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After initial claims that there was “no grand strategy” behind Dish Network’s acquisition of TerreStar’s 20 MHz of S-Band MSS spectrum out of bankruptcy, Dish has proven sceptics wrong. Last week the company filed its FCC application seeking approval of the purchase. Dish requested that it be allowed to combine its purchase of TerreStar’s 20 MHz with its purchase of DBSB’s 20 MHz of MSS. The company also asked for a waiver of the FCC restrictions on using MSS spectrum primarily for terrestrial service. If the FCC grants Dish’s applications, the company will have a 40 MHz contiguous block of unencumbered S-Band MSS spectrum which the company says it will use to offer mobile and fixed wireless broadband services on a retail basis. Because the S-Band MSS spectrum does not present the GPS interference issues that LightSquared’s L-Band spectrum does, Dish is an even stronger new entrant into the U.S. wireless industry. In fact, Dish Network, the country’s third largest pay-TV provider with more than 14 million customers, will be positioned as a formidable provider of a complete telecom offer–Internet, TV and mobile–with greater geographic and population reach than AT&T, CenturyLink, Comcast, Cox, or Verizon.

Dish’s bold move proves that new entrants into the wireless market are more common than what popular wisdom may want you to believe. For example, many have derided MVNOs as not being “real” competition because they purchase minutes from other carriers rather than build a network. This perspective completely ignores the massive success of TracFone, the country’s fifth largest service provider with more than 18.7 million subscribers at the end of Q2 2011. This reality should lead to at least a reassessment of the theory that MVNOs are not real competitors to facilities based mobile providers. Mobile virtual operators and facilities-based operators look and feel the same to consumers.

But back to Dish’s plans. The proposed wireless network would work well in conjunction with Dish Network’s Blockbuster acquisition, which has streaming movie rights just like Netflix and Dish Network’s satellite TV service. Dish could offer a total communication and entertainment bundle: Satellite TV at home, 4G Internet connection at home and on the go, with all the streaming video on top of it. Dish has 14 million customers it can use as a starting point for cross-selling. In addition, Blockbuster’s 500 stores could serve as Dish’ sales and customer service backbone. Think of Apple-like experience stores–a physical place where consumers can see and feel how it all connects and fits together. Some may think that 500 stores is insufficient to make an impact, but when you look at what a huge impact Apple’s 241 retail stores have, one could conclude that 500 stores done right could be a force to be reckoned with.

A question many are asking is where Dish will find the money to build the network. As we learned from LightSquared, vendor financing has made a revival. There are many vendors that could view a Dish network build as an opportunity to gain a bigger foothold in the U.S. market. Another question is whether Dish will mobilize a consortium of small and mid-size mobile wireless providers and partner with them to build out and/or offer service. And there is of course the question of timing for build. Will the FCC put Dish on a fast track similar to LightSquared’s buildout schedule? No one knows for sure what Charlie Ergen’s plans are other than Charlie, but what we do know is that there is nothing about the U.S. wireless industry structure that prevents him from becoming the country’s newest facilities based wireless broadband competitor. In fact, if Dish succeeds at the FCC and raises the money it needs for the network build, Dish would become the industry’s second, brand new facilities-based wireless entrant in less than two years. Calling this industry anything other than competitive is simply ignoring reality.

Roger Entner is the Founder and Analyst at Recon Analytics. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications.

FierceWireless

Dish Network intends to make a mobile broadband play with its recently acquired S-Band satellite spectrum, the company’s CEO said, though it remains unclear what kind of wireless offering the satellite TV provider will bring to the market.

Clayton

On the company’s second-quarter earnings conference call, Dish CEO Joseph Clayton–who has been on the job since May–said Dish will use its recent spectrum acquisitions to “have a significant role in the evolving world of wireless communications, and this is the principle reason that I am here” at the company.

According to a Morningstar transcript of the call, Clayton said that Dish will keep its plans “somewhat nebulous,” but he did lay out several options for the company. “We will keep our options open, we will not tip our hand and we will continue to pursue the necessary assets to shape our long-term strategy,” he said. “This could include additional acquisitions, partnerships, alliances or even parting with assets that might not prove to be strategic going forward.”

Clayton also said that Dish could use wireless service to deliver content. He said that delivering video is going to remain the company’s primary objective, but that “we’re also very interested in wireless broadband for a lot of our secondary and tertiary customers throughout our market.” 

Dish received final approval in July from a bankruptcy court judge to purchase TerreStar Networks for .375 billion. The purchase nearly matches the .4 billion Dish will pay for DBSD North America, a transaction that won bankruptcy court approval in June. Dish Chairman Charlie Ergen pushed for the deals and Clayton said Ergen “believes that these actions have been the best possible usage for the company’s available capital.” Together, DBSD and TerreStar each give Dish access to 20 MHz channels of S-Band spectrum.

Tom Cullen, Dish’s executive vice president of sales, marketing and programming, said the company will file a request with the FCC within the next two weeks to transfer the spectrum licenses to Dish. He declined to discuss whether Dish will define a business strategy for the spectrum when it makes its filing.

BTIG analyst Walter Piecyk told FierceWireless that he does not think Dish will describe a business model in its license transfer request, noting that Dish likely wants to get the spectrum and avoid any unnecessary complications at the FCC. “I think they want to keep a very low profile,” he said, adding that the licenses might be transferred by the end of the year or early next year.

When asked if Dish might reveal part of its wireless strategy in connection with Sprint Nextel’s (NYSE:S) Oct. 7 investor conference–Sprint has promised to discuss its 4G strategy during the event–Cullen said that he “wouldn’t expect anything in the near term.” He also declined to comment on whether Dish would be interested in buying Qualcomm’s (NASDAQ:QCOM) 700 MHz MediaFLO spectrum, should AT&T (NYSE:T) not be able to purchase it. The FCC said it will consider AT&T’s proposed .93 billion purchase of the Qualcomm spectrum spectrum side-by-side with AT&T’s planned billion acquisition of T-Mobile USA.

For more:
- see this Morningstar transcript

Related Articles:
Dish hints at possible wireless plans in AT&T/T-Mobile deal opposition
Dish gets final approval for .38B TerreStar auction purchase
Dish Network lands .38B bid for TerreStar, reportedly outflanking MetroPCS
Bankrupt TerreStar extends deadline for bids on assets
Dish’s Ergen: No ‘grand strategy’ on spectrum play
Dish’s B DBSD purchase sparks spectrum intrigue

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Three months after Dish Network workers voted 25-19 for CWA representation at the Farmers Branch, Tex., facility, the full National Labor Relations Board finally certified the election. The workers are represented by CWA Local 6171.
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