Dish execs: Sprint, nTelos fixed TD-LTE trials could turn into a real business

Dish Network (NASDAQ: DISH) is optimistic that the trials it is conducting with Sprint (NYSE: S) and nTelos Wireless to supply fixed broadband via 2.5 GHz TD-LTE service can turn into an actual business, according to Dish executives.

During the company's third-quarter earnings conference call, Dish Chairman Charlie Ergen said the company is "cautiously optimistic that that's a real business as well" regarding the trials with Sprint and nTelos. The trials are targeted at unserved and underserved consumers, especially those with slow or no Internet access.

Thomas Cullen, Dish's executive vice president of corporate development, said in late October he visited customers who have had the trial service for several months. "They're pleased with the service and the choice," he said, according to Seeking Alpha transcript of his remarks. "So the experience is good. We're optimistic about the efforts, and we're still learning."

In July, Dish and nTelos launched a fixed TD-LTE service using 2.5 GHz spectrum offering high-speed wireless Internet service to select customers in Charlottesville, Waynesboro, Staunton, Harrisonburg and Roanoke, Va. The service costs $30 per month when bundled with a qualified Dish satellite TV service plan. NTelos said the service is delivering downlink speeds of 15 Mbps and higher.

In late September, Dish launched a similar service in Corpus Christi, Texas, using Sprint's network and spectrum. The Internet service in Corpus Christi has been advertised with download speeds of 10 Mbps, and is available for $30 per month when bundled with a qualifying package of Dish's satellite TV service, or $40 as standalone service.

David Zufall, Dish's vice president of wireless, told FierceWireless in September that in Corpus Christi, Dish technicians are installing ruggedized outdoor BandRich routers with high-gain antennas to support the service, just like they install outdoor satellite dishes for Dish TV. Dish is also offering customers the option to get a free Wi-Fi router at installation.

Cullen said it will still take Dish a while to finalize the business models for such plans and understand the marketing and installation challenges. He declined to say how many customers have signed up for the service, but he said Dish is "training more installers and we're sending more installation resources into both of those markets. We're seeing some positive attachment rates in terms of Dish bundling. And we're learning things."

Interestingly, Ergen on the company's earnings call was asked whether Dish has considered putting its spectrum into a "separate vehicle where, if a transaction occurred, that it would be much more tax efficient."

Ergen said Dish is indeed thinking about putting its spectrum into a new unit or venture, but signaled he could not say more than that. Dish controls more than 50 MHz of spectrum, including 40 MHz in the AWS-4 band and 10 MHz of the 1900 MHz PCS H Block, part of which is adjacent to AWS-4.

New Street Research analysts wrote in a research note that Dish's existing spectrum holdings "comprise 12% of industry capacity (including spectrum from upcoming auctions), and if wireless revenue share tracks capacity share over time, we believe this spectrum could be worth" more than $100 billion to a carrier.

"While the path to realization remains unclear, the opportunity for value creation through building a business or selling to a carrier is enormous," they added. "Further, we believe the intrinsic value of DISH's spectrum is rising and the upcoming AWS-3 auction will likely support this."

Dish has signaled it will participate in the FCC's upcoming AWS-3 spectrum auction.

For more:
- see this Seeking Alpha transcript
- see this WSJ article (sub. req.)

Special Report: Wireless in the third quarter of 2014

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