FCC angers small carriers by helping AT&T and Starlink buy EchoStar spectrum

Separately, a group representing rural mobile carriers criticized the approvals, saying the FCC ignored competition concerns raised by small wireless operators. The spectrum sales “continue the troubling pattern of spectrum aggregation that disadvantages rural wireless providers, stifles competition in the wireless marketplace, and hinders the deployment of wireless services—particularly in the hardest-to-serve rural areas,” the Rural Wireless Association said. While Starlink isn’t a wireless carrier, it is looking to dominate the emerging market for Direct-to-Device (D2D) systems that use low Earth orbit satellites to provide service on standard mobile phones. Meanwhile, AT&T’s purchase of EchoStar licenses continues the consolidation of spectrum with the three major carriers—AT&T, Verizon, and T-Mobile. “In approving the EchoStar/AT&T deal, the FCC’s Wireless Telecommunications Bureau erroneously asserts that the likelihood of competitive harm is low, dismissing concrete harms identified by rural wireless carriers, including reduced access to spectrum needed to expand service in rural markets and diminished competitive opportunities for rural and regional wireless providers,” the Rural Wireless Association said. Although the Rural Wireless Association objected to the approvals, it said there is still a chance for small carriers to get some spectrum licenses from EchoStar in future deals. EchoStar’s deal with SpaceX will be completed in two stages, with the licenses being transferred first to a trust held for the benefit of SpaceX and later from that trust to SpaceX. The companies say the two-step process is necessary to obtain regulatory approvals outside the US. The final step is expected to be completed by November 30, 2027, but could happen earlier. EchoStar said it is “evaluating next steps” in regard to the escrow condition. That kind of statement can indicate a company is considering legal action. “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,” EchoStar said. “However, these approvals come with an unprecedented involuntary escrow condition. We are analyzing this requirement and evaluating next steps.” The FCC said the docket drew comments “alleg[ing] that EchoStar has told various tower companies, fiber backhaul providers, and construction firms that it will not fulfill its contracts nor pay the monies it owes them for constructing that radio network.” The companies asked the FCC to impose an escrow requirement so they can be paid from the proceeds of the spectrum sales. “EchoStar disputes claims that have been raised by those companies,” and “responds that it has reached settlements with hundreds of vendors and made hundreds of millions of dollars of payments,” the FCC said. “It argues that any escrow condition is illegal and unmanageable.” Despite acknowledging those objections, the agency ordered EchoStar to put $2.4 billion in an escrow account, which would be withdrawn based on the outcome of legal disputes with vendors. The FCC acknowledged that the agency itself played a “unique role in the underlying series of events,” creating “a precedentially novel fact pattern and cognizable public-interest harms specific to this transaction that we find necessary to resolve here.” “With the attached condition, the FCC continues to allow the relevant parties and, if necessary, courts or other bodies, to adjudicate or settle these issues,” the FCC said.