Spectrum Fees Would Slow MSS Spectrum Development, Say Ergen, Monroe

"Money is fungible” and investment may move elsewhere if the cost of building out spectrum becomes too onerous, Ergen said. Such fees will simply be passed onto the consumer, he said. Globalstar Chairman Jay Monroe said he also opposed such fees because “you don’t change the rules on people halfway through the game.” Globalstar is working to regain ancillary terrestrial component rule compliance so it can use its spectrum terrestrially.

Despite Ergen’s opposition to spectrum fees, he said he understands the need for revenue and that “everything should be on the table,” and he would be agreeable to paying a higher personal income tax. Ergen also complained about the broadcast industry’s hold on large swaths of valuable spectrum. He said they're the only group not being talked about as required to pay spectrum fees, even though TV stations got their spectrum for free and aren’t required to build out their services, he said. Sometimes it’s about who “has the best lobbying campaign,” said Ergen.

Ergen’s comments are interesting coming from “the poster child for spectrum hoarding,” said an NAB spokesman. “Few broadcasters operating today received ‘free spectrum.’ Over time, most stations have sold for millions of dollars, and sometimes for hundreds of millions. Moreover, unlike our pay-TV friends, local broadcasters have a public interest obligation to serve communities of license, free of charge. Mr. Ergen should visit Tuscaloosa [Ala.] and Joplin [Mo.] -- where local broadcasters saved countless lives this Spring with emergency tornado warnings -- and ask residents if broadcasters are efficiently using spectrum."

Ergen would like to use the S-band spectrum and other assets to become the provider of fixed and mobile video, data and voice, he said. While it “may take other companies and partnerships to do it,” he would like to be the first to provide all those services on one bill to the consumer, Ergen said. The focus will continue to be on the residential consumer, rather than enterprise services, he said.

Complaints that Dish’s plan to buy DBSD and TerreStar amounts to a windfall for the company because the companies being acquired didn’t have to buy the spectrum at auction don’t understand the reality, said Ergen. “I wish that were true,” he said, saying he has agreed to pay about $3 billion for the companies. The deals don’t guarantee a successful return on investment and the value comes with what Dish actually does with the spectrum, Ergen said. DBSD and TerreStar could not make their businesses work, but using that same spectrum “in conjunction with satellite and used terrestrially, we think makes for a business plan that will work,” Ergen said. The wireless industry was similarly originally given spectrum as a means to allow the industry to mature, Monroe said.

The fight over LightSquared shows the need to “do your homework” and “do it right the first time,” Ergen said. Dish has done its homework in the S-band purchases and proactively said it wants regulators to take the normal amount of time in looking at the deals, he said. Dish wouldn’t have gone ahead with purchases without the precedent set by LightSquared, Ergen said: While he hopes LightSquared is successful, what they're doing is different than what Dish is doing.

Asked about their largest regulatory failures, Ergen lamented his failed deal to buy DirecTV that was eventually blocked. Ergen said the $600 million breakup fee was real money and joked he’s looking forward to seeing how the AT&T/T-Mobile deal turns out, in which the breakup fee is said to be around $3 billion. Monroe said Globalstar’s largest regulatory failure was in failing to get the FCC to extend a waiver.