Tag Archives: NATE

EchoStar versus Tower Owners

One of the more interesting conflicts in the telecom industry right now is EchoStar’s fight with tower owners. The fight comes from EchoStar walking away from billions of dollars of long-term leases of cell towers to support its facility-based cellular business.

This story requires some background. This started when Dish purchased a significant amount of cellular spectrum and also the customers of Sprint’s prepaid brands, which included Boost Mobile. The sale to Dish was a requirement of the FCC agreeing to allow T-Mobile to buy the Sprint cellular business. The FCC wanted Dish to become the next facility-based cell carrier as a replacement for Sprint.

Dish borrowed billions of dollars to add to its existing debt to build a nationwide cellular network. As Dish’s satellite television business faded, the company agreed to merge with EchoStar. However, as the roll-out of the new cellular business bogged down, Dish was faced with looming problems over its $26 billion in debt and was in peril of default. In 2025, the FCC also put a lot of pressure on EchoStar and accused it of spectrum squatting, since much of its spectrum was sitting unused. EchoStar decided to walk away from the cellular business, and that involved defaulting on the many leases for cell tower space and backhaul. EchoStar realized a cash windfall when it was able to sell spectrum to AT&T and SpaceX for more than $42 billion.

A coalition of more than forty tower owners, led by the Wireless Infrastructure Association (WIA) and NATE: The Communications Infrastructure Contractors Association, has asked the FCC to force EchoStar to pay for the abandoned cell tower leases. These losses are estimated to be worth as much as $9 billion. The biggest companies in this group include American Tower, Crown Castle, SBA Communications, and Vertical Bridge.

WIA and the tower owners are asking the FCC to withhold the transfer of EchoStar spectrum to AT&T and SpaceX until the tower obligations have been satisfied.

EchoStar counters that the leases are a contractual dispute and that private contracts are outside of the FCC’s jurisdiction. It further argues that its cancellation of the leases was out of its control, making it a force majeure event, since the company was pressured by the FCC to abandon the cellular business.

This is an interesting dilemma for the FCC. There have regularly been defaults on leases of fiber, towers, and other infrastructure, and the FCC has never gotten involved in these kinds of disputes before. I have to think that if it wasn’t for the associated transfer of the spectrum, the FCC would never consider this issue.

It’s an interesting chess game. If the FCC sides with the tower owners, then the payments to EchoStar for the spectrum will be held up. Even though EchoStar would certainly take a negative FCC decision to court, the big delays in getting paid for the spectrum would likely drive the company to reach a compromise with the tower owners. If the FCC doesn’t rule for the tower owners, they will almost certainly take this to court, and may get an eventual settlement.

There was an interesting report written by the Brattle Group for WIA related to the case. The report says that the damages to the tower industry would be severe and would likely result in an increase of 5.7% to 10.7% to others who lease towers. It also warns that this would ripple through the cellular industry and would put a crimp on future capital spending for towers and related infrastructure. The tower leases are not the only dispute related to EchoStar’s decision to abandon the cellular business, and other vendors are also seeking relief by going straight to court.

 

Monopsony in the Wireless Labor Market

NATE, the Communications Contractors Association, recently sponsored a report by the Brattle Group titled Market Failure in the Wireless Communications Infrastructure Service Industry. The report describes how the three national mobile networks (AT&T, T-Mobile, and Verizon) dominate the labor market for wireless contractors in a way that is undermining the development and retention of the workforce for this critical infrastructure.

The Brattle report calls the situation a monopsony. That is an economic term for a market where a buyer, or a small universe of buyers, has significant market power over vendors who serve the industry. Brattle believes the term applies since the three big cellular carriers collectively control 97% of the cellular market. The contractor market that sells labor to the carriers is comprised of numerous small companies.

The Brattle report describes how the three carriers collectively harm the contractor industry. The three carriers dictate the prices they are willing to pay for service. Contractors complain that the prices offered don’t account for local issues like labor rates, terrain, and weather. 80% of the contractors that responded to a Brattle survey say that prices offered by the carriers don’t cover their costs. The rates don’t cover costs like warehousing of materials, third-party compliance, or training costs for technicians.

The report also shows some interesting graphs that show that the carriers are slow to pay, further adding to the cost of working with them. They have charts that contrast the carriers and show that Verizon pays 75% of invoices within 30 days, while T-Mobile only pays 17%, and AT&T pays 15%. AT&T doesn’t pay more than 45% of its invoices for more than 60 days. Slow payments put a lot of pressure on contractors that must meet payrolls.

The behavior of the carriers is having a big impact on the contractor industry. 54% have downsized during the past three years. A lot of contractors have exited the market and are looking for work outside the cellular market. Attrition of knowledgeable technicians is killing institutional knowledge. The contractors fear that they won’t be able to respond to emergencies or support any effort in a few years to deploy 6G networks.

The Brattle report does not accuse the three big carriers of collusion but says that the desire of each to drive down operating costs is having the same impact as if they were colluding. The report warns that the industry is seeing a noticeable decline in institutional capacity. It takes time and on-the-job experience to train tower climbers – this is not a position that can be quickly ramped up. They warn that loss of experienced tower climbers is not only a concern for the industry but is a national security concern.

The report makes an interesting comparison to another monopsony industry, the companies that build airplanes. The airline industry has learned that it is most efficient if it pays enough to keep experienced workers, because that significantly reduces the time needed to build a new airplane.

The report believes that corrective action is needed. Brattle doesn’t know the best way to fix the problem, which could be done through policy, regulation, or the carriers deciding to change their practices.

This situation is a big contrast to the fiber construction industry because there are hundreds of companies building fiber, which creates significant competition to find a contractor for a project. However, there is a danger after the big spending on grants is completed that the number of companies building new fiber networks will shrink to be similar to the wireless industry.