TAMPA, Fla. - The FCC has given Elon Musk’s SpaceX the regulatory equivalent of a gold star and a tied-string-around-the-finger: approval to purchase EchoStar spectrum for direct-to-device services, but only if EchoStar sets aside $2.4 billion in escrow to settle disputes over its abandoned 5G network buildout.
The regulator ruled May 12 that EchoStar can sell about 115 megahertz of spectrum in separate deals with SpaceX and AT&T, collectively worth more than $40 billion. The catch: EchoStar must create an escrow account to cover claims from infrastructure partners left holding the bag after its Dish subsidiary scrapped the terrestrial 5G network following the sales.
Tower companies and others had filed regulatory pleas urging the FCC to ensure Dish honored obligations to partners, demanding money be placed in escrow. EchoStar argued that an FCC investigation into whether it was underusing spectrum pressured it into selling licenses and abandoning the buildout, triggering “force majeure” provisions under certain agreements. The company also noted it has already settled with hundreds of vendors and made hundreds of millions in payments.
“The FCC has continuously applauded EchoStar’s spectrum sales to AT&T and SpaceX as pro-competitive transactions that serve the public interest, and we appreciate that the FCC approved them today,” an EchoStar spokesperson said. “However, these approvals come with an unprecedented involuntary escrow condition. We are analyzing this requirement and evaluating next steps.”
While the FCC approval clears a major U.S. regulatory hurdle for SpaceX, the transaction still faces other approvals and is structured to close in stages. EchoStar recently said it expects the licenses to fully transfer around Nov. 30, 2027, unless SpaceX chooses to close earlier and cover additional debt-related costs.
The conditional approval comes soon after the FCC gave AST SpaceMobile permission to provide direct-to-device services in the U.S. with up to 248 satellites. The FCC also recently confirmed exclusive rights in certain Mobile Satellite Service bands, including the spectrum SpaceX is acquiring from EchoStar.
“In the coming months, we will be taking additional actions to ensure that companies who want to innovate in D2D have the regulatory framework and spectrum resources to match,” FCC chairman Brendan Carr said.
SpaceX’s deal covers around 65 megahertz of nationwide spectrum, including AWS-4, H-block and unpaired AWS-3 licenses, which the FCC said promises “generational upgrades” for D2D services, “from text-based services to reliable mobile voice and data.” EchoStar expects to receive roughly $22 billion in total from the deal, including up to $11 billion in SpaceX stock and around $2 billion in interim financing to cover payments tied to debt through at least Nov. 30, 2027.