Concerning DISH Network (NASDAQ: DISH), New Street Policy Advisor Blair Levin ponders how the government might react in the event of a spectrum fire sale or bankruptcy. The FCC and DoJ have more authority outside of a bankruptcy, where the concerns of creditors and the power of the bankruptcy court may take precedence over competition and telecommunications policy, he notes.
A key policy question is the FCC/DoJ’s view of the competitiveness of the mobile market in the future. Levin says NSR thinks they can believe one of four things: “That DISH can be an effective fourth facility-based competitor but needs more capital to complete the network build-out and achieve success. That the U.S. still needs a fourth facilities-based competitor, but it does not appear that DISH will be the one. That, the government comes to believe three is enough. That the government comes to believe cable is a full competitor and therefore DISH is not necessary to [have] a competitive market structure.”
Currently, key government officials believe the first. “That could change either as the facts change or if there is a change in the political leadership. Our analysis is focused on the next year. We will proceed by assuming that the Democrats are in charge when the game is called,” states Levin.
He considers a spectrum fire sale scenario, saying there is significant case law that suggests the FCC and DoJ don’t have to modify the existing constraints. “As with the 800 MHz extension request, the FCC and DoJ are likely to prioritize the possibility of the deployment of a fourth national facilities-based wireless carrier over the strict enforcement of the existing constraints,” states the policy expert.
But Levin notes that if the FCC and DOJ believe that DISH is close to achieving the build-out and successful operation of a fourth national facilities based wireless network, NSR thinks they will adjust their rules sufficiently to enable sales of some spectrum to provide the necessary capital to achieve that goal. “As with the 800 MHz extension request, the FCC and DoJ will likely not grant everything DISH wants but will grant what they need. We think DISH will design the ask to be modified but still sufficient to provide the capital to avoid having to enter bankruptcy court.”
A bankruptcy proceeding would prioritize the interests of the creditors. That will lead the court to seek remedies that maximize the monetization of the DISH spectrum holdings, according to Levin. In this scenario, “the DoJ and FCC are likely to negotiate in good faith with the bankruptcy court to help the court achieve its goals. A bankruptcy scenario inherently undercuts the premise of the conditions placed on the spectrum sale.”
By Leslie Stimson, Inside Towers Washington Bureau Chief
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