Does DISH Deserve a Windfall?

"When it comes to playing ball in Washington, DISH has been a perennial, but necessarily popular, all-star. It has developed a remarkable presence and practice of going it alone and taking unpopular positions, when necessary." -Adonis Hoffman

When the Department of Justice approved the $26.5 billion merger of Sprint and T-Mobile, it required those two wireless companies to divest a significant piece of their businesses to DISH. Doing so, according to DOJ rationale, would pave the way for a fourth new wireless carrier and facilitate faster deployment of 5G service throughout the United States.

This development could not have been better for DISH, which is already abundant in spectrum. As one of America’s first satellite TV services, DISH is, by any measure, a very successful company. It began operations in 1996 as a service of EchoStar, which itself was formed in 1980. Led by the visionary Charlie Ergen, DISH has notably become the fifth largest holder of wireless spectrum in the U.S. And as we all know, spectrum, like real estate, is valuable because it is a finite commodity. As they say down south, God ain’t making any more of it.

Today, the publicly traded DISH has a market cap of more than $33 billion, which includes an estimated $30 billion of low and mid-band spectrum. The company has gained tremendous value on Charlie Ergen’s buy and hold strategy. The sheer scale of its yet-to-be built-out spectrum has prompted the FCC to mandate that DISH use it or lose it by 2020. 

Even with such an endowment, DISH is by no means golden. The company appears to be losing both customers and cachet. The burgeoning options in the video marketplace may have eclipsed the core satellite TV service and has put pressure on DISH to diversify, grow or die. Competition has not been kind to the company despite its efforts to keep pace with Sling TV and other new offerings. 

When it comes to playing ball in Washington, DISH has been a perennial, but necessarily popular, all-star. It has developed a remarkable presence and practice of going it alone and taking unpopular positions, when necessary. It also has become known for getting pugilistic on public policy. DISH plays hard and pushes the limits of regulatory convention by directly confronting its critics and competitors both in public and sub rosa. 

The company has never met a merger it liked. DISH has opposed almost every telecom and media deal to come before the FCC. In fact, it has orchestrated and financed opposition groups, ad hoc coalitions and aggressive advocates to contest the mergers of Comcast, Charter, AT&T and several broadcasters. The most successful of which was the “Stop Mega Comcast” effort which led Comcast to abandon its plan to acquire Time Warner Cable in 2014. It was a diverse collection of strange bedfellows including fifteen different trade and interest groups ranging from the far left to the fringe right. In a textbook move on power politics, DISH simply out-bullied Comcast on Capitol Hill and at the FCC. Not an easy feat. 

Not long after that, DISH was reprimanded by the FCC for its deft, but unlawful, sponsorship of two minority firms to win more spectrum in the FCC’s AWS-3 wireless auction. Reportedly, DISH had nearly 85% ownership equity in those companies, who received auction bidding credits as designated entities or, in telecom talk, disadvantaged businesses. It turns out the companies were not independent small businesses at all, but were in fact very much under the control and direction of DISH. 

Over the years, DISH has become known as a difficult business partner. It has been at the center of carriage disputes or blackouts with AMC Networks, CBS, FOX, Nexstar, Meredith, MSG, Hearst, Turner Broadcasting, Univision, and Regional Sports Networks, among others. And with a litany of lawsuits and regulatory enforcements against it, DISH is as scrappy as they come, refusing to let the viewers get in the way of a good fight. 

All of which begs the question: why has the DOJ bent over backwards to reward such bad behavior? Or put another way, does DISH really deserve the windfall it will receive as a baked-in beneficiary of the T-Mobile-Sprint merger? 

To put things into perspective, DISH will now pick up Sprint’s prepaid business, Boost Mobile, for $1.5 billion and its entire portfolio of 800 MHz spectrum for $3.5 billion. DISH will have unfettered access to T-Mobile’s network for seven years while building out its own, along with a sweetheart deal on the lease of 20,000 cell sites and hundreds of retail stores. 

While this arrangement is being cast as a structural condition for approval of the Sprint – T-Mobile merger, it looks more like a subsidy to a company that has no experience in providing wireless phone service to the public. And yet, according to assistant Attorney General Makan Delrahim, “DISH is in a unique position to succeed.” 

Only time will tell whether DISH will indeed succeed. The company only has to perform for four years before it is allowed to sell any or all of its newly acquired assets to the highest bidder. With no shortage of interested Big Tech suitors, it is only a matter of time before DISH will reap what could be the windfall of the decade, courtesy of a government giveaway. 

Adonis Hoffman is chairman of Business in the Public Interest, Inc. He is a former chief of staff and senior legal adviser at the FCC and served in senior positions in the U.S. House of Representatives and as an adjunct professor at Georgetown University.