Dish to plow ahead on wireless handsets regardless of FCC action

Dish Network intends to launch wireless handsets using chipsets from Qualcomm (NASDAQ:QCOM) regardless of how the FCC crafts rules for the terrestrial use of Dish's S-band MSS spectrum.

Dish Chairman Charlie Ergen said on the company's second-quarter earnings conference call that such handsets, with terrestrial and satellite capabilities, will be "part of our lineup" regardless of how the FCC rules. On the call Dish CEO Joseph Clayton said the company expects "a favorable resolution in the next few months" as the FCC works on its proceeding for the airwaves, officially known as AWS-4 spectrum.

Dish inked a deal in June with Qualcomm and Ergen said the company did so because Dish needed to ensure chipsets and handsets could be made that work with its spectrum regardless of the FCC proceeding. He said because no carriers are using S-band spectrum for terrestrial use, the deal with Qualcomm has allowed Dish to minimize any delays the FCC process may cause.  Dish is waiting to see if the FCC will grant it a waiver that would allow it to sell terrestrial-only devices, which Dish has argued is essential to its business plan.

Ergen reiterated that Dish would like to partner with a wireless carrier to help it build out its LTE Advanced network. He said he has been frustrated by the slow nature of the FCC process, but said he believes that the FCC wants to encourage more wireless competition.

Dish said in a filing to the FCC in May that it will not be able to launch its proposed LTE Advanced network using its spectrum until 2016 or later. This is about 12 months longer than the FCC's current proposed buildout schedule, which requires Dish to launch its network in three years covering 30 percent of the U.S. population. However, Dish has indicated that when it does launch its network, it will cover 60 percent of the U.S. population.

Dish, which paid $2.78 billion in 2011 for its spectrum in bankruptcy proceedings, has argued that the FCC's buildout requirements are not feasible and are not in line with similar requirements for terrestrial services. For example, Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T) have 10 years to cover 75 percent of the population using the 700 MHz spectrum licenses they won at auction.

In another bit of potentially wireless related news for the satellite TV player, Dish disclosed in a filing with the Securities and Exchange Commission that it had made a $396 million strategic investment in debt securities of an unnamed "single issuer," which Dish said "has indicated that it will need substantial additional capital to meet its business and financial obligations beyond the next 12 months."

"There has been much speculation that this investment was in Clearwire (NASDAQ:CLWR) debt," Wells Fargo Jennifer Fritzsche wrote in a research note. Clearwire has indicated it has enough cash on hand for the next 12 months, but has said it will look for strategic financing opportunities. Dish and Clearwire declined to comment, according to Reuters.

For more:
- see this Seeking Alpha transcript
- see this SEC filing
- see this Reuters article
- see this Bloomberg article

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