A new rule circulating at the Federal Communications Commission (FCC) will reportedly allow Dish Network LLC (Nasdaq: DISH) to use its spectrum for terrestrial-only services, but the satellite TV giant is fuming that the proposal could "cripple" its wireless ambitions. (See Spectrum Ruling Could Prove Risky for Dish .)

The FCC is considering new rules that would let Dish use 40MHz of AWS-4 wireless spectrum without having to support its satellite-based access requirements. Dish is upset that the draft order would require Dish to disable 25 percent of its uplink spectrum and impair another 25 percent to accommodate adjacent, and currently unused, H-Block spectrum that Sprint Corp. (NYSE: S) is eyeing for its Long Term Evolution (LTE) networks.

"While the FCC would grant full terrestrial rights, its proposal to lower our power and emissions levels could cripple our ability to enter the business," Dish Executive VP and General Counsel R. Stanton Dodge said, in a statement.

Dish wants to use the spectrum to build out its own wireless network, a risky decision that would cost billions and, in Dish's assessment, also create "tens of thousands of jobs." Some analysts and observers see that as a bluff to help Dish boost the value of its holdings. While waiting for the FCC to act, Dish Chairman Charlie Ergen has outlined several other possible scenarios in which Dish would seek a wireless partner or sell off its holdings.

Dodge said the H-Block provision could "add years" to the process and cause Dish to mothball some important elements, including radio designs and the build of the network itself, until the interference issues can be sorted out.

The FCC has not publicly revealed any details of its purported proposal and was not immediately available for comment on Wednesday morning. A vote is not expected until after the Thanksgiving holiday weekend.

Why this matters
A ruling that limits Dish's use of the spectrum will almost certainly spell the end for its already seemingly doomed idea of building its own wireless network.

That would open the spectrum up to an outright sale, though the value of those holdings might decrease in the wake of a ruling that impairs their use. The ruling might also cause Dish to get more aggressive about finding a partnership.

But the proposal is not set in stone, and the Dish lobby is out to tilt things in its favor before it's too late. "We stand ready to work with the full Commission on final rules that put the full AWS-4 spectrum to work for America and that advance the future potential of the H Block," Dodge added, with a bit of patriotic flair.

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— Jeff Baumgartner, Site Editor, Light Reading Cable