A proposal to allow Dish Network Corp. (DISH:US) to offer mobile-phone service has enough votes to win approval at the U.S. Federal Communications Commission, according to commission staff members.
FCC Chairman Julius Genachowski’s proposal to regulate Dish’s airwaves has support from at least four of the five FCC commissioners, including Democrats Genachowski and Jessica Rosenworcel and Republicans Robert McDowell and Ajit Pai, according to three FCC staff members who asked not to be identified because the vote hasn’t been made public.
Justin Cole, an FCC spokesman, didn’t immediately respond to a request for comment.
The second-largest U.S. satellite-TV provider needed FCC approval to start wireless service that could compete with the largest U.S. mobile provider, Verizon Wireless, and No. 2 AT&T Inc. (T:US) Dish has built up its spectrum holdings as it seeks to decrease its reliance on the satellite-TV business, which is losing subscribers.
Dish has said its ability to enter the wireless business could be crippled by the proposal’s requirement that it limit power for its planned network. That’s intended to prevent interference with government-owned frequencies known as the H Block, which is slated to be auctioned.
Dish, based in Englewood, Colorado, fell 0.4 percent to $37.02 at the close in New York. The shares have gained 30 percent this year.
“No matter how you slice it, this is a transformative outcome for Dish to expand beyond its pay-TV business,” Paul Gallant, Washington-based managing director at Guggenheim Securities, said in an interview. “Even if Dish loses the spectrum interference battle it’s been fighting, it still got most of what it wanted from the FCC.”
Responding to the FCC’s proposal, Dish last week offered to let part of its spectrum be used as a so-called guard band to preserve the H block. Sprint Nextel Corp. (S:US), which may seek to acquire the H Block at auction, responded that Dish’s new proposal still “would substantially reduce” the value and utility of the block of frequencies.
Bob Toevs, a spokesman for Dish, didn’t immediately return a call and e-mail seeking comment. John Taylor, a Sprint spokesman, declined to comment before an announcement is made by the FCC.
Dish Chairman Charlie Ergen met with Genachowski and his staff Nov. 29, and Sprint Chief Executive Officer Dan Hesse spoke by telephone with the FCC chairman Dec. 5, according to filings with the agency.
Sprint has approached Dish in recent months about a potential partnership that would allow the satellite-TV company to offer mobile-phone service over Sprint’s network, with Sprint getting access to Dish’s mobile airwaves, according to two people familiar with the matter, who asked not to be named because they aren’t authorized to speak publicly.
An earlier attempt by Genachowski’s FCC to designate satellite airwaves for smartphone use foundered. The agency in February reversed its tentative approval to LightSquared Inc. after officials said the mobile service would interfere with global positioning system-based navigation gear, and the company filed for bankruptcy.
The FCC is trying to accommodate rising demand for mobile Internet service as consumers turn to smartphones and data- hungry tablets. The agency in 2010 voted to ease restrictions on smartphone use of the airwaves Dish now owns.
Dish first asked for FCC approval in August 2011 after paying about $3 billion for airwaves from bankrupt satellite companies DBSD North America Inc. and TerreStar Networks Inc. in deals announced (DISH:US) last year.
The agency in March approved Dish’s taking control of the airwaves, and said it would write the rules that Genachowski has now proposed.
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