Dish Network will use the S-band wireless spectrum it acquired via its $2.775 billion purchases of DBSD North America and TerreStar Networks to push a mobile video strategy to complement its wired video delivery service, according to Dish Chairman Charlie Ergen.
Ergen, speaking on the company's third-quarter earnings conference call Monday, said that the spectrum licenses will give Dish "a seat at the table" in wireless. "So the way I look at it is, we believe that the wireless business is a place where--if we're in the video business, we need to be more than fixed, we need to be a mobile video as well," he said, according to a Seeking Alpha transcript of his comments. "The wireless spectrum that we're attempting to acquire allows us to be able to do that."
Dish, citing the conditional waiver the FCC granted wholesale LTE provider LightSquared, in August told the FCC it wants to build a hybrid network based on LTE-Advanced using its 40 MHz of spectrum from TerreStar and DBSD under a subsidiary called Gamma. Dish argued in the filing with the FCC that the network will help promote the FCC's goal of expanding broadband access.
Currently, the FCC is reviewing the transfer of the spectrum licenses to Dish, and Ergen said his "expectation is that in relatively short order, we should get approval for the merger. There could be conditions on the merger. We have to see what those conditions are and whether those would allow us to compete or not."
Ergen's comments did not break much new ground beyond what Dish CEO Joseph Clayton has said in the past, but his remarks did provide more insight into why Dish made the investment into spectrum. Ergen said the spectrum will allow Dish to "control our own destiny from a mobile perspective," but also added that wired infrastructure will likely continue to be the way people access video in their homes. "But having said that, obviously, you look at the way people are going to consume video, when you look at tablets and phones and--this start to be pretty compelling from a video perspective," he said. "And I think that to be able to offer customers video in a fixed and mobile basis could be--is a kind of thing from a competitive point of view that Joe and his team can market at a whole new level because it's such a differentiating potential item."
Notably, Ergen did not say specifically how much capital the company plans to return to investors for the investment needed to build a wireless network, but said there is money to be made in mobile. "I look at it a little differently, which is there's tremendous business opportunity for the wireless side and the macro trends of data consumption, our 0s and 1s consumption," he said. "And therefore, I believe there is a way to make a lot of money in that."
Ergen also echoed comments Clayton has made that Dish will look for potential partners for its wireless venture, though he said Dish is prepared to forge ahead alone if necessary. "Having said that, the desired path and I think the path that's got the greatest chance of success would be to partner with others," he said. "And there could be a variety of different people that could fit that bill, some in the business today and some that aren't in the business today but would have similar motivations to us." Analysts have cited flat-rate wireless players MetroPCS (NASDAQ:PCS) or Leap Wireless (NASDAQ:LEAP) as potential partners.
For more:
- see this Seeking Alpha transcript
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