US FCC delays Dish plan to build cellular network

March 2 Fri Mar 2, 2012 5:59pm EST

March 2 (Reuters) - The Federal Communications Commission said on Friday it was delaying its decision on whether Dish Network Corp can build a wireless cellular network, a move that could hurt the value of the satellite television company's newly acquired wireless assets.

Dish shares fell more than 3 percent in after market trading.

Dish was seeking a waiver of its license to allow it to build a purely terrestrial network, rather than one that combines both satellite and terrestrial service.

While the regulator said on Friday it had approved Dish's license to acquire more than $3 billion worth of wireless spectrum, an FCC spokesman said that a "rulemaking process will best serve the public interest and maximize the long-term value of the spectrum for the American economy."

Two sources close to the matter said that a decision on whether Dish can use its wireless spectrum to build a cellular network will be made by the end of the year.

Dish Chairman Charlie Ergen said on a conference call in late February that if Dish was not granted a waiver, or if there was a delay, it may have to look at alternatives with its wireless assets, including writing down their value.

Dish did not immediately reply to a request for comment late Friday.

An FCC rulemaking could be lengthy process that involves the agency issuing proposed rules, collecting comments and then issuing a final rule based on the commission's vote.

Dish has spent more than $3 billion on wireless spectrum it bought from DBSD and Terrestar last year. The second-largest satellite TV provider in the United States is seeking to diversify its business beyond pay TV.

Dish CEO Joe Clayton has previously said the company could build a wireless network on its own or find a partner.

Analysts have said that Dish's spectrum could be an acquisition target for AT&T if Dish had gained the necessary approvals.

The delay of the waiver calls into question that plan and how much its spectrum is worth. Cellular service is much more valuable than satellite services, which are costly and used by few customers.

Dish Network shares fell 3.5 percent to $28.25 per share in extended trade on Friday, after closing 1.7 percent higher at $29.27 in regular trade.

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