The FCC cleared Dish Network's satellite spectrum acquisition Friday but put the company's wireless plans on the back burner, denying a waiver to use the airwaves for a land-based next-generation LTE-Advanced network.
The decision is a major setback for the company, which had pushed the agency to quickly grant it a waiver for flexible use of the satellite band so it could get its network running in time to keep pace with competitors like Verizon and AT&T.
"Unless DISH begins this development work now, it may not have a sufficiently developed S-Band ecosystem by the time the incumbent carriers complete their own transitions to LTE-Advanced," it said in documents filed with the FCC one day before the agency made its decision. "This delay will jeopardize DISH's ability to successfully enter the wireless market and would require us to consider other options"
The FCC says the regulatory barriers preventing Dish from using its 2 GHz satellite spectrum for LTE will be addressed through a rulemaking proceeding, a time-consuming process that could severely delay Dish's work on its network.
"The commission has been clear about its intent to remove regulatory barriers in this band through a rulemaking," the FCC said in its decision. "The record in this proceeding does not provide a sufficient basis to depart from the intended rulemaking approach."
The agency will vote on a proposal to open up the 2 GHz band for land-based wireless networks at its March 21 open meeting.
Dish and the FCC had discussed possible conditions on the deal in exchange for a waiver, but the agency ultimately decided to go with a formal proceeding. The agency is fielding criticism over its handling of a similar waiver it granted to LightSquared last year, a waiver which it recently had to revoke because of problems with GPS interference.
Dish said it was "disappointed" with the FCC's decision.
"We believe that the denial of those waivers will delay the advancement of some of President Obama's and the FCC's highest priorities – namely freeing up new spectrum for commercial use and introducing new mobile broadband competition," it said in a statement.
The DBSD and TerreStar transactions will close "as soon as practicable," Dish said.
Stifel Nicolaus analyst Chris King says it is unclear whether Dish will move forward with its LTE plans, team up with another provider or sell the spectrum AT&T is rumored to be interested in buying the spectrum after its takeover of T-Mobile USA failed last year.
"Dish's decision making about what to do with its new spectrum could still depend on the direction and speed of the rulemaking, with the FCC reportedly trying to conclude the proceeding this year," King said in a research note.
The FCC may try to wrap up its rulemaking proceeding this year before November elections that could shake up the agency's leadership, King said.