https://www.foxbusiness.com/business-leaders/dish-network-chair-charlie-ergen-in-5g-hot-water-with-fcc
Dish Network Chair Charlie Ergen in 5G hot water with FCC
Charles GasparinoPublished January 08, 2019
Telecommunications honcho Charlie Ergen begins 2019 in the middle of a perfect
stock and regulatory storm that will be difficult to escape from.
Shares of Dish Network, the company he co-founded, are well off their highs of
$80 per share reached back in 2014, and have tanked 41 percent over the past
year. Meanwhile, FOX Business has learned that the straight-talking chairman
remains in the crosshairs of the Federal Communications Commission and its
chairman Ajit Pai over billions of dollars in wireless spectrum licenses his
company has purchased in recent years as part of his plan to transform Dish
from a satellite carrier, to a new company focused on 5G wireless broadband.
Over the past six months, the two sides have exchanged letters on the progress
of the 5G wireless buildout with Dish saying it is meeting its stated goals,
and the government questioning the company’s actual progress. Sources inside
the FCC tell FOX Business that Pai remains unimpressed with Dish’s explanation
of its wireless buildout, and is closely monitoring the situation.
If Dish doesn’t meet a 2020 government mandate for the buildout that covers a
substantial part of the U.S. population—or convince President Trump’s FCC to
give it an extension--it faces the possibility that the federal government will
pull some of its wireless licenses leaving the cash-strapped company billions
of dollars in the hole.
Making matter worse, Ergen isn’t just facing a skeptical FCC, but one that is
part of an administration that he has opposed politically. Since 2009, Ergen
and his wife Candy have contributed more than $1.6 million to Democrats running
for federal office and have held a high-profile fundraiser for Democratic
presidential nominee Hillary Clinton that generated nearly a $1 million for her
failed 2016 presidential campaign.
Pai’s boss, Republican President Donald Trump, meanwhile, received no
contributions from the Ergens and since 2009, the couple has contributed just
$210,000 to Republicans running for federal office, according to federal
records. Despite having an estimated net worth of nearly $9 billion, as tracked
by Forbes and being an executive whose company could benefit from bipartisan
support locally and in Washington. Ergen and his wife also co-founded EchoStar
and of which he is also chairman.
“Several years ago Ergen made two big bets: One to enter the wireless broadband
market and another to protect himself politically just in case he would have
trouble building it out,” an FCC attorney told FOX Business. “That’s why he
made a big bet on Hillary hoping a friendly FCC would enable him to sell
licenses or get an extension on the build-out requirements. Both of those bets
appear to be souring.
A spokeswoman for the FCC had no comment. A spokeswoman for Dish told FOX
Business: “As we’ve consistently shared with the FCC, DISH anticipates meeting
all construction milestones applicable to the spectrum licenses. Our plan
presents the most promising technology to fulfill a growing demand for IoT
[Internet of Things ]connectivity in the near term and will serve as a bridge
to build the first standalone 5G network in the United States. Our plan is
consistent with the flexible use policies the FCC established for the spectrum
licenses, and will help advance our country’s goal to lead in the global race
to 5G.”
The spokeswoman declined to comment on the impact of Ergen’s political
contributions that were funneled mainly towards Democrats, other than to say he
has given to politicians in both parties over the years.
Ergen’s skeptics, of course, go beyond those in government, which is why Dish’s
stock is in the doldrums. Dish has issued tens of billions of dollars in dent
snapping up wireless spectrums in a bid to compete with AT&T and Verizon in the
5G wireless race, as Dish’s fortunes in satellite stalled.
To build out the wireless network he will need as much as $20 billion or more,
even as he concedes he doesn’t have the funds on his balance sheet.
Lack of funds and or financing, coupled with a not-so-friendly FCC, which has
put him on notice over the wireless buildout, could send shares of Dish even
further south.
Dish, for its part, maintains the company is on schedule to meet its required
5G buildout, even if it’s still in the first phase process, creating something
called “narrowband IoT.” Ergen has recently told analysts he has never missed a
buildout deadline, and won’t miss 2020 5G deadline.
One tactic Ergen could use, is to potentially sell his licenses by selling
Dish—and he has said there are interested parties. But bankers and analysts say
the market for Dish and its licenses has dried up with industry consolidation,
plus lots of potential buyers aren’t interested in negotiating with Ergen, who
is known as a difficult merger partner.
Ergen could also try and convince Pai at the FCC to grant Dish an extension on
the licenses facing the 2020 deadline, but people at the agency tell FOX
Business that the chairman may not want to set a precedent by allowing Dish to
get a pass on something it had agree to as part of its deal to buy the licenses
in the first place.
“Time seems to be running out on Charlie,” the FCC attorney told FOX Business.
