Dish Network CEO Charlie Ergen last week said the window has likely closed for his company to use its coveted spectrum by building its own mobile network “from scratch.” Instead, Dish hopes to find a carrier partner to deploy services across its airwaves. And Sprint may be the best fit around.
Like my colleague Kevin Fitchard, I’ve been skeptical that Dish truly wants to join the mobile game. The company has dragged its feet on building its own network, leading Fitchard and others to believe that it simply wants to flip its spectrum licenses to the highest bidder once the Federal Communication Commission approves those airwaves for terrestrial use.
Dish has plenty of motivation to become a carrier, however. The satellite TV provider recently launched dishNET, a national, fixed-line broadband service for users in rural areas. Launching a mobile service would enable Dish to offer an unprecedented triple play across satellite, fixed-line and cellular – a proposition no other single company can match.
Dish needs a partner, not its own network
Building its own network would be prohibitively expensive, however, and even Ergen concedes that Dish’s 40 MHz of AWS-4 (Advanced Wireless Services 4) isn’t enough for a nationwide build-out. But the field of potential partners shrank considerably last week with Deutsche Telekom’s move to merge MetroPCS with its own T-Mobile USA, substantially strengthening the nation’s fourth-largest carrier. (Reports have surfaced that Sprint may try to outbid Deutsche Telekom for MetroPCS, but that seems highly unlikely considering that Sprint’s board killed a proposed $8 billion takeover of MetroPCS just eight months ago.) And there’s no way a tie-up with AT&T or Verizon Wireless would pass muster with federal regulators considering how AT&T’s effort to acquire T-Mobile was killed.
Dish, Sprint and the “spectrum shift”
But Sprint is a good fit for Dish Network for several reasons. Sprint has the nationwide network and large customer base Dish will need as it enters an entirely new industry, and like every U.S. carrier not named AT&T or Verizon it doesn’t have as much LTE-friendly spectrum as it would like. Its nightmarish merger with Nextel is now largely behind it, and the carrier has done a solid job growing its subscriber base in recent years.
Perhaps the most compelling factor, though, lies in the spectrum both companies own. Dish has said it wants to operate an LTE network through its spectrum in the range of 2000 MHz to 2020 MHz, and from 2180 MHz to 2200 MHz, but – again – that usage has yet to be approved by the FCC. Sprint uses the 1900 MHz range for its current LTE offerings and is hoping to improve the speed of its network via a “spectrum shift” that would bump part of Dish’s band by 5 MHz. The proposed shift could allow the FCC to increase the total amount of bandwidth available to mobile carriers; Dish has said any such move would throw a monkey wrench into its plans to offer service. A tie-up between Dish and Sprint not only would serve the best interests of both companies, it might give the FCC a way to handle a no-win situation.
AT&T and Verizon Wireless have shrewdly compiled spectrum for LTE with blockbuster deals over the last year or so, leaving smaller operators to cobble together airwaves when and where they can find them. Meanwhile, the FCC isn’t planning to auction off the next several blocks of LTE-friendly AWS spectrum until 2015 – and the 300 MHz that will be available now is a far cry from the 800 MHz CTIA wants to see. Dish Network’s entry to the mobile industry not only would add spectrum that currently is going unused, it would provide some much-needed competition in a world dominated by AT&T and Verizon. And it would be a good move for both Dish Network and Sprint.