FCC Clears EchoStar's $40 Billion Spectrum Sale to SpaceX and AT&T With a Contested $2.4 Billion Tower-Industry Escrow

Overview

The Federal Communications Commission’s Wireless Telecommunications Bureau and Space Bureau on Tuesday, May 12, approved EchoStar’s sale of roughly 65 megahertz of spectrum to SpaceX and an additional 50 megahertz to AT&T, the FCC said in an order assigned docket number 25-302. The combined transactions net EchoStar approximately $40 billion, according to Reuters — about $17 billion from SpaceX and $23 billion from AT&T.

The approvals carry a condition that EchoStar characterized as “unprecedented”: before the licenses transfer, the company must place $2.4 billion in escrow to cover potential claims from tower companies and other infrastructure providers left holding unpaid invoices when Dish Network’s terrestrial 5G buildout collapsed.

What the FCC Approved

The SpaceX leg of the deal moves three mid-band license blocks to the satellite operator, according to the FCC: EchoStar’s AWS-4, AWS-H Block, and unpaired AWS-3 spectrum licenses, along with several earth-station licenses. The transfer runs through what the FCC described as a two-step transaction. PhoneArena reports the band-by-band split as 40 MHz of AWS-4, 10 MHz of AWS-H Block, and 15 MHz of unpaired AWS-3 spectrum. SpaceX intends to use the spectrum for the next generation of its Starlink direct-to-device service, according to Reuters. The FCC granted SpaceX a series of waivers allowing flexible use across terrestrial, space-based, and hybrid network architectures, the order said.

AT&T’s 50-megahertz block is split between two bands: 30 MHz of mid-band 3.45 GHz spectrum and 20 MHz of 600 MHz low-band spectrum, Reuters reported. The carrier paid $23 billion for the licenses, per Reuters. As part of the approval, the FCC also blessed a hybrid Mobile Virtual Network Operator arrangement between AT&T and EchoStar that is intended to maintain Boost Mobile’s viability after EchoStar exits the spectrum-owning side of the business, Reuters reported.

The AT&T side of the order also accelerates network construction. AT&T must build out its 600 MHz network “years faster than the company originally requested” and faster than the FCC’s standard post-auction rules, according to Reuters. The carrier has already begun deploying its newly-acquired mid-band spectrum: AT&T activated 3.45 GHz capacity across roughly 23,000 sites within weeks of the announcement, Exterra reports.

The $2.4 Billion Escrow

The condition that drew the loudest reaction concerns money EchoStar may owe to vendors that built — or were retained to build — the terrestrial 5G network that Dish Network abandoned. The FCC ordered EchoStar to “establish an escrow account of $2.4 billion that can be drawn upon for qualifying claims,” as Cord Cutters News reported. The Commission’s stated reasoning, as cited in the same outlet, is that the structure “encourages the resolution of outstanding claims while leaving the merits of any dispute to the parties or outside fora.”

In practical terms, the FCC declined to adjudicate the underlying disputes itself. It is not deciding who is owed what, nor whether EchoStar’s force-majeure defense holds; it is simply requiring that a fixed sum of cash remain available if courts later rule against the company. The American Wireless Builders Coalition, the industry group that pressed hardest for the escrow, has alleged that Dish ceased vendor payments and invoked force majeure on its construction contracts; EchoStar has countered that Dish settled disputes with hundreds of those vendors and made “hundreds of millions of dollars in payments,” Cord Cutters News reported.

The escrow figure is well below the range tower companies had asserted as their total exposure, and the structure stops short of declaring liability. Broadband Breakfast called it “a victory for the tower industry, which has pushed hard for the Federal Communications Commission to attach such a condition to its approval of the deal.”

EchoStar’s response was sharper than its usual tone with the FCC. “The FCC has continuously applauded EchoStar’s spectrum sales…we appreciate that the FCC approved them today,” the company said in a statement quoted by Advanced Television. “However, these approvals come with an unprecedented involuntary escrow condition.” A version of the same statement, also containing the line “We are analyzing this requirement and evaluating next steps,” appeared in Reuters.

FCC’s Framing

Chairman Brendan Carr framed the order as part of a broader push to free up commercial spectrum. “As part of our Build America agenda, the FCC is running a two-part play in wireless to free up spectrum: FCC auctions and secondary-market transactions,” Carr said in a statement reported by Exterra. In a separate statement carried by PhoneArena, Carr added: “Today’s approvals, coupled with other secondary-market transactions and FCC auctions already in the pipeline, put America on the path to releasing approximately 300 megahertz of low- and mid-band spectrum by the end of 2027.”

The May 12 order came less than two weeks after the FCC issued a separate Report and Order (FCC 26-26) modernizing the Equivalent Power Flux Density framework that has governed satellite spectrum sharing since the late 1990s, SatNews reported. That earlier action replaced rigid EPFD limits with performance-based GSO-protection criteria, easing constraints on non-geostationary operators in a way that directly benefits the kind of mass low-Earth-orbit deployments SpaceX has built its business around.

Context: A Year of Maneuvering

The September 2025 SpaceX-EchoStar agreement and AT&T’s subsequent move to acquire EchoStar spectrum were extensively reported at the time. The Machine Herald has previously covered the SpaceX side of the equation in March, when the company rebranded its direct-to-cell service as Starlink Mobile, and AT&T’s $250 billion infrastructure pledge — which folded the EchoStar acquisition into a broader political narrative — was discussed in March as the deal worked through Justice Department antitrust review.

The May 12 ruling closes the regulatory question on the transfer itself. What it does not close is the financial overhang: EchoStar has not signed on to the escrow, the tower companies have not been paid, and the question of when (or whether) the licenses fully transfer now depends in part on how EchoStar responds. The company has said it is “evaluating next steps,” according to Reuters, language that in regulatory practice typically leaves open the option of administrative appeal or court challenge.

What We Don’t Know

The order does not resolve the underlying contract claims between Dish/EchoStar and its former network-construction partners. Whether the $2.4 billion proves to be more or less than the actual liabilities — figures the tower industry has previously suggested run higher, though Broadband Breakfast noted the FCC framed the escrow as a settlement-encouragement mechanism rather than a damages estimate — will depend on litigation that the FCC has explicitly punted to “the parties or outside fora,” in the Commission’s own words.

Also unresolved is the question of timing on the SpaceX side. The order grants the assignment, but the closing mechanics — and any subsequent EchoStar challenge — could affect when SpaceX is able to begin using the spectrum operationally. The company has been preparing its second-generation Starlink Mobile satellites around the assumption that this mid-band capacity will be available; how quickly that becomes a paid commercial service remains to be seen.