Dish Sees ATSC 3.0 as ‘Pretty Intriguing’ — Not ‘Contemplating’ Deployments
Dish Network views ATSC 3.0 as “a pretty intriguing technology, and so therefore we were willing to co-invest with some of the broadcasters in testing” through the single-frequency-network (SFN) 3.0 trials Sinclair spearheaded in Dallas (see 1804080002), said Tom Cullen, Dish executive vice president-corporate development, on a Tuesday earnings call. On Sinclair’s description of Dish at the NAB Show as a surprising 3.0 partner, Cullen agreed Dish and broadcasters “wear different hats when it comes to these relationships.”
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One month in, there’s little to read into Dish’s participation, said Cullen. “Candidly, at this point, it’s just a technology trial,” he said. “We’re measuring propagation,” and gauging the viability of the SFN for 3.0, he said. “It’s not at the point where we’re contemplating services deployment, but we think there are synergistic opportunities for us to work with the broadcasters in 3.0, not only with the 700 [MHz] E-block that we deployed, but potentially with some of our uplink channels.”
Even as Dish transitions more toward an over-the-top service through its Sling TV offering, and away from its traditional "linear" satellite TV service, OTT “opens up a number of potential minefields for content owners that I’m not sure they’ve totally thought through,” said Chairman Charles Ergen on the call. From a “consumer perspective,” OTT can be “a great product,” but it's prone to “tremendous piracy opportunities” because the internet “is just not that secure, as we all know,” said Ergen. Rampant “password-sharing” also is causing OTT players and their content partners to leave a lot of money on the table, he said.
Ergen predicts OTT will gravitate to the point where it gets “pretty close to a la carte,” he said. “You’re going to end up with packages” that cater to an assortment of “constituencies,” and consumers, “with the click of a button, they can move from package to package,” he said. The Dish satellite TV service in Q1 lost about 185,000 subscribers compared with the year-earlier quarter, while Sling gained about 91,000 subscribers, the company said Tuesday. Dish shares closed 12.1 percent lower Tuesday at $29.81.
For Sling, “I challenge Warren and Erik to say where in that continuum of where we think this thing is going, do we think we can make a profit,” said Ergen of Sling TV President Warren Schlichting and Dish CEO Erik Carlson. “Let’s go there. Let’s not go to the place where we lose $40 for every customer.” Sling “has a tremendous technology,” said Ergen. “We can do things that other people can’t. We’ve got reasonable flexibility in our contracts to go maybe to places that others don’t.” Ergen’s bottom line: “We’re not going to go where there’s just no money.”
Ergen thinks there are many things that “linear content providers can do to reinvigorate the business,” he said. “I’ve been fairly amazed to watch the rise of Netflix and Amazon kind of go on unabated for the last four to five years,” he said. “There’s a reason why people like Netflix, and there’s a lot of things that we can do in the current linear-style business that would be more reflective of what customers want.”
One impediment toward becoming more nimble with the Dish satellite TV business is that “every contract we have is different” with content owners, said Ergen. “Sometimes, you can take some content with you and offload it and take it on an airplane, and sometimes you can’t, but with Netflix, you can do that, with everything.” The inability to “take some chances and see what works and what doesn’t work” with Dish, “that’s always been disappointing, and one reason we got into the OTT business,” he said.
Dish faces “a number of hurdles” commercializing 5G, chief among them the “buildout” of its “first-phase” narrowband IoT network, said Ergen. “My experience in business is, you have hurdles you can predict, and then there are some that you can’t predict,” he said. 5G “is not our first rodeo,” he said. “We had those similar circumstances of hurdles when we decided to launch our first satellites back in 1990.”
In the 5G buildout, “there will be other people that I know are willing to help us,” said Ergen. “We’re going to need partners.” In launching its first satellites, Dish “ended up with a lot of people that helped us,” he said. “We’re going to need help on this one as well.”
The “scope of what 5G can do” can’t be overstated, said Ergen. “Every industry needs 5G,” he said. “There is virtually no industry that doesn’t need a connectivity network.” When one looks at the “industries of the future,” including artificial intelligence, autonomous vehicles, virtual and augmented reality and smart cities, “current networks weren’t built” for those, he said.
Ergen is “cognizant” that “people are skeptical” about Dish’s ability to build out a 5G network, he said. “I’d probably be skeptical if I was on the outside of this company, too." Being inside the company, Ergen is "not skeptical," he said, "and I know that there’s a dedicated group of people that are putting their heart and soul into making sure we get there.”