to put pressure on the company to do something with its spectrum.

Licences in the US typically come with rollout obligations. As a regulatory tool, however, it seems they haven’t been a success. For many of its holdings, the FCC simply kept extending EchoStar’s deadlines, believing the company’s promise that it really was building out the country’s fourth nationwide operator.

Many proceedings against the company dragged on for years. In May this year, the FCC’s new chair Brendan Carr finally put his foot down. In a strongly worded letter, he accused EchoStar of “kicking the can down the road” and said he would investigate the company’s failure to hit targets.

A month earlier, SpaceX CEO Elon Musk had been publicly urging regulators to revoke EchoStar’s AWS-4 licences.

Now that EchoStar has got rid of most of its spectrum holdings, the FCC appears to have concluded its investigations into the company.

But what precedent does this set? Does it imply that spectrum warehousing is permissible, provided the licences are eventually transferred to another party? In effect, valuable spectrum stayed underutilised for extended periods, offering little benefit to the public.

This shows that regulators need to take rollout obligations much more seriously. Far too often, they aren’t properly enforced or are too weak in their design. In 2023, the German regulator accused new entrant 1&1 of not hitting its targets. Two years on, it still hasn’t done anything about it.

It’s not that regulators should be quick to revoke licences. After all, in many cases, it’s unclear that a different company could make better use of the spectrum. But surely mobile operators should feel real pressure for not complying with their licence conditions?

Here’s what else PolicyTracker covered this week:

• A new law in the Philippines could modernise the country’s spectrum regulations.
• The future of terrestrial TV in the UK remains uncertain, as members of parliament have their say on the issue.
• A new broadcasting standard dubbed “TV 3.0” is gaining ground in Brazil, taking advantage of the 300 MHz band.
• A Māori firm in New Zealand has decided to lease spectrum to Spark, one of the country’s major mobile operators.
• China’s Ministry of Industry and Information Technology (MIIT) has awarded a satellite direct-to-device business licence to China Unicom.