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Summary:

Report after report points to AT&T marrying Dish Network after Ma Bell’s forced break up with T-Mobile, but given the companies’ increasing belligerence, you wouldn’t think that was the case. What we’re witnessing here is some very cynical pre-nuptial gamesmanship.

poker

Report after report points to AT&T marrying Dish Network after Ma Bell’s forced breakup with T-Mobile, but given the companies’ increasing belligerence, you wouldn’t think that was the case.

AT&T is petitioning the Federal Communications Commission to impose network buildout conditions on Dish’s satellite spectrum –- requirements that would be passed onto AT&T if it acquired the satellite TV provider. Meanwhile, Dish insists it plans to use that spectrum to build a commercial LTE network to challenge the reigning nationwide mobile operators, including AT&T. These are hardly the actions of two companies about to tie the knot.

What we’re witnessing here is some very cynical pre-nuptial gamesmanship. According to TMF Associates satellite communications analyst Tim Farrar, Dish is playing AT&T off its competitors by threatening to partner with MetroPCS to build a nationwide LTE network over its satellite broadband and 700 MHz spectrum. To muck up Dish’s plans, AT&T is insisting to the FCC that the satellite TV provider face the same strict rollout requirements the commission imposed on fellow satellite spectrum holder LightSquared: An LTE rollout covering 100 million people in 33 months and 260 million in less than 6 years.

As Farrar wrote in his blog:

This submission is a blatant attempt by AT&T to put a thumb on the scales, as the FCC weighs up the appropriate balance between buildout mandates and clawback of any windfall. The reason for AT&T’s action at this very late stage in the process appears to be that DISH is trying to play off AT&T’s prospective bid against a potential venture with MetroPCS. MetroPCS would certainly be unwilling to commit to a 260M POP buildout, so if the FCC conceded AT&T’s demands, they would be the only game in town and DISH would lose its leverage in price negotiations. We’ll find out soon enough if AT&T’s gambit succeeds, but few would bet against [Dish chairman] Charlie Ergen’s poker playing skills after the events of the last year.

AT&T may seem like the bad guy here, but Dish’s motives are just as suspect. In an FCC filling Thursday, Dish maintained it plans become a competing mobile operator, launching an LTE network that would compete with the big 4:

The overly aggressive and unrealistic schedule AT&T advocates would likely set DISH up for failure or force DISH into unfavorable business arrangements with large Commercial Mobile Radio Service (“CMRS”) carriers.  It would erect artificial barriers to DISH’s plan to construct a new mobile broadband network on its own or consideration of partnerships with smaller companies, and could threaten DISH’s ability to roll out a retail service.  In short, an impracticably tight schedule would be a triple loss for consumers, the Commission, and DISH.

But as my colleague Stacey Higginbotham wrote when Dish first applied for permission to build LTE, Dish’s proposal sounds more like a financial gamble to cash in on the skyrocketing value of mobile broadband spectrum, rather than a legitimate bid to become a wireless competitor. One big clue is Dish’s insistence on deploying an LTE-Advanced network in order to “enter the market for the first time with the most advanced technology.” Of course, LTE-Advanced was just finalized as a standard so Dish claims it will have to wait several years before commercial equipment is available.

That’s absolute malarkey. LTE-Advanced is an iteration of LTE technology, not a completely new network. Claiming that you must wait until LTE-Advanced equipment is available before building a network is kind of like insisting you can’t move into a house before the shag carpeting is installed. There’s nothing stopping Dish from building an LTE network this year and evolving it into an LTE-Advanced network in 2013 or 2014.

Supposedly we face a spectrum crisis, but no one is acting like it. Instead of using public airwaves to deploy real networks, operators seem to be playing high-stakes poker with their licenses. AT&T’s motives may be self-serving, but maybe in this case it’s right. If it forces strict rollout guidelines on Dish’s spectrum and then buys those licenses, we may actually get a new mobile broadband network – rather than a bunch of operators whining about how they don’t have the spectrum to build them.

Poker Image courtesy of Flickr user Ross Elliott
Tower Image courtesy of Flickr user Nikhil Verma

  1. Vincent McBride Friday, February 3, 2012

    This behavior by AT&T and Verizon reaches the outer boundaries of responsible business ethics. AT&T and Verizon has exercised their power and size post auction to influence and manipulate the compatibility of the 700 MHz. bands and to control the development and production of
    mobile devices to operate only in the 700 MHz. frequency bands they own. This attempt to suppress the competition with non- interoperability and lost of valuable time makes it nearly imposable for small business to compete on a level playing field. The Commission has a long track record of prohibiting other restrictive arrangements that become obstacles to competitive access in the telecommunications market. The Commission has the authority to address discriminatory and anti-competitive practices under the Telecommunications Act, and it should do so as soon as possible.
    Interoperability is clearly a market entry barrier for small businesses and is in the public interest.4 The Commission has long recognized the benefits of having robust competition in the wireless marketplace including lower prices and choice among providers. Interoperability is a prerequisite to true competition in the wireless marketplace. The need for regulatory intervention stems from the extreme market power that AT&T and Verizon are exerting with respect to the low frequency spectrum and their growing dominance in mobile broadband. AT&T and Verizon intend to leverage this market power through restrictive device practices on carrier specific band
    plans designed after the 700 MHz auction. The Commission has an obligation as regulators of the industry to enforce policies that protect small business from the harmful side effects of such unfairness as non-interoperability in the 700MHz. band which undermines the very principals and objectives of the Commission to promote small business and competitiveness in the mobile industry and must take every opportunity to correct these harms.

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  2. Lindsworth Horatio Deer Saturday, February 4, 2012

    Sounds a lot like the spectrum battle looming here in Jamaica. Digicel has gotten a hold of CLARO 3G Network and has shut down their Voice network, in effect re-farming the spectrum for their as-yet to be launched 4G Network.

    http://www.geezam.com/claros-freeness-ends-5th-january-2012-digicels-bigger-better-with-data-and-cloud/

    But this also means that no viable spectrum allotments are left for the SMA (Spectrum Management Authority) to give to future entrants into Jamaica Telecoms sector, an effective block to future competition. Digicel needs to give up the spectrum for CLARO that they are using for voice to allow for competition in Jamaica. FTC thinks so, and so has them in court for next few months, argueing that the change in tact by ten JLP (Jamaica Labour Party) PM and President Andrew Holness gives Digicel too much of an advantage in Jamaica’s Telecoms Market.

    http://mythoughtsontechnologyandjamaica.blogspot.com/2012/01/digicel-to-shut-down-claros-voice.html

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  3. William Diaz ✔ Sunday, February 5, 2012

    I dont see the FCC allowing AT&T (especially after its failed merger with T-Mobile) to buy Dish Network or invest in their spectrum. AT&T has massive amounts of spectrum at hand, and has chosen to warehouse a nice portion of it. They should be legally required to deploy it before being allowed to purchase any more that another company CAN use to build out.

    Additionally, Dish Network can be looked at by the FCC as a company that may build out a competing network against AT&T and Verizon, as well as Sprint and T-Mobile, and expanding 4G and broadband services right now is all the FCC cares most about. IF any other competition comes in, thats only a win in their book. Consolidation is limiting choice, and putting wireless back into the realm of landline where monopolies and duopolies have to be broken up again.

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    1. Kevin Fitchard Sunday, February 5, 2012

      Hi William,

      I would agree with you normally, but I don’t think Dish has any intention of building a network. It’s just try to buff up its licenses to get a more attractive price. I have no problem with AT&T buying that spectrum or any operator as they long build a network on it, and right now it actually looks like AT&T would while Dish wouldn’t. Its claim they have to wait for LTE-Advance to deploy is absolute crap. If they want that waiver, let’s see them put some skin on the table.

      As for AT&T, you’re right. They can’t really complain about not having frequencies when they aren’t using what they have, but I do believe they’ll need more spectrum in the future — as will operators with the exception of Sprint/Clearwire. The nice thing about these spectrum sales (as opposed to auctions) is the FCC can impose rollout timelines on the operators. If AT&T will commit to building a sizable network in 3 years on those frequencies, and no one is willing to outbid them, let them have it.

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