Verizon Wireless (NYSE: VZ) is not talking to Dish Network (NASDAQ: DISH) about any kind of deal, according to Verizon Communications CEO Lowell McAdam.
McAdam said it was "somebody's fantasy" that Verizon and Dish could strike a deal. "There have not been any discussions and there aren't any discussions going on with Dish," McAdam said at the J.P. Morgan Global Technology, Media and Telecom Conference.
The Verizon chief said that "Dish has something interesting assets" and there are things the two companies could do together. "I don't feel that owning a satellite company is something I'm finding intriguing," he said though. McAdam said Verizon is more interested in delivering video in a mobile-first manner and via over-top-video services using the OnCue interactive TV technology it picked up in the acquisition of Intel's Intel Media division.
Since AT&T (NYSE: T) announced it plans to buy DirecTV (NASDAQ: DTV) in a $49 billion deal, analysts have speculated what Dish might do, since AT&T and DirecTV had been its two most logical merger or acquisition partners.
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. Speaking in the context of the billions of dollars Dish has spent to acquire spectrum, Ergen said earlier this month "we're ready to harvest our investments."
There is continued speculation that Sprint (NYSE: S) will try to merge with T-Mobile US (NYSE:TMUS), perhaps as soon as next month. Ergen has said that Dish would not try to outbid Sprint but that it could partner with T-Mobile if Sprint did not pursue a deal or such a transaction fell apart.
Speaking of wireless consolidation, McAdam was sanguine and said Verizon could continue to compete no matter the industry structure. "We can certainly compete in a four-player market," but he said Verizon could compete in a three-player market as well. He added that typically, three-player are markets are more stable but that "whatever the regulators decide, they decide."
McAdam said Verizon is always looking for new spectrum but that it needs to be a good fit for its existing portfolio. He praised FCC Chairman Tom Wheeler for setting up rules for the AWS-3 auction late this year--the rules don't include any limits on how much spectrum carriers can bid on. McAdam said Verizon expects to "participate fully" in that auction.
McAdam was warier of next year's incentive auction of 600 MHz broadcast TV spectrum. In that auction, the FCC has voted for rules that would place restrictions on how much spectrum AT&T and Verizon can acquire, with the goal of ensuring smaller carriers like Sprint, T-Mobile and others will be able to acquire spectrum. Specifically, the FCC plans to reserve up to 30 MHz of spectrum in a given market for smaller carriers after the auction raises an a yet-to-be determined amount of spectrum, though the total amount of reserved spectrum could vary depending on demand. Verizon would be prevented from bidding on the reserved spectrum if it holds 45 MHz or more of spectrum below 1 GHz in that market.
McAdam said there is "still a lot more information that needs to be gleaned from the process," adding that "so far it looks positive." He said that broadcasters still need to contribute their spectrum to the pool of airwaves that wireless carriers will later bid on. McAdam said he would like to be "opportunistic" in the auction but that Verizon will need to see "how things shake out."
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