Dish seeks a favour from FCC for T-Mobile-Sprint deal role
June 23 2019 11:42 PM
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A Dish Network technician
A Dish Network technician prepares to install a satellite television system at a home in Denver.

Bloomberg/New York

Dish Network Corp chairman Charlie Ergen has managed to become a central character in T-Mobile US Inc’s yearlong quest to take over Sprint Corp, and he might have US regulators right where he wants them.
Dish is seeking to have the Federal Communications Commission waive a March deadline to use — or lose — airwave licences the company bought years ago, according to people familiar with the matter. In exchange, Dish will acquire additional spectrum, subscribers and other assets from T-Mobile and Sprint, said the people, who asked not to be identified discussing private information. That way, the government can point to Dish as a new mobile-phone company, making it easier to prove T-Mobile’s acquisition of Sprint won’t harm competition.
It’s a remarkable turnabout for Dish and its billionaire chairman, who had previously opposed the T-Mobile-Sprint merger but now has reason to help it go through. Dish, which has irked the FCC by amassing an enormous stockpile of mobile-phone airwaves and failing to use them, now represents the agency’s best hope for a scrappy new player in a market that will otherwise be reduced to three competitors.
Dish, a satellite-TV provider, had publicly opposed T-Mobile chief executive officer John Legere’s ambitions to buy Sprint because it threatened to consolidate too much of the wireless industry.
“This is pretty weird, because Ergen has been attacking the deal, and Legere has been attacking Ergen and Dish,” said Blair Levin, a former FCC chief of staff and analyst with New Street Research. “But now you have this situation where it could be that Ergen is the one guy who can bail out Legere, and Legere is the only guy who can bail out Charlie.”
On his way to becoming the 40th richest person in the US, Ergen, 66, has developed a reputation for doing things the hard way. He’s fighting the US government in court over airwaves purchased at a discount through separate small-business entities. And he pulled HBO shows from millions of Dish’s customers in an ongoing contract dispute with AT&T Inc.
While some strategic gambles have paid off — he’s the owner of billions of dollars’ worth of airwaves — others have led to failures. A merger attempt with archrival DirecTV was blocked, and an attempt to revive Blockbuster Video and mount a challenge to Netflix Inc foundered. But through it all, Ergen has demonstrated one defining trait: He’s willing to outwait his rivals.
Ergen has talked up plans for almost a decade to build a new advanced network to deliver TV and internet access that would compete with Verizon Communications Inc and AT&T. For years, he has been buying airwaves opportunistically, bidding at auction and acquiring licenses on the cheap from bankrupt satellite companies. Discussions and deals with Clearwire, later Sprint and even T-Mobile all failed in the past.
There’s pressure on Ergen to get his advanced wireless network underway soon, and not just because the FCC is growing impatient with him. Satellite TV is suffering the steepest subscriber losses in the pay-TV industry.
“Mr. Ergen thinks he can outrun the decline of pay TV and catch a growth wind in wireless and soar,” said Roger Entner with Recon Analytics LLC. “I am sceptical.”
That’s why Ergen sees the T-Mobile-Sprint deal as a possible way out of a jam. The FCC has already signalled it will clear the deal if the companies agree to limits on pricing and sell Boost, Sprint’s prepaid wireless service. The Justice Department has taken a tougher line, pushing T-Mobile and Sprint to sell enough additional assets, like spectrum and network access, to lay the groundwork for a new fourth wireless competitor.
T-Mobile and Sprint could have tried to work with another company, but few others make sense if the goal is to create a new national wireless provider as soon as possible. Cable companies like Comcast Corp and Charter Communications Inc only offer service regionally. Technology giants that have shown interest in wireless, such as Amazon.com Inc and Alphabet Inc, present their own antitrust concerns. Dish already has a trove of airwaves, operates across the US and isn’t dominant in any industry.
While Dish could agree to pay $6bn or more to acquire airwaves from the merging companies, other types of transactions are possible. One idea is a simple trade. Dish would provide some spectrum to T-Mobile, which would give Dish access to capacity on its network, allowing Dish to use it to provide its own wireless service. That would let Dish offer mobile-phone plans while saving the billions it would cost to build from scratch. And T-Mobile and Sprint could consummate their deal and get superior airwave capacity for 5G service at a lower cost than Verizon and AT&T.
“An additional benefit of this solution would be that the exchange would be in the form of capabilities and assets rather than cash, which would make it easier for Dish to pay for the transaction,” Barclays Plc analyst Kannan Venkateshwar said in a research note.
But Ergen is holding out for another big prize: a reprieve from the FCC’s March deadline to use the airwaves he’s already acquired or forfeit the licenses. Dish could argue that a deal with T-Mobile and Sprint would provide a new and better option for its airwaves then the network it’s currently building, which would allow devices to send information to each other but wouldn’t immediately be available for mobile-phone service. It’s possible the FCC would agree to cut Ergen some slack, seeing it as a way to finally bring more spectrum out of Dish’s warehouse and into consumers’ hands, while allowing the T-Mobile-Sprint deal to move forward.
“It will be interesting to see what Dish is willing to commit to,” New Street Research analyst Jonathan Chaplin said in a note.



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