In 2019, the U.S. Department of Justice and the states of Kansas, Nebraska, Ohio, Oklahoma, and South Dakota brought a civil antitrust suit opposing the merger of T-Mobile and Sprint. According to the lawsuit, consolidating nationwide carriers from four to three would reduce competition to an unacceptable degree, ultimately harming consumers. To resolve the complaint, and in an effort to encourage competition, T-Mobile agreed to divest certain assets, including approximately 13.5 MHz of nationwide wireless spectrum in the 817-824/862-869 MHz band (“800 MHz Spectrum”). DISH Network stepped up and agreed to a purchase price of $3.59 billion.

The parties were originally due to close the deal by June 30, 2023, however, DISH needed additional time and negotiated an extension until April 1, 2024. Speculation was that DISH’s merger with Echostar and other improving economic conditions would place it on better footing to close the deal. This proved not to be the case, as DISH did not exercise its purchase right on April 1, 2024.

But the DOJ settlement had a Plan B. It provided that if DISH did not purchase the 800 MHz spectrum, T-Mobile would be required to hold an auction for the spectrum by October 1, 2024. Consistent with that requirement, on T-Mobile’s April 25, 2024, Q1 earnings call, Mike Sievert, T-Mobile’s president and CEO, stated the auction “has begun.”

Interestingly, T-Mobile’s settlement with the DOJ and the states provides that T-Mobile “will not be required to divest the 800 MHz Spectrum Licenses at a price that is lower than the price the [DISH] originally agreed to pay for such licenses” – effectively setting a reserve price of $3.59 billion. The agreement also states that T-Mobile will not be required to sell to “any other national facilities-based mobile wireless network operator, without the prior written approval of the United States.” So, AT&T and Verizon are out of the auction, as well as any other party that can’t raise $3.59+ billion for 800 MHz spectrum. That likely leaves a fairly small pool of potential participants and, if the auction fails, T-Mobile gets to keep the spectrum.

DISH thinks that gives T-Mobile a motive to not play fair. On the April 25, 2024, earnings call, Mr. Sievert stated that if the auction fails, T-Mobile gets “found spectrum and capacity.” Mr. Sievert spoke in glowing terms of the 800 MHz spectrum calling it “great spectrum” and stating there are “lots of interesting things [T-Mobile] can do with it, especially with emerging technologies.” DISH thinks this is evidence that T-Mobile is hoping the auction fails because it actually wants the spectrum for itself.

In a filing with the FCC earlier this month, DISH asserts T-Mobile refuses to share “even preliminary information about the auction” with DISH. This includes relevant rules and procedures by which DISH might choose to participate. DISH claims the intent is clear… T-Mobile wants to undermine its own auction to keep the spectrum for itself. On the other hand, T-Mobile states it has received “nonbinding indications of interest” in the auction and that there is “reason to believe that [it] will meet the reserve” successfully auctioning off the spectrum. It just doesn’t believe DISH has the right to participate in the auction.

October is rapidly approaching, and it will be interesting to see where this 800 MHz spectrum, a significant asset to be sure, ultimately lands.