Dish fires back at T-Mobile over 800 MHz extension request

Dish Network last week defended its request for more time to buy 800 MHz spectrum from T-Mobile, telling a Washington, D.C., court that it boils down to the final judgment the court approved in 2020, which was all about ensuring a competitive U.S. wireless market.

The U.S. District Court for the District of Columbia approved T-Mobile’s merger with Sprint with conditions set forth in the final judgment, including that Dish becomes a new fourth facilities-based service provider. The Department of Justice (DoJ) required T-Mobile to take certain steps to make it all happen, including the divestiture of 800 MHz licenses to Dish.

Dish originally was supposed to exercise its option to purchase the spectrum by June 30, 2023, but received an extension. It’s now seeking a 10-month extension because it doesn’t have $3.6 billion on hand to buy it. Presumably, it will be on better financial footing by June 30, 2024, thanks to its planned merger with EchoStar, a distribution agreement with Amazon and other device and distribution partnerships.

After Dish on August 17 filed for more time, T-Mobile responded the following week with its opposition. Part of T-Mobile’s argument rests on the notion that Dish can’t claim hardship or difficulty as grounds for modifying the final judgment and that rising interest rates, whatever their cause, have always been a known risk of financing. 

Dish seized on that, telling the court: “T-Mobile’s cavalier attitude toward unprecedented interest rate hikes notwithstanding, the global financial turbulence resulting from the Covid-19 pandemic and a war in Europe was certainly not foreseeable by Dish when the Division commenced this action in mid-2019. But those events have seriously impaired Dish’s ability to close the purchase of the 800 MHz spectrum licenses in the near term.”

Dish also asserted that T-Mobile is acting like the court should review Dish’s request as something akin to an ordinary commercial dispute, when in fact, the court should be concerned about the underlying goal of the final judgment, which is to preserve competition.

T-Mobile is now the largest wireless carrier in the U.S. by market capitalization, yet it complained to the court about the expenses it will incur if it has to hold onto the 800 MHz licenses for another 10 months. According to T-Mobile, the additional time will cost at least $215.7 million, and if Dish ultimately doesn’t purchase the spectrum, the value of the licenses at action may be reduced because the licenses begin expiring in March 2028.

Dish countered that by saying T-Mobile was permitted to conduct a “highly profitable acquisition of Sprint,” and the fact that the divestiture may cost T-Mobile more money than it anticipated is trumped by the final judgment’s pro-competitive goals.  

As for T-Mobile’s statements pointing to Dish Chairman Charlie Ergen saying the 800 MHz spectrum was a “nice to have” rather than a must-have, Dish said those statements were “cherry-picked” from investor calls and not representative of Dish’s sentiment that the 800 MHz spectrum is competitively important.

“The 800 MHz frequencies are instrumental to reducing Dish’s marginal costs because they will help avoid network congestion – a key driver of costs,” Dish told the court. “If the 800 MHz licenses were to go to another buyer, Dish would not be able to simply buy other low-band and uplink spectrum at its convenience.”

Other interested parties

Burns & McDonnell Engineering Company has expressed interest in acquiring the 800 MHz spectrum so that electric utilities could use it to build wireless broadband networks, but Dish argues that there’s no other entity other than itself that can put the spectrum to use as a nationwide facilities-based wireless network.

“Even assuming that Burns & McDonnell’s unidentified ‘Group’ of financing, utility and industry partners could consummate a purchase of the 800 MHz spectrum licenses, only by some miraculous metamorphosis could these companies fill the competitive void left by Sprint,” Dish wrote. “Any benefit from Burns & McDonnell’s acquisition of the spectrum would be outside the national facilities-based mobile wireless market and therefore would not offset the loss to competition cause when T-Mobile swallowed its closest competitor.”

In a note for investors today, New Street Research (NSR) analyst Blair Levin said he reviewed comments from other third parties commenting in favor of Dish’s request – including the Benton Institute for Broadband & Society, New America’s Open Technology Institute and Public Knowledge – and concluded that while they don’t fundamentally change the calculus, they’re likely to help Dish with the DoJ.

It's still a close call, but Levin said he continues to believe that the DoJ is more likely than not to side with Dish and file in support of its request. He added that the key date to watch is September 18, the date by which the DoJ and the plaintiff states must file if they want to make their views known to the court.