Analysis: Scramble for EchoStar spectrum ramps up

The decision by EchoStar to sell some of its spectrum holdings to AT&T last week opened the floodgates for further sales but expect machinations between Elon Musk-owned SpaceX and additional US operators.

Indeed, Semafor reported last week (26 August) T-Mobile previously expressed interest in all of EchoStar’s spectrum before AT&T struck its $23 billion deal for rights to the satellite player’s 3.45GHz and 600MHz licences. It is reportedly still interested in some of the remaining assets.

The news agency reported T-Mobile, AT&T and EchoStar were in preliminary talks which would have allowed the operators to split the satellite player’s spectrum holdings.

SpaceX covets EchoStar’s AWS-4 spectrum for use on its low Earth orbit (LEO) satellites as part of a goal of providing its own coverage to mobile devices outside of partnerships with operators such as T-Mobile.

EchoStar co-founder and chair Charlie Ergen is a well-known hoarder of spectrum, but his company’s decision to shutter its greenfield, open RAN-based network, along with a $22 billion debt load, marks the beginning of spectrum sales.

Tim Farrar, an analyst at TMF Associates, explained in a research note EchoStar still owns 30MHz of 3.45GHz spectrum and approximately 20MHz of 600MHz spectrum, both of which were purchased in government auctions.

The crown gem of EchoStar’s spectrum is AWS-4 in the 2GHz band, which SpaceX contends is underutilised.

“Going forward it is therefore quite likely that there will be further transactions, perhaps just between AT&T and T-Mobile, or perhaps involving EchoStar’s key midband holdings in AWS-3 and AWS-4,” Farrar stated.

“However, we are highly skeptical about suggestions SpaceX would bid for the AWS-4 2GHz MSS spectrum, or that SpaceX wants to run a terrestrial wireless network, at least at a price level that EchoStar would take remotely seriously.”

He noted AT&T is less specific about its plans for the 600MHz band, which he previously thought would be of more interest to T-Mobile.

“However, it is not implausible to think that AT&T might want to use the 600MHz spectrum as leverage for a trade with T-Mobile to allow AT&T to acquire T-Mobile’s 3.45GHz and C-band spectrum,” he explained.

AWS-4
In May, the Federal Communications Commission (FCC) called out EchoStar’s lack of use of its AWS-4 spectrum licences following a complaint by SpaceX.

SpaceX appeared to have an ally in FCC chair Brendan Carr, who pressed EchoStar to part with spectrum it wasn’t using. A meeting between Ergen, Carr and US President Donald Trump may have smoothed the path for the sale to AT&T.

“AWS-4 is the elephant in the room,” stated LightShed Partners analyst Walter Piecyk in a research note. “For SpaceX, access to AWS-4 could be transformative. The spectrum would supercharge Starlink’s direct-to-device ambitions, potentially enabling streaming-grade sat-to-phone services.”

Farrar estimated the AWS-4 spectrum to be worth around $20 billion but Semafor reported Ergen values it at $30 billion.

“SpaceX may see AWS-4 as critical to its sat-to-phone roadmap, but SpaceX is unlikely to pay anything close to $25 billion,” Piecyk stated. “Instead, its leverage lies with the FCC”.

“A sympathetic regulator could push for shared use or apply pressure on EchoStar by threatening to revoke rights.”

Farrar posted on X Verizon should buy EchoStar’s AWS-3 and lease AWS-4 in urban areas, while continuing to hold onto the latter to build its non-terrestrial network (NTN) for a direct-to-device (D2D) satellite constellation.

“But if TMUS [T-Mobile] wins the bidding this would change,” he said on X.

He explained if T-Mobile bought all of EchoStar’s AWS-4 the latter will likely abandon its D2D constellation while allowing the mobile operator to provide more spectrum to partner Starlink for its satellite service.

“AT&T has already used portions of AWS-4, briefly lighting up spectrum during Covid,” Piecyk stated. “That suggests AT&T radios can handle at least half the band without new capex. In a spectrum-scarce world, that’s a significant edge that neither T-Mobile nor Verizon currently enjoys.”

He noted while Verizon is not an obvious first mover for EchoStar’s remaining spectrum, “it has a history of opportunistic spectrum grabs at high prices”.

“It should now feel some additional pressure given AT&T’s moves.”

Peter Adderton, the founder of Boost Mobile and now CEO and founder of operator MobileX, told The New York Post another scenario could include the Trump administration taking a stake in SpaceX in return helping it acquire EchoStar’s AWS-4 spectrum.