Charlie Ergen Folds, Sells EchoStar/Boost’s Stockpile of Spectrum to AT&T

[updated Aug 27 5:30 PM ET with additional context]

Charlie Ergen is famous for playing poker and hoarding wireless spectrum hoping for a future payday. Under pressure from the FCC and its creditors, he is finally giving up on hopes of a future windfall or building out a successful wireless carrier. Ergen-controlled EchoStar is selling its cache of lowband 600MHz and midband 3.45GHz spectrum to AT&T for $23 billion. AT&T can lease the spectrum before the deal closes, so this should finally put that spectrum to productive use relatively quickly.

This is also the big investment that AT&T needed to get closer to parity with T-Mobile (which has a huge stash of midband spectrum from its Sprint acquisition) and Verizon (which bought more C-band spectrum at auction than AT&T did). AT&T is getting 50MHz of spectrum in “virtually every market in the U.S.” In the coming days I'm sure we'll get charts from each of the big three national carriers showing how they now/still have the biggest/bestest spectrum assets. Of course they'll all be right, but I'm confident that whatever the spin, AT&T has improved its network assets in a meaningful way. AT&T says that the acquisition, “supercharges AT&T’s converged connectivity leadership strategy,” which is marketing speak for AT&T now being able to push FWA (broadband over wireless) as hard as it can. This should have at least some impact on T-Mobile and Verizon growth prospects, but the secondary effects may be bigger for cable operators, who are starting to see cord-cutters dropping not just linear TV but broadband, too. However, while AT&T does have a FWA product today, it has been focused more on fiber. It will take time for AT&T to integrate the spectrum and ramp up its marketing; T-Mobile and Verizon have a window to continue pressing their advantage in the short term.

This spectrum was originally allocated to Boost Mobile, which the company now calls a "hybrid MNO," whatever that means. I'm not being facetious, I really don't know what that means. Boost had recently started promoting the capacity of its mostly national all-5G network to press and analysts with orange SWAG, Boost-exclusive tablets, and SIMs. Its main message was that Boost's network -- particularly in the metro New York area -- is extremely fast. I found this to be true, which shouldn't be a surprise, because Boost had a lot of spectrum, a modern open RAN network, and virtually nobody on it. Now those few customers will be hosted by AT&T's network (or T-Mobile, in many cases), and "elements of Boost Mobile's radio access network (RAN) will be decommissioned over time." Ever since was spun out of Sprint as part of Sprint's acquisition by T-Mobile, Boost hasn't been all that successful either as an MVNO on T-Mobile's network, then also on AT&T's network, or as a wireless carrier with its own network plus roaming. I'm skeptical that moving to an even messier transition phase will help the brand. I'd love to be wrong -- there are certainly plenty of MVNOs launching these days targeting specific political, podcasting, and demographic groups.

What will EchoStar do with its remaining spectrum? At some point, most of that will be divested. EchoStar’s remaining spectrum is enough for a modest national network, but that’s not the route that EchoStar has said it’s taking — and Boost Mobile was struggling when it had that spectrum as part of its network and much more. So the remaining spectrum will be sold, or potentially regulated over, to someone who needs it. (Spectrum is a public resource. If you're not using the spectrum for a national network, the FCC can demand it back, and there has been pressure from Elon Musk and others on this.) So it will go somewhere; the only questions are when, to whom, and for how much. 

Echostar's press release: EchoStar Announces Spectrum Sale and Hybrid Mobile Network Operator (MNO) Agreement, Steps Toward Resolving Federal Communications Commission's (FCC) Inquiries | EchoStar Corporation

AT&T's press release: AT&T to Acquire Spectrum Licenses from EchoStar

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