Keeping Spectrum Seen as Better Option for Dish Network, Analysts Say
Dish Network would most likely benefit more from keeping its spectrum and partnering with a wireless company to operate it than it would from selling the spectrum, some analysts said in interviews. During a conference call last week, Dish Chairman Charlie Ergen said he would consider selling the spectrum by itself to be a personal failure, but it’s possible. He also said a number of partnerships are open to the company that would allow it to enhance the spectrum. But partnering with Dish to build out a network using AWS-4 spectrum would be very difficult for a wireless company because it isn’t a standard band, some analysts said.
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Plan A for Dish is probably “to re-equip itself for the broadband future, and doing that in a way that doesn’t involve selling assets is still where Ergen really wants to go,” said Paul Gallant, a Guggenheim Partners analyst. “If he wanted to sell the company, he could've done that a long time ago.”
A partnership with Sprint is more plausible than one with T-Mobile, said Tim Farrar, an independent mobile satellite services analyst. T-Mobile experienced trying to operate with a non-standard band when it deployed its 3G network in the AWS-1 band, he said. It didn’t have an iPhone for several years and it had to switch its LTE and High Speed Packet Access network around “to get on the same track as Verizon,” he said, referring to spectrum deals T-Mobile made with Verizon and AT&T in 2012. “It’s hard to see how T-Mobile could make use of Dish’s non-standard spectrum.” It’s also hard to see how Dish could put the spectrum to use by buying T-Mobile, he said. A deal with Sprint to bring more fixed broadband to the home is “a plausible next step,” he said.
Selling all the spectrum would be the easiest thing to do, said Daryl Schoolar, principal analyst at Ovum. Using Dish’s spectrum on its own would be a challenge because AWS-4 is an unnatural band to be working with, he said. Deploying a network, partnering with another company to fill in coverage holes and creating the customer base will be very difficult, he said. Buying T-Mobile could be another option, Schoolar said. That may be a better path to creating Dish’s mobile service, he said. Dish and T-Mobile have some AWS spectrum and they're interested in the AWS-3 spectrum auction, he added.
The Brattle Group’s Coleman Bazelon agreed that although AWS-4 spectrum is valuable, “it is an island,” he said. The band would have its own equipment and AWS-3 spectrum won’t add value because the bands do not sync, he said. Ergen is sitting on valuable assets, “but he needs to go big to make them pay off,” he said. Developing a national network all at once would get the economies of scale on equipment, Bazelon said. The advantage of partnering with a current national carrier “is quick access to a customer base,” he said. Any company that buys AWS-4 spectrum would have the same challenges and benefits as Dish in the sense that it requires handsets that work with it, standard-setting bodies, and manufacturers to build chipsets that work with it, Gallant said.
Selling spectrum to AT&T or Verizon probably isn’t going to happen anytime soon, Farrar said. Those companies will have an option to buy plenty of spectrum at the AWS-3 auction this fall, he said. (klane@warren-news.com)