Analysts: EchoStar Seemingly Bought More Time Before the FCC
Analysts said the FCC is unlikely to act soon on its twin EchoStar proceedings given that the White House seems to want to avoid an EchoStar bankruptcy. The agency is probing whether the company is using the 2 GHz band for mobile satellite service and looking into the deadline extensions EchoStar received for its 5G network buildout (see 2505130003).
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President Donald Trump reportedly told FCC Chairman Brendan Carr not to act in a way that could lead to EchoStar bankruptcy, which New Street Research's Blair Levin called a "meaningful political constraint." It doesn't mean EchoStar is out of the woods when it comes to possible bankruptcy, but Carr must be able to convince the White House that any such bankruptcy wasn't due to his actions, Levin wrote investors Monday. He said it's possible that Trump got involved at the urging of Chris Ruddy, with the Newsmax CEO seeking to prevent a problematic bankruptcy. While meeting with Carr and Trump, EchoStar Chairman Charlie Ergen likely raised issues related to China, national security and the open radio access network ecosystem, Levin said, which probably resonated more with the president than issues Carr would have brought up about intensified spectrum use.
If the FCC rules against EchoStar and the issues are resolved in court, the record in the proceedings favors the company, Levin said, adding that negotiation seems more likely than litigation. He said he expects that Trump's intervention will slow any FCC action, because if the agency were to move soon and EchoStar entered Chapter 11, Carr could face negative reaction from the White House.
MoffettNathanson's Craig Moffett said that before Trump's involvement, Carr seemed to be pushing for Ergen to sell EchoStar's spectrum rather than the agency to reclaim its spectrum licenses. He said Carr is now likely to extend the commission's spectrum review process to allow more time for talks with EchoStar. "Ergen, for now, has bought himself a reprieve."
Uncertainty about the state of EchoStar's 2 GHz spectrum holdings and the deadlines attached to its open radio access network 5G network buildout "has effectively frozen EchoStar’s decision-making," Ergen told Carr. In a docket 25-173 filing posted Monday, EchoStar recapped a meeting the two had last week, at which the company said reconsidering the deadline buildout extensions or changing the 2 GHz band-sharing rules "would be unlawfully retroactive, arbitrary, and capricious."