Photo: EchoStar Mobile

The FCC has closed its investigation into EchoStar after EchoStar announced two massive spectrum sales to AT&T and SpaceX. EchoStar disclosed in SEC filings on Sept. 9 that the investigation is closed. 

FCC Chairman Brendan Carr sent a letter to EchoStar Chairman Charlie Ergen, published in the SEC filings, directing agency staff to end the investigation. 

The FCC opened two inquiries into EchoStar’s spectrum use in May, one into EchoStar’s use of the 2 GHz band for Mobile Satellite Services (MSS), and another into whether EchoStar met milestones for its 5G network buildout. The MSS inquiry came after SpaceX questioned EchoStar’s MSS spectrum use. 

EchoStar previously argued that the inquiry cast a “dark cloud of uncertainty” over the company’s spectrum rights and “imperil[s] the underpinning of FCC spectrum auctions and policy.”

The inquiry received much criticism, particularly from former Republican FCC Commissioner Nathan Simington, who left the FCC shortly after it was announced. Simington wrote an op-ed calling the investigation a mistake that threatens America’s progress in 5G while China moves ahead. 

During the inquiry, EchoStar rolled out plans for a 100-satellite direct-to-device constellation that would use its 2 GHz spectrum — but then decided to sell the spectrum to SpaceX for its own D2D services, canceling a contract with MDA Space. 

In all, EchoStar is selling 50 MHz of nationwide spectrum to AT&T for $23 billion, and selling its AWS-4 and H-block spectrum licenses to SpaceX for approximately $17 billion in a combination of cash and SpaceX stock. 

Some analysts believe EchoStar never intended to build the D2D constellation and it was a negotiating posture. Other analysts noted the 2 GHz sale to SpaceX marks a change in its D2D spectrum strategy that could make it harder for others to compete in the D2D market.

EchoStar’s stock price has soared nearly 200% in the last two weeks following spectrum sales.  

“While this resolves the FCC inquiries commenced in the May 9 Letter, our previously announced transactions with AT&T and SpaceX continue to remain subject to FCC approval,” EchoStar said in the SEC filing.

EchoStar said it plans to use the proceeds of the sales to pay down debt (which stands at about $25.4 billion according to its most recent financial results), and to invest in growth initiatives. The company said operations of Dish TV, Sling, and Hughes will not be impacted by the transactions.