Enterprise Mobility & Connected Devices Blog

Dish Is A Player in the U.S. Wireless Market

Earlier this month, Dish Network Corporation instantly expanded beyond pay-tv, when the U.S. Federal Communications Commission announced that Dish has been granted a portion of spectrum originally designated for satellite-phone transmissions, but now may be converted for use as cellphone service. Dish is not jumping immediately into the wireless market, but restrictions upon the spectrum by the FCC (To avoid interference with adjacent spectrum, a portion is not available for cellular, and there are build out requirements for population coverage that must be met by the 4 year mark and even higher coverage levels at 7 years) as well as recent acquisition moves by T-Mobile and Sprint will be drivers for Dish to position itself quickly for its next move. As Dish weighs its options, what path might it take in the wireless market?

Sell. Dish has a valuable piece of the spectrum pie. Over five years ago, the chairman of Dish, Charles Ergen, began assembling the spectrum with an estimated $3 billion investment. Today, that spectrum real estate is estimated to be worth anywhere from $9-$12 billion. The opportunity to sell the spectrum can't be undervalued as demand in the wireless markets will not dissipate. While the government establishes spectrum from radio broadcasting to GPS navigation systems, it's the growth of cellular service that is the most significant opportunity. A spectrum crisis among the major existing carriers, and growing cellular demand could drive up the spectrum even further, and if sold, make an easy return on the initial investment.

Enter the market. Dish could enter the cellular market to compete directly with other wireless carriers, or with some product offering for their satellite TV customer base. Given the capital investment required, and the challenges facing existing carriers, which already struggle with their business models for pricing, coverage, and network speed, it would be the most challenging scenario. In addition, due to FCC restrictions on interference of adjacent airwaves to Dish's spectrum, network speeds would be as fast as market leaders, and therefore become another competitive barrier.

Partner. A strategy involving a partner would be less expensive and a quicker path into the market. Some of the major carriers could be candidates, although pending deals such as Sprint's recent bid for all of Clearwire, and T-Mobile's acquisition of MetroPCS, are making some obvious fits less viable.

Regardless of the path that Dish forges, it will require additional work with the FCC to prime the spectrum for partnership or sale. The forecasted market penetration for smart phones and tablets will equate to more data, and more data equals the need for more spectrum. Dish's move seems to be a clear bet on expected demand in the wireless market, particularly since carriers are more likely to spend for spectrum rather than invest in methods to get more from existing spectrum. If Dish plays its cards right, it stands to make a buck. 

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