DISH Network’s attempts to create a 4G LTE wireless network of its own are slowly taking shape, but chairman Charlie Ergen said selling off its spectrum holdings is an option on the table should his bet on mobility fall flat. The airwaves are worth billions, but DISH still needs help from a partner, like Clearwire, to shore up its assets for a national launch.
Last fall DISH received FCC approval to use its 40MHz of Advanced Wireless Services (AWS) spectrum to create a 4G mobile broadband network—and last week filed a trademark application to use "Racecar” as the brand name to launch it under. But it still has a ways to go in order to fulfill its wireless dreams.
For one, those dreams have a distinctly video-centric bent. “First and foremost, we want to do video inside and outside the house,” Ergen said at All Things D’s Dive Into Media conference in Dana Point, Calif. "We'd like to own a wireless network so we can give you a quality of service."
Video, of course, is a bandwidth and spectrum-intensive service. DISH simply doesn’t have the existing holdings to appropriately offer that nationwide. But straining things further is the fact that as long as it’s already delivering video, it wants to offer voice and data too. Ergen confirmed that he would like to offer a full-blown nationwide mobile service with a bundled talk/surf/text service plan around the video piece, but acknowledged that in light of that, DISH would need a partner that can offer wireless towers and infrastructure, along with spectrum.
“We want to compete against both the cable guys and the wireless guys,” he said. “Ideally, we’d compete against AT&T and Verizon, and to do that we need more spectrum.”
Enter Clearwire, for which DISH is offering a $3.30 per-share price to secure a minority stake in carrier. But DISH is up against Sprint Nextel, which is trying to buy the rest of the shares that it doesn’t already own in Clearwire. While DISH does have an advantage in the fact that it is offering an 11 percent premium over what Sprint has bid (Sprint has been capped by its majority shareholder Softbank at $2.97 per share), Clearwire said that it is "severely limited by its current contractual arrangements" in terms of what it can do with the satco.
DISH would gain access to about 11.4 billion MHz-POPs, or 24 percent of Clearwire's total spectrum holdings, for $2.2 billion. Clearwire could also sell or lease an additional 2MHz to DISH under the deal.
Unfortunately, Clearwire is not expected to take the bid. And, if the Englewood, Colorado-based DISH can’t find an appropriate partner to help it with its infrastructure and spectrum needs for wireless, the obvious option would be to sell its spectrum holdings, which are worth billions.
"We would admit we failed and try a new approach,” Ergen said. “We would hang a 'for sale' sign on the spectrum."
On a related note, according to the Wall Street Journal, Ergen said that DISH’s 2011 acquisition of video rental chain Blockbuster was done with an eye towards the chain’s brick-and-mortar store footprint, which it wanted to use as the real estate for wireless and satellite TV retail stores. Despite speculation that DISH would launch its own over-the-top (OTT) streaming service on the back of the acquisition, Ergen said that was not on the table.
“We didn’t have enough guts to go there and try” the Netflix model, he explained, because he felt the market for online streaming is too crowded. “I feel stupid that we didn’t do [the Netflix model] first.”