Is everyone in Washington on the spectrum?

OPINION:

Americans are fed up with much of the wheeling and dealing that makes Washington insiders rich at the expense of all of us. Call the reason Ergen-omics.

Back in 2023, the federal government sold a large and valuable band of electronic spectrum to Dish Network for roughly $20 billion. Now, EchoStar, which subsequently merged with Dish, and its CEO, Charlie Ergen, are set to sell that spectrum for as much as $40 billion, a nearly $20 billion profit.

Bloomberg reported last week that EchoStar has “a splashy deal with SpaceX [that] has helped send shares of the telecommunications company … soaring more than 375% since early August, boosting the net worth of co-founder Charlie Ergen to $20.1 billion.”

AT&T will purchase some of that spectrum to build out the nation’s 5G and 6G cellular network.

Mr. Ergen made some of his $20 billion from a deal with the Federal Communications Commission, which granted him ownership rights when Dish Network bought the spectrum at way below market value.

Why would federal regulators sell this valuable spectrum asset at well below fair market value? Because they negotiated with Mr. Ergen to create a fourth telecom company to compete with AT&T (the very company to which EchoStar is now selling the spectrum), Verizon and T-Mobile.

That dream blew up. Dish/EchoStar has been a business train wreck. It has failed to meet conditions and racked up nearly $10 billion in unpaid contracts with cell tower operators and construction companies before giving up.

Why Mr. Ergen should get a tidy profit for that is a great mystery.

It is in everyone’s interest to reallocate the spectrum to AT&T and SpaceX.

Still, the redeployment of this spectrum carries a major complication. EchoStar wants to stiff its creditors by claiming that its debts are owed to an effectively bankrupt shell company. Under this scheme, contractors take big losses while EchoStar and Mr. Ergen walk away with a windfall of anywhere from $10 billion to $20 billion.

The entire $40 billion infrastructure deal could be held up in legal disputes for years. Under that scenario, everyone loses.

This is all a mess, and Brendan Carr, the savvy Federal Communications Commission chairman, may need to intervene.

As the overseer of our valuable spectrum resources and the head of the agency responsible for ensuring the reliability of our telecom networks so our cellphones work without disruptions, the FCC should require an equitable solution that prevents creditors from being rolled over.

Mr. Carr also should ensure that Mr. Ergen and EchoStar investors don’t profit at the expense of taxpayers.

This isn’t just about fairness and the rule of law, which require that creditors have a first claim on assets over shareholders. A study by consulting firm The Brattle Group found that if tower operators eat these huge losses, they may have to increase their rents on other networks, such as AT&T, T-Mobile and Verizon, by 6% to 11% to make up for them.

These costs would have to be passed on to their customers: you and me.

That would be the worst outcome of all because it would make future telecom services more costly and less reliable for everyone. Mr. Ergen and EchoStar must be made to pay their bills.

• Stephen Moore is a co-founder of Unleash Prosperity and a former Trump senior economic adviser.