EchoStar pays $500M to stay out of bankruptcy and to buy time for FCC talks

EchoStar hopes that by making one of the two payments due in the coming week, it has bought itself some time to negotiate with the FCC. The regulatory agency’s Chairman, Brendan Carr, has previously threatened to take away some of EchoStar’s spectrum licenses. The second interest payment due July 1st, which EchoStar won’t pay, comes to $114 million and by refusing to make the payment, a 30-day grace period is triggered.

While EchoStar has enough cash on hand to make both interest payments on time, the company is holding off on one of them in order to gain some leverage in negotiations with the FCC. Carr wants EchoStar to give up licenses on spectrum that he says the company isn’t using. The FCC Chairman said, “It’s my view that right now, we are really working hard to make sure this valuable public resource of spectrum is put to use. No new news to break, but I think the status quo needs to change. There’s lots of different paths forward there and all options are still on the table at the FCC.”

                       -FCC Chairman Brendan Carr

Former FCC chief of staff Blair Levin, who now works as a policy analyst at New Street Research, says that Carr wants to “force a reallocation of spectrum from EchoStar to others.” What Levin is talking about is the 2 GHz spectrum licensed by EchoStar which FCC Chairman Carr asked EchoStar about in a letter. Carr wants to know exactly how often EchoStar is using the 2 GHz band.

The reason why Carr is so interested in EchoStar’s 2 GHz usage is because Elon Musk’s SpaceX has its eyes on the 2 GHz spectrum because it is superior for satellite to cellphone communications than the airwaves that SpaceX uses now. The FCC chairman had no comment about a meeting he supposedly attended at the White House earlier this month with President Donald Trump and EchoStar Chairman Charlie Ergen.