Ergen Notes Possible FCC ‘Skepticism’ About Dish’s IoT Buildout Capability
FCC “skepticism” about Dish Network’s ability to “execute” on its narrowband IoT buildout strategy by the March 2020 deadline possibly may have been one of the “motivations” behind the letter Wireless Bureau Chief Donald Stockdale sent the company last month seeking details about its network deployment plans (see 1807100062), said Chairman Charlie Ergen on a Friday earnings call. Though it was “unusual to receive a letter,” it’s always "an opportunity for us to continue dialogue with the regulators, and we always want to take advantage," he said.
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The agency’s goal is for the U.S. to be “No. 1 in 5G, and the goal that we have at Dish is exactly the same,” said Ergen. Dish emphasizes that in meetings all the time with commissioners and staff, he said. “For the United States to lead in 5G, you’re going to have to have, we think, a stand-alone 5G network,” like those being built in China and Japan, not the “hybrid” 4G/5G networks the “incumbents” want to build in the U.S., he said. “We’re the guys, we’re the company, to do that.”
Dish was one of the few companies to take the “lead” in DTV, while it took cable “more than 10 years to go from that hybrid legacy business to all digital,” said Ergen. “The FCC was very supportive of what we did there,” he said. “We have a track record of being innovative, disruptive.” Dish has “another opportunity to do that in 5G,” he said.
Ergen concedes there's “some skepticism” at the FCC, as well as in the investor community, about Dish's “ability to execute” its narrowband IoT plan, he said. “As people see the progress that we’ve made,” they will “come to the realization, that we can” pull that strategy off, he said. Dish “faced that same skepticism when we launched satellites and competed against the incumbents and the major corporations,” said Ergen. “It was a big project for us, but with a dedicated team of people, focused on the right direction, we’re confident we’ll be able to do that.”
Comments are due Aug. 20, replies Aug. 30, meanwhile, on a Dish ask for waivers of rules limiting out-of-band emissions from equipment in the 1925-2000 MHz band into the 2000-2050 MHz band and vice versa, said a public notice Friday in docket 18-237. Dish shares closed 15 percent higher Friday at $34.20.
Dish has reached the “inflection point” toward a total breakup with Univision, now that the blackout of Univision content on Dish TV and its Sling over-the-top service is into its second month (see 1807300051), said Ergen. He’s more “pessimistic” than the rest of Dish senior management that the two sides can work out their impasse over content fees, and thinks “this one is probably permanent.”
Univision is “a good company” with a “good product,” said Ergen. “We’re not mad at them.” But Univision “penciled in Dish with a 75 percent increase in their programming fees,” after losing half its prime-time viewership in recent years, “and they lost the World Cup, which was their No. 1 short-term attraction,” he said. “We see declining value” in Univision, he said.
What “further exacerbates” the impasse is that Univision wants to charge Dish “materially” more than the $7.99 Univision charges monthly for its own direct-to-consumer service, said Ergen. Univision also is available over-the-air for free in many places, he said. Another complication is that “our team has never heard from their new CEO,” Ergen said of Vincent Sadusky, who took the Univision post June 1 with the retirement of Randy Falco. “We might have been their largest customer, and we’ve never heard from their new CEO. That doesn’t sound like a relationship they want to proceed with.”
Ergen predicts Univision will “be OK,” post-breakup, while Dish will save money in Univision content fees that will help boost profit: “I think they’ll get half the revenue they probably would have gotten from us.” Ergen understands that Univision is “stuck between a rock and a hard place,” trying to pass along higher content costs from its programming providers, “but you can’t take it out on the Hispanic customer,” he said. “We’re not going to gouge them.”
Univision didn’t comment on Ergen’s remarks. It said in a statement it takes no “pleasure” that the pay-TV service lost 192,000 net subscribers in Q2, as Dish disclosed Friday, while Sling TV subs increased 41,000. “We are concerned Dish’s decision to turn its back on Hispanic audiences -- a growing community that already accounts for nearly 20% of Dish’s subscriber base -- will exacerbate such losses going forward,” said Univision. It’s “confident” that a “a renewed partnership” with Dish “that leverages our top-rated news, sports and entertainment programming will not only mitigate ongoing subscriber losses but propel Dish to greater long-term growth.”