A new partnership between Verizon and companies connected to Dish Network is yet another unprecedented development arising from the spread of the new coronavirus.
Verizon received approval from the FCC on Wednesday to borrow spectrum owned by two companies connected to Dish. Under the new agreement, Northstar Wireless LLC and SNR Wireless LicenseCo will temporarily loan their AWS-3 spectrum licenses to Verizon at no cost "in order to provide additional capacity to Verizon customers across the country," according to the FCC.
"I want to thank Northstar and SNR for their willingness to allow this use of the spectrum for which they hold licenses," FCC Chairman Ajit Pai said in a statement. "I'm also grateful to Verizon for seeking out ways to meet increased consumer demand."
The action is important to Verizon because it could significantly increase the operator's mobile network capacity amid growing Internet traffic related to the COVID-19 outbreak. While Verizon has argued that its wireless network can keep up with its customers' data demands, analysts continue to worry that Verizon and other operators will need more spectrum soon for both 4G LTE and 5G.
Thus, Verizon's announcement with Northstar and SNR can be viewed as a signal that the operator does indeed need more spectrum for network capacity. And not only that, Verizon could reach out to Dish – a company notorious as a difficult negotiator – to satiate that need.
However, to be clear, the FCC's authorization is only good for the next 60 days and may not result in a long-term agreement between Dish and Verizon.
A complex arrangement
The spectrum that Verizon is putting to use is certainly tied to Dish but is not technically owned by the company directly. Northstar and SNR won roughly $13.3 billion in AWS-3 spectrum licenses during the FCC's 2015 spectrum auction, but they did so as "designated entities." DEs receive bidding credits intended to help small businesses participate in spectrum auctions like the AWS-3 auction – and because of the companies' connection to Dish, the FCC has engaged in a protracted regulatory battle to block the $3.3 billion in DE discounts initially afforded to Northstar and SNR.
In 2018 Dish made changes to its relationships with Northstar and SNR designed to regain the DE discount.
However, Dish's Charlie Ergen said last year that the FCC had not yet made any firm decision on whether the two companies will in fact receive the discount. He also confirmed that the AWS-3 spectrum licenses at the center of the dispute between the FCC and Northstar and SNR are not part of Dish Network's agreement with the Department of Justice announced last year. Under that agreement, the DoJ approved the merger between Sprint and T-Mobile on the condition that Dish begin building a 5G network using its AWS-4, lower 700MHz E Block and AWS H Block spectrum licenses.
This is the third time the FCC has approved a 60-day spectrum loan because of the coronavirus. The agency on Monday allowed Comcast, Dish Network, Bluewater, Channel 51, Grain Management affiliate NewLevel, LB Holdings and Omega Wireless to loan T-Mobile their 600MHz spectrum licenses, and on Tuesday it said it would allow U.S. Cellular to use AWS-3 licenses from Advantage Spectrum in parts of California, Oregon, Washington and Wisconsin.
Like T-Mobile, Verizon will likely put Northstar and SNR's spectrum resources to use via a remote software update to its cell towers in locations where it can do so and where Northstar and SNR own spectrum licenses.