BOULDER, Colo.--Dish Network's efforts to launch a terrestrial LTE Advanced network using S-band satellite spectrum are an imperative for the satellite-TV provider, which is watching its primary business mature and stagnate, according to Charlie Ergen, Dish's chairman.
"We're kind of a one-trick pony as a company. We do fixed video very well, do it very economically. It's a great product," said Ergen. But he noted that most everyone who wants TV service in their house has it, and there is not a lot of new household growth due to the recession. Growth in the pay TV market is averaging about about 1-3 percent a year, and competitors are often simply swapping the same customers back and forth.
"For us, [video's] a good business, but 10 years from now that's not going to be a good business," said Ergen, who explained Dish's plan for the future is to market service bundles that include fixed and mobile video, mobile data and voice plus fixed broadband.
"That's where we're willing to transform the company, and we're willing to take the money we've made so far and risk it again and try and get into that business," he said. "For us, not taking a risk is the bigger risk."
Ergen made his remarks Tuesday during a speaking engagement at the Silicon Flatirons Center for Law, Technology, and Entrepreneurship on the University of Colorado at Boulder campus.
Ergen gave up his role as CEO of Dish last summer so he could focus on the company's wireless broadband initiative, which he said is being conducted as an entrepreneurial effort outside of Dish's regular business but will be folded in over time.
The company thinks it can get the FCC waivers it needs to launch its wireless broadband network in part because broadband is a stated priority for the Obama administration and FCC. Further, it is clear that the 2 GHz S-band spectrum was initially allocated "for a business that wasn't very economical," said Ergen. By spending more than $3 billion to acquire 40 MHz of MSS spectrum from bankrupt DBSD North America and TerreStar, he said Dish has been able to craft a plan that promises to create competition, benefit consumers and alleviate some of the spectrum crunch.
"A lot of times good ideas don't work in Washington," Ergen acknowledged. "But I think we've got credibility. We've done it before."
Regarding the S-band spectrum that Dish acquired, "We did our homework, in the sense that we knew there'd be some interference issues," Ergen said, adding the company "went after frequencies that are pretty clean." He noted the GPS industry, which opposes LightSquared's efforts to use L-band satellite spectrum for an LTE network, supports Dish's plan.
Ergen was realistic about the challenges Dish faces. For one thing, the FCC's rulemaking on opening up satellite spectrum in the 2 GHz MSS band for mobile terrestrial use is just starting. Initial comments on the proceeding are due May 17, while replies are due June 1, and the rulemaking is sure to draw considerable debate. "There's no guarantee that any of the rules will be accommodating enough," he said.
Even if Dish does launch a wireless broadband business, "It would be longshot, I think, that we get to compete with AT&T (NYSE:T) and Verizon (NYSE:VZ)," said Ergen. "Having said that, it seems like something we want to try and do."
Ergen stressed that to succeed, Dish will have to enter the wireless business with a better product that is less expensive than what the cellular incumbents offer.
However, if Dish's effort is unsuccessful, he said the spectrum it has acquired will be valuable to other companies "that have scale in this business."
Dish has considerable funding set aside to build its LTE Advanced network. "We will spend billions of dollars for sure, and we'll create tens of thousands of jobs if we're successful," said Ergen. "We've been saving our money, and we're prepared to go spend that."
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