The Federal Communications Commission (“FCC”) is working to ensure the United States will lead the way in the next generation of wireless connectivity, commonly known as “5G”. To meet that goal, wireless providers will need access to more spectrum, or “airwaves”, especially in the lower- and mid-range frequencies from 600 MHz to 5 GHz. The U.S. cannot lead the world in 5G without timely access to additional spectrum in these frequency ranges.
The impending 5G spectrum crunch offers a powerful motivation for the FCC’s decision to investigate DISH Network L.L.C.’s deployment plans for a substantial amount of 5G spectrum in low- and mid-frequency ranges the company controls but hasn’t used. DISH’s failure to use its spectrum in a timely manner could result in an FCC enforcement action in the near term and, in the long term, could result in the loss of some of DISH’s spectrum licenses altogether.
The FCC investigation is focused on three blocks of spectrum licenses:
- The 6 MHz “E Block” licenses in the 700 MHz band that DISH acquired for nearly $712 million in a 2008 auction;
- The 40 MHz of spectrum in the AWS-4 band that the FCC gave DISH rights to use for mobile broadband in 2013; and
- The 10 MHz of nationwide spectrum in the H Block that DISH acquired for $1.546 billion in a 2014 auction.
When the FCC licenses spectrum for mobile use, it typically imposes interim and final network performance (i.e., “buildout”) requirements to prevent speculators from “warehousing” spectrum licenses (i.e., letting spectrum lie fallow while the licensee seeks to sell it for a profit). DISH missed its interim buildout deadlines for its licenses in each of these three bands. As a result, DISH must now offer service in the 700 MHz and AWS-4 bands to 70 percent of the population (or geography in 700 MHz) for each license area by March 7, 2020, and to 75% of the population for each H Block license area by April 29, 2022.
DISH told the FCC it plans to build a “narrowband Internet of Things (IoT) network” in these three spectrum bands for now and start upgrading it to a 5G broadband network in July 2020—after its licenses in the 700 MHz band are slated to expire.
The FCC has ample reason to investigate DISH’s latest network plans. DISH’s decision to launch a narrowband network in more than 50 MHz of prime spectrum suitable for 5G is inconsistent with company’s previous representations to the FCC and the agency’s goals.
In 2012, DISH said it would “drive competition in the mobile broadband market” (emphasis added) if the FCC would give DISH the right to use 40 MHz of valuable spectrum in the AWS-4 band for mobile broadband services. According to DISH (six years ago), its “planned entry into the wireless market could not come at a better time for American consumers.” Now DISH is telling the FCC that American consumers will need to wait at least two more years for its “planned” wireless broadband service. (DISH apparently decided it would be a better time for consumers to wait another eight years.)
DISH also negotiated a price for its H Block spectrum with the FCC in 2012, in a deal that included an extension of the buildout deadline for DISH’s 700 MHz spectrum and the right to deploy mobile broadband in the AWS-4 spectrum without competing for that right in an auction. DISH told the FCC these concessions were “critical to DISH’s successful deployment of a terrestrial broadband network” like the broadband networks other operators had already deployed in the 700 MHz band—the type of broadband network DISH now says won’t happen until at least 2020 (if it happens at all).
DISH got what it wanted from the deal. The FCC extended DISH’s buildout deadlines for its 700 MHz spectrum, agreed to adopt DISH’s price for the H block spectrum, and gave DISH valuable mobile broadband rights in the AWS-4 band for free.
In return, DISH has given the FCC another empty promise—that DISH might build a mobile broadband network sometime after July 2020, more than 11 years after DISH acquired its first set of mobile licenses in the 700 MHz band.
Though DISH still has time to meet its final buildout obligations, its failure to meet the interim buildout deadlines in the 700 MHz band subjects it to enforcement action by the FCC, which includes the potential for a hefty fine or even the revocation of DISH’s 700 MHz licenses. In its order providing for such enforcement action, the FCC noted that it could “impose a proportional reduction in the size of the licensed area.” To the extent DISH failed to build anything at all, that would amount to revocation of the licenses themselves.
DISH has another problem with its 700 MHz licenses—its final buildout deadline coincides with the expiration of the licenses’ terms. Even if its narrowband network would be considered sufficient to satisfy the final buildout obligations, it still might not be enough to meet the FCC standard for renewal of DISH’s 700 MHz licenses. The FCC has been clear that its requirements for renewal of a license are distinct from its buildout requirements. The renewal standard requires a licensee to demonstrate that it has provided adequate levels of service over the course of its license terms. Because DISH failed to meet its interim benchmark, it must make a detailed “renewal showing” that, among other things, involves the date service was commenced and the level and quality of service it actually provides. Given the disparity between the timing and quality of service DISH said it would provide (competitive mobile broadband service) and what it is now saying it will provide (a narrowband service at the end of its license term), it could be difficult for DISH to meet the FCC’s renewal standard.
In short, the FCC’s investigation of DISH’s buildout plans could be far more serious than it initially appeared.
DISH Network did not respond to my request for comment.
