Communications regulators proposed on Wednesday a path for making satellite airwaves available for mobile broadband use, a rulemaking that could help Dish Network Corp launch a wireless cellular network.
The proposal is in line with the Federal Communications Commission push to free up more airwaves to meet the booming demand for mobile devices like Apple Inc's iPad tablet and Google Inc's suite of Android-powered smartphones.
It also reflects agency caution about potential interference issues. The FCC plans calls for protections from harmful interference for incumbent users of the spectrum and seeks input on any interference concerns from licensees in nearby bands.
Dish, the second-largest satellite TV provider in the United States, is seeking to diversify its business beyond pay TV. The company spent more than $3 billion to buy spectrum from DBSD and TerreStar last year.
The FCC earlier in March approved Dish's license to acquire the spectrum, but denied the company's request for a waiver to allow it to build a terrestrial wireless network.
Instead the agency opted to initiate a rule-making process, a process that could take until the end of the year and potentially hurt the value of the satellite television company's newly acquired wireless assets.
FCC Chairman Julius Genachowski said at the agency's open meeting on Wednesday that he aimed to quickly close the rule-making and make the satellite spectrum available for other uses.
The FCC came under fire from lawmakers for granting a waiver in January 2011 to hedge fund manager Philip Falcone's wireless start-up LightSquared LP.
The agency has since proposed stripping LightSquared of authority to use its satellite spectrum for a ground-based cellular network due to interference with the Global Positioning System used by airlines, the military and others.
Analysts say Dish's wireless network would not be expected to face the same interference problems as it would be on a different spectrum band.
The question is how the FCC will go about making this change, particularly the requirements it could impose on Dish, analysts at Stifel Nicolaus said in a research note. There may be some interference issues, but they appear nothing like those faced by LightSquared.
Dish said in a statement it looked forward to working with the FCC. We hope the process will move forward expeditiously so that more wireless innovation can be introduced to American consumers, the company said.
Dish Chairman Charlie Ergen said on a conference call in late February that if Dish were not granted a waiver, or if there were a delay with a decision, it might have to write down the value of its wireless assets.
Dish shares closed up 3.7 percent to $32.35 on Wednesday.
In another decision related to freeing wireless airwaves, the FCC on Wednesday said it would consider whether it should draft regulations that require devices operating in airwaves reclaimed from TV broadcasters in 2008 to work across all carriers' networks.
Incumbent carriers like AT&T Inc and Verizon Wireless have argued that interference among their networks in the lower 700 MHz band prevents manufacturers from offering compatible devices.
But smaller carriers say AT&T and Verizon used their leverage with handset makers to prevent their devices from working on other networks and make it harder for competitors to get the newest devices.
Verizon Wireless is a joint venture of Verizon Communications Inc and Vodafone Group Plc.
Consumers should be able to use expensive smartphones operating on the newest, fastest, spectrum bands on any carrier's service, and not have to buy another phone if they change companies, said Harold Feld, legal director of Public Knowledge, a public interest group.
The FCC said it would examine the interference claims, and sought comment on how to proceed if such interference was found to be negligible or could be mitigated.
An industry led solution would be the preferable solution, Genachowski said. We're launching this proceeding because no solution has yet been reached.
(Reporting By Jasmin Melvin; Editing by Gerald E. McCormick and Tim Dobbyn)