Push for a Fourth National Wireless Network Is on Life Support Following AT&T/EchoStar

LightShed’s Walter Piecyk told investors Wednesday that the EchoStar/AT&T deal “marks the first step in dismantling what was once envisioned as the fourth national wireless network” in the U.S. “While some may view this as a setback for competition, we believe it could ultimately spark more competition in both wireless and home broadband,” he said. “The reality” was that EchoStar’s Boost “was not moving the market,” but “more importantly, this is just the first step, and the process is far from complete.”

Carri Bennet, the Rural Wireless Association's outside general counsel, said members of the group are concerned about the impact of the transaction on their plans to build out rural areas with EchoStar, which established such a program to expand its network (see 2503130034). “It’s not clear if or how that will be impacted,” she said in an email.

If EchoStar becomes a hybrid mobile virtual network operator (MVNO) or hybrid mobile network operator, “are rural carriers to follow suit?” Bennet asked. RWA members “have more questions than answers at this point,” she added. “EchoStar and AT&T have the ball in their court, and we hope they are willing to let the rural carriers into the game and the FCC calls fouls appropriately rather than turn a blind eye to the continued consolidation with no guard rails.”

Dish Wireless “certainly won't be the facilities-based competitor that DOJ (but apparently not the FCC) hoped it would be,” said Public Knowledge Senior Vice President Harold Feld in an email. The EchoStar transaction is “yet another set-back for consumers in an increasingly concentrated market.” DOJ “has already sounded the alarm about the ‘Big 3 oligopoly,’ and when the DOJ uses the word ‘oligopoly,’ it means it, acquiring so much spectrum that wireless competitors could never hope to catch up.”

The development definitely helps AT&T enter the fixed-wireless market in a way it couldn’t before, ensuring that it “can maintain network quality on par” with T-Mobile and Verizon, Feld said.

'Very Bad Day'

Michael Calabrese, director of the Wireless Future Program at New America, said eliminating “EchoStar as a facilities-based competitor is a very bad day for consumers.” Citing warnings last month from Gail Slater, DOJ's Antitrust Division chief (see 2507110045), Calabrese noted that “the consolidation of mobile market share and spectrum ownership among the Big Three mobile carriers will further diminish effective competition."

There's a “silver lining,” though, he added: Instead of filing for bankruptcy, it appears EchoStar “will live on” as a hybrid MVNO. “Although it will be dependent on wholesale access to AT&T’s network, its Boost brand can leverage the company’s own 5G core, control customer relationships and quite possibly offer better and more affordable service to millions.”

EchoStar’s decision to sell much of its spectrum “really just underscores how difficult it is to stand up a viable, facilities-based competitor in this market,” said Kristian Stout, innovation policy director for the International Center for Law & Economics. “Letting Dish monetize the spectrum acknowledges reality -- it is better to have three robust national carriers investing heavily than to prop up an anemic competitor that can’t get to scale.”

Slater’s views likely reflect those of DOJ staff, said New Street’s Blair Levin. “The FCC is fine with three” national providers, “and the DOJ wants four,” he said. “The problem is, it’s not clear who the fourth will be." DOJ may have concerns about AT&T/EchoStar but will probably agree to the transaction, he added.

LightShed's Piecyk said AT&T could deploy the 3.45 GHz spectrum “overnight” with little capital expenditure “and only marginal tower expense.” The $23 billion price tag “is still a steep premium over Dish’s cost basis, especially with no evidence of a competitive sale process,” he said. But moving now also “eliminates the risk of paying more years later after a drawn-out FCC battle, while also delivering near-term operational gains.” Piecyk said AT&T can use the spectrum to limit further densification of its network and strengthen its ability to grow its fixed-wireless offering.

Less clear, Piecyk noted, is why AT&T wanted EchoStar’s 600 MHz licenses, since AT&T had already sold off most of its 600 MHz holdings to Columbia Capital, which resold them to T-Mobile. “This spectrum is likely to sit idle, with the FCC likely showing flexibility on buildout deadlines given the broader industry restructure,” he said. AT&T could ultimately trade the spectrum to T-Mobile for more C-band spectrum “in another win-win deal.” For financial reasons, EchoStar probably insisted that the deal include the low-band frequencies, Piecyk said.