FCC Approves AT&T and Starlink's Acquisition of EchoStar Spectrum Licenses, Sparking Backlash from Small Carriers

FCC Approves $40 Billion Spectrum Sale

On May 13, the U.S. Federal Communications Commission (FCC) approved a transaction in which EchoStar will sell its spectrum licenses to AT&T and SpaceX (the operator of Starlink). The combined value of the deals amounts to $40 billion.

The order issued by the FCC’s Wireless Telecommunications Bureau and International Bureau comes as no surprise, as FCC chairman Brendan Carr had effectively pressured EchoStar to sell its licenses.

Pressure from FCC Chairman

Last year, SpaceX argued that “Dish Network, a subsidiary of EchoStar, has used very little of its spectrum to provide mobile services to U.S. consumers.” Following this claim, Chairman Carr hinted at the possibility of revoking the licenses. Although Dish had secured an extension for its network deployment obligations from the FCC during the Biden administration, Carr objected to this agreement made under the previous administration.

Under this pressure, EchoStar, led by Charlie Ergen, signed contracts to sell its spectrum licenses to SpaceX for $17 billion and to AT&T for $23 billion.

Spectrum Bands Acquired by AT&T and Starlink

AT&T will acquire nationwide licenses for 30 MHz in the 3.45 GHz band and 20 MHz in the 600 MHz band. This acquisition is expected to enhance AT&T’s mid-band and low-band options for 5G and fixed wireless networks.

Meanwhile, SpaceX will purchase nationwide licenses for 65 MHz across several chunks in the 1.695 GHz to 2.2 GHz range. These frequencies are expected to bolster Starlink’s satellite-based mobile services compatible with T-Mobile phones.

Remaining Challenges and Conditions

Despite the approval, challenges persist. EchoStar has expressed opposition to the FCC’s condition requiring the company to deposit $2.4 billion into an escrow account to compensate construction firms responsible for Dish Network’s development. In a statement, EchoStar suggested it might contest this escrow requirement, arguing that it had to scale back its network construction plans to resolve complaints from the FCC.

EchoStar’s subsidiary Boost Mobile will continue providing wireless services but will operate through AT&T’s network rather than its own. Furthermore, Boost Mobile will gain access to Starlink’s mobile network through a deal with SpaceX.

Criticism from Small Carriers

On the other hand, organizations representing rural mobile carriers have criticized the approval, arguing that the FCC ignored competitive concerns raised by smaller wireless providers.

The Rural Wireless Association stated, “These spectrum sales disadvantage rural wireless providers, hinder competition in the wireless market, and perpetuate a troubling pattern of spectrum consolidation, which is especially harmful to wireless service deployment in rural areas where service is most challenging.”

Market Impact and Future Outlook

While Starlink is not a wireless carrier, it is aiming to dominate the emerging market for “Direct-to-Device (D2D)” systems that use low-earth orbit satellites to provide services to standard mobile phones. Meanwhile, AT&T’s acquisition of EchoStar licenses further consolidates spectrum resources among the three major carriers: AT&T, Verizon, and T-Mobile.

The FCC’s statement on the approval of AT&T’s transaction remains incomplete, but similar competitive concerns may have been raised. Moving forward, attention will focus on how the dispute over escrow conditions between EchoStar and the FCC will unfold.