Dish Network Corp. (DISH)’s bid for U.S. permission to offer a high-speed wireless network may face resistance from the Federal Communications Commission, two analysts said.
The agency yesterday proposed writing new rules for airwaves that Dish intends to use for the service, a process that typically takes months. The step may indicate FCC Chairman Julius Genachowski is “disinclined” to grant the waivers Dish needs, David Kaut and Christopher King, Stifel Nicolaus & Co. analysts, said today in a note.
Dish, the second-largest U.S. satellite-television provider behind DirecTV (DTV), asked the FCC in August for clearance to buy assets of satellite companies DBSD North America Inc. and TerreStar Networks Inc. Dish also asked for waivers to let it offer service with handsets that use ground-based signals only and don’t communicate directly with satellites.
The prospects for Dish may have been complicated by the case of LightSquared Inc. (SKYT)’s wireless service, which won preliminary FCC approvals that the agency now plans to withdraw after tests showed interference to navigation gear, Kaut and King wrote.
Interference isn’t an issue in the Dish waiver, “but the LightSquared experience may have left the FCC gun-shy about being perceived as cutting procedural corners,” they said.
Dish Chief Executive Officer Charlie Ergen said last week he would “look at other alternatives” if the waivers were denied or “kicked down the road without a decision through rulemaking.”
The FCC should grant the waiver as it conducts the process of writing the rules, Marc Lumpkin, a spokesman for Englewood, Colorado-based Dish, said in an e-mail.
“We need regulatory certainty to begin development of consumer devices and to design our state-of-the-art 100 percent 4G broadband network,” Lumpkin said. “A rulemaking alone would delay that process indefinitely.”
Neil Grace, an FCC spokesman, declined to comment on prospects for the waiver, and on a report by DealReporter that said the agency won’t grant the waiver. DealReporter didn’t identify the source of its information.
Dish dropped 1.3 percent to $28.79 at 4 p.m. in Nasdaq Stock Market trading. Aaron Johnson, a Dish spokesman, declined to comment on the DealReporter report.
“If the company does not receive the waiver to build its wireless network, investors speculate that Charlie may sell the company since he has indicated that there is limited upside to the core video business,” Paul Sweeney, an analyst with Bloomberg Industries, said in an e-mail.
CTIA-The Wireless Association, with members including largest U.S. mobile providers Verizon Wireless and AT&T Inc. (T), asked for a rulemaking in an Oct. 17 filing. Dish is seeking waivers “that would appear to eviscerate” some restrictions on airwaves use, the Washington-based association said.
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