Dish's newest spectrum suited for backhaul, fixed broadband

Dish Network's latest spectrum acquisition speaks to the company's desire to build a wireless broadband network, say analysts.

Dish agreed to pay Cablevision $80 million for 500 MHz of wireless multichannel video distribution and data service (MVDDS) spectrum licenses that cover a population of 150 million in 45 markets, including New York, Los Angeles, Chicago, San Francisco and Philadelphia. The acquisition is part of a total $700 million settlement of the breach-of-contract lawsuit that Cablevision and former subsidiary AMC Networks had been waging against Dish.

The deal makes Dish the nation's largest MVDDS spectrum holder. Prior to this latest acquisition, Dish founder Charlie Ergen was already the second largest owner of MVDDS spectrum, forming a company called to buy MVDDS licenses in 37 markets, including Boston, Atlanta, Detroit, Houston, San Antonio, Pittsburgh, San Diego and Salt Lake City, reported our sister publication FierceCable.

It is unclear what plans Ergen may have for MVDDS. Dish did not respond to requests for comment from FierceBroadbandWireless or FierceCable.

Broadband Internet services that rely on MVDDS spectrum are in their infancy. Over the summer, Cablevision began using MVDDS spectrum to provide its fixed wireless broadband Internet and telephone service in Florida called OMGFAST!, charging subscribers $29.95 monthly for a 50 Mbps Internet connection.

Evercore Partners analyst Bryan Kraft, said MVDDS spectrum is not suitable for cell phone services, but it could play other roles in delivering fixed broadband services or backhaul. "The 500 megahertz spectrum is very high frequency and not suitable for mobile network deployment," he said in a report. "This spectrum can only be used for point-to-point applications and it requires line-of-sight. Therefore, we believe it could be used for fixed wireless and potentially mobile backhaul," said Kraft, who was quoted in Investor's Business Daily.

Craig Moffett, a Bernstein Research analyst, wrote in a research report, "From an ongoing business perspective, the inclusion of the licenses is perhaps the most interesting part of this deal, and speaks unambiguously to Dish's desire to follow through on building a wireless network."

In related news, Ergen told Bloomberg that regulatory delays in rules for Dish's 40 MHz of MSS S-band spectrum will cause the company to miss its opportunity to get into the wireless market. Dish is waiting on final rules from the FCC for the 2 GHz S-band of MSS spectrum, which the FCC has renamed "AWS-4." The FCC is expected to issue final rules on the terrestrial use of the satellite spectrum by year-end.

Dish has been cited as a potential acquirer of WiMAX-turning-LTE operator Clearwire (NASDAQ:CLWR). Sprint Nextel (NYSE:S) recently moved to acquire a 50.4 percent majority voting stake in Clearwire, possibly to scare off Dish or other potential Clearwire investors. Charlie Ergen, Dish's founder and chairman, is rumored to already hold in excess of $900 million of Clearwire's debt, according to Tim Farrar, head of Telecom, Media and Finance Associates.

For more:
- see this Dish release
- see this Investor's Business Daily article

Related articles:
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Cablevision launches 'OMGFAST' wireless broadband service