The Federal Communications Commission (FCC) has extended the
deadline for Dish Network (
) to complete a national wireless broadband network, and given the
company flexibility in how it can use wireless frequencies. In
return, Dish has pledged to bid at least $1.56 billion in the FCC's
H-block auction of frequencies scheduled for January 14, and to
lower the power of transmissions on some former TV-station analogue
frequencies Dish bought in 2008.
This is a welcome move for Dish. It gives the company until 2021
to build this nationwide network; and it increases the company's
flexibility to use its already owned airwaves for
uplink. Apart from the H-block auction, Dish is also eyeing
the LightSquared spectrum. In a recent move, private equity firm
Centerbridge abandoned the plan to bid for LightSquared (See -
Another Roadblock Cleared For Dish As Centerbridge
Backs Out From LightSquared Bid
). With the FCC agreement, the value of Dish's spectrum
holdings could grow far more than it actually will end up paying.
Dish's current spectrum is already valued at around $11
See our complete analysis for Dish
Why FCC Allowed This?
In February 2012, Congress enacted "The Middle Class Tax Relief
and Job Creation Act of 2012," containing landmark provisions to
create a much-needed nationwide interoperable broadband network
that will help police, firefighters, emergency medical service
professionals and other public safety officials. The law's
governing framework for the deployment and operation of this
network, which is to be based on a single, national network
architecture, is the "First Responder Network Authority"
(FirstNet). FirstNet will hold the spectrum license for the
network, and is charged with taking all actions necessary to build,
deploy, and operate the network, in consultation with Federal,
State, tribal and local public safety entities, and other key
stakeholders. Thus the network auction is crucial for FCC.
Dish's commitment to place minimum bids in the H-block auction
ensures that the FCC will see some money raised for its national
emergency response agency radio network idea, FirstNet. The FCC has
tried before to raise the money in an auction for FirstNet, but the
auction received no bidders. Dish's bid for H-block gives FCC a
minimum reserve price of $1.56 billion in the auction scheduled
next month. Moreover, the FCC wants owners of the former TV
frequencies to reduce the power of transmissions on those
frequencies to avoid interference with other users. Dish has agreed
to the FCC request for restrictions on some former broadcast TV
frequencies that Dish bought in 2008.
Why Dish Is Bidding For H Block Auction?
The H Block is a 10 MHz block of paired airwaves that runs from
1915-1920 MHz (for the uplink) and from 1995-2000 MHz (for the
downlink). Dish controls spectrum adjacent to a portion of the H
Block, called AWS-4, which runs from 2000-2020 MHz (for the uplink)
and 2180-2200 MHz (for the downlink). Dish has asked the FCC to let
it use the 2000-2020 MHz band for downlink operations instead of
uplink. Now that the FCC has given the nod for Dish's request, it
will have more spectrum for downlink operations, assuming the
company wins the H Block auction.
Dish is also eyeing LightSquared spectrum and has a $2.2 billion
bid in place for the same. (Read -
Dish Eyes More Spectrum With LightSquared Bid
) However, it has been learned that Fortress Investment Group
is in talks to acquire LightSquared out of bankruptcy proceedings.
It will be interesting to see how things unfold from here and if
Dish manages to acquire the LightSquared and H Block spectrum.
Macquarie estimates that the auction purchases, with a positive FCC
decision, could add a minimum of $6.6 billion of value atop the
unused spectrum Dish Network already controls.
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