- The FCC approved EchoStar spectrum sales to AT&T and SpaceX, but requires a $2.4 billion escrow account
- The escrow fund is meant to cover qualifying claims tied to Dish’s unpaid vendors and partners
- SpaceX is getting a boost to compete in the wireless and satellite broadband space
The Federal Communications Commission (FCC) gave its blessing to EchoStar’s $40 billion spectrum sales to AT&T and SpaceX, with the condition that EchoStar establish an escrow account of $2.4 billion.
The escrow account is key because EchoStar subsidiary Dish last year quit paying its network vendors and partners, claiming that because the FCC forced it to sell spectrum and shut down its 5G network, that constituted a “force majeure” event. Tower companies, contractors and other affected entities filed myriad lawsuits against the company for refusing to pay its bills.
The FCC’s announcement today didn’t exactly spell out those concerns but said the escrow account “can be drawn upon for qualifying claims. This encourages the resolution of outstanding claims while leaving the merits of any dispute to the parties or outside fora.”
EchoStar’s initial response to the spectrum transaction approvals was positive but seemed to take a “wait a minute here” reaction to the part about establishing an escrow account.
Here’s the statement an EchoStar spokesperson provided to Fierce: "The FCC has continuously applauded EchoStar’s spectrum sales to AT&T and SpaceX as pro-competitive transactions that serve the public interest, and we appreciate that the FCC approved them today. However, these approvals come with an unprecedented involuntary escrow condition. We are analyzing this requirement and evaluating next steps."
Details of spectrum sales
Specifically, the FCC’s Wireless telecommunications Bureau and Space Bureau approved EchoStar’s sale of about 65 megahertz of spectrum to SpaceX and an additional 50 megahertz to AT&T.
AT&T received special authority to use EchoStar’s 3.45 GHz spectrum before the spectrum transaction was approved and did so within weeks, deploying across 23,000 sites and boosting download speeds by up to 80% nationwide, the FCC noted. AT&T is also buying Dish’s 600 MHz spectrum, which will take more time to deploy because AT&T’s current network doesn't support that spectrum band.
As for SpaceX, the FCC is allowing Elon Musk's company to use its new spectrum for terrestrial, space-based and hybrid network architectures.
According to the FCC, that flexibility is “subject to first-of-its-kind performance obligations designed to be technologically neutral. SpaceX must meet demanding standards to use its spectrum intensively and provide meaningful, reliable connectivity to the public – whether D2D [direct-to-device], terrestrial, or both – within years.”
Praise for escrow account
Tower industry groups showered praise on FCC Chairman Brendan Carr’s stipulation for an escrow account.
“Today the FCC put Build America into action. America’s world-leading networks are built on wireless infrastructure and EchoStar’s refusal to honor its obligations threatened that foundation,” Wireless Infrastructure Association (WIA) President and CEO Patrick Halley said in a statement.
“Chairman Carr listened. Today’s decision ensures critical wireless spectrum is put to its highest use, while supporting the infrastructure providers that make connectivity possible,” Halley said.
NATE, which represents tower contractors nationwide, echoed WIA’s sentiment.
"We also commend Chairman Carr and the FCC for requiring a $2.4 billion escrow account to address obligations owed to tower owners, contractors and infrastructure providers. As a member of the Wireless Builders Coalition, NATE stood with WIA to ensure companies harmed by unpaid Dish and EchoStar obligations are made whole,” NATE said in a statement.
Evan Swarztrauber, principal at CorePoint Strategies and former policy advisor to then-Chairman Ajit Pai and Commissioner Carr, said approval of the deal lights up spectrum for D2D satellite services that will provide new services for consumers and inject more competition into the mobile market.
He also called out Carr's Build America agenda. "Chairman Carr has spent nearly a decade learning directly from the men and women that build America's broadband networks – from tower climbers and fiber splicers to construction crews and network engineers. The establishment of the escrow in these transactions is a reflection of Carr's unique understanding of, and commitment to, that workforce."
This story has been updated with additional commentary.