The Federal Communications Commission said it would develop rules to make a block of mobile satellite spectrum available for mobile broadband use.

The proposal is in line with the agency's push to free up more airwaves to meet the booming demand for mobile devices like Apple Inc's (AAPL.O) iPad tablet and Google Inc's (GOOG.O) suite of Android-powered smartphones.

Dish, the second-largest satellite TV provider in the United States, is seeking to diversify its business beyond pay TV. The company spent more than $3 billion on spectrum it bought from DBSD and Terrestar last year.

The FCC earlier in the month approved Dish's license to acquire the spectrum, but denied the company's request for a waiver to allow it to build a terrestrial wireless network.

Instead the agency opted to initiate a rule-making process, a potentially lengthy process that could hurt the value of the satellite television company's newly acquired wireless assets.

The agency on Wednesday signaled support for Dish's wireless plans. FCC Chairman Julius Genachowski said at the agency's open meeting that he aimed to quickly close this proceeding and make the satellite spectrum available for other uses.

The FCC came under fire from lawmakers for granting a waiver in January 2011 to Philip Falcone's wireless start-up LightSquared LP MOSAV.UL to allow it to offer cellular service to traditional mobile phones.

The agency has since proposed stripping LightSquared of authority it had previously given the firm to use its satellite spectrum for a ground-based cellular network due to interference with the Global Positioning System used by airlines, the military and others.

Analysts say Dish's wireless network would not be expected to face the same interference problems as it would be on a different spectrum band.

"The question is how the FCC will go about making this change, particularly the requirements it could impose on Dish," analysts at Stifel Nicolaus said in a research note. "There may be some interference issues, but they appear nothing like those faced by LightSquared."

The FCC's proposal on Wednesday calls for protections from harmful interference for incumbent users of the spectrum band and seeks input on any interference concerns from licensees in nearby bands.

Dish could not immediately be reached for comment.

Dish Chairman Charlie Ergen said on a conference call in late February that if Dish were not granted a waiver, or if there were a delay with a decision, it might have to look at alternatives for its wireless assets, including writing down their value.

Cellular service is much more valuable than satellite services, which are costly and used by fewer customers.

In afternoon Nasdaq trading, Dish shares were up 82 cents or 2.56 percent to $32.02.

(Reporting By Jasmin Melvin; Editing by Gerald E. McCormick)

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