Draft Order Circulates On Dish AWS-4 Rules With Uplink Limitations

The Dish order is mostly what everyone was expecting, an FCC official said. The bottom 5 MHz is to be internalized for Dish, the official said. The commission is imposing increased OOBE limits at and below 2000 MHz, the official said.

The draft order includes technical rules that could affect up to 5 MHz of Dish uplink spectrum, another FCC official said. These technical rules are on out-of-band emissions and power limits, the official added.

While commissioners likely want to vote on the order quickly, it’s uncertain if it will get done before the weekend after Thanksgiving, the other official said. They may use the Dec. 12 meeting as a backstop if the order doesn’t get a vote before that date, the official added. The draft order doesn’t appear to address windfall conditions, the official said. The FCC will continue to review any proposed transfers of control, the official said.

The proposed order properly addresses some of the opportunities with the spectrum, Dish said in a news release. But, “it’s significantly flawed by introducing serious limitations that impair its utility,” it said. While the FCC would grant full terrestrial rights, “its proposal to lower our power and emissions levels could cripple our ability to enter the business,” the company added. Dish said that the commission appears to back a proposal that calls for the DBS provider to “disable 25 percent of its uplink spectrum and impair another 25 percent of that spectrum to accommodate possible future use of neighboring H block spectrum by Sprint."

Analysts said they expect the order to be approved by mid-December, around the Dec. 12 meeting. The draft could be approved on circulation when commissioners finish voting, “or if necessary, at the FCC’s Dec. 12 open meeting,” Stifel Nicolaus analysts wrote investors. The H block proceeding also could be approved then, they said. There don’t appear to be restrictions on possible wholesale agreements with other carriers, they said. “If Dish were to try to sell the spectrum outright or merge with another company, it would be subject to a new review by the FCC and Department of Justice."

A loss of 5 MHz of uplink spectrum likely won’t affect consumers’ service quality “in a way that materially reduced Dish’s ability to provide a competitive wireless service,” said Paul Gallant of Guggenheim Partners. He’s unsure how much of Dish’s recent statements of concern on the 5 MHz issue “represents a true impairment of its true wireless capabilities versus posturing to try to persuade the FCC on the 5 MHz issue,” the analyst wrote investors. If the order is approved, the core value of Dish’s spectrum remains mostly intact, “as the vast majority of the utility of Dish’s spectrum is associated with its downlink, which remains untouched,” said Credit Suisse analysts.

The proposal around auctioning the H block will likely lead to a 2013 auction, Gallant said. That time frame would be good for Sprint Nextel, “as it may be the most natural buyer of H given its neighboring spectrum,” he said. Sprint is pleased the FCC is moving forward to adopt rules for the 2 GHz spectrum, a spokesman said. “We remain hopeful that the commissioners will decide to support Dish’s plans to build a new wireless network, while taking the steps necessary to protect Sprint’s PCS spectrum holdings and other adjacent 2 GHz terrestrial spectrum.” Sprint also welcomes the commission’s plans to auction the adjacent spectrum, added the spokesman.

The commission “is required to auction the H block by law, and they have an obligation to the taxpayers to get as much money as possible for it,” said a wireless industry official. The commission could get less money at auction if the signal from AWS-4 bleeds over into H block, the person said.