DISH Looking for Mobile Broadband

DISH Network Corp. (DISH - Analyst Report), the second largest satellite-TV operator in the U.S., has finally come out with its plan for its newly acquired bankrupt telecom firms. Recently, the company applied for FCC approval to deploy a high-speed wireless broadband network to offer mobile Internet services to its customers. In a filling with FCC, DISH requested for clearance of assets of its newly acquired entities DBSD North America Inc. and TerreStar Networks Inc. and for license waivers.

In March 2011, DISH got a bankruptcy court approval to acquire 100% stake of DBSD for a total consideration of approximately $1.4 billion. In July 2011, DISH got another court approval to acquire bankrupt TerreStar Networks Inc. for $1.375 billion. DBSD provided a block of 20 MHz S-band spectrum to DISH for both wireless and wireline networks. On the other side, TerreStar provided another block of 20 MHz S-band spectrum and is currently working on a project to launch the world’s first satellite smartphone.

Additionally, DISH Network itself owns a slot of highly demanded 700 MHz wireless frequency. Management is trying hard to develop DISH as storage for spectrums that can be used to grow a viable pay-TV distribution network. FCC approval will enable DISH to deploy a hybrid terrestrial-satellite broadband network. Using these slots of airwaves, the company can form a formidable video-on-demand service over a wireless network of mobile handsets, such as smartphones and tablets.

An approval from FCC will place DISH head on with other cable MSOs and telecom operators, which offer triple-play bundled TV, Internet, and telephony services. Satellite TV providers, such as DISH and DIRECTV (DTV - Analyst Report) have constraint offering bundled services as their platforms lack two-way interactivity (no uplink). The consumers are generally attracted toward cable and telecom service providers as they like the convenience of having all their services on one bill and avail discounts given by the those companies by bundling their services.

We believe the decision to install an innovative wireless broadband network is the right move in right direction by DISH Network. In the U.S., cable TV and satellite TV operators are facing fierce competition from telecom service providers. Telecom operators are quickly gaining market share from cable TV and satellite TV service providers by offering fiber-based TV and other high-speed broadband services to subscribers. In the previous quarter, DISH lost 135,000 subscribers compared with a net loss of a mere 19,000 subscribers in the prior-year quarter. However, in the same quarter, AT&T (T - Analyst Report) and Verizon Communications Inc. (VZ - Analyst Report) together added 386,000 video customers.

In this juncture, offering high-speed Internet may help DISH network to eliminate customer churn. Furthermore, in April 2011, DISH also acquired bankrupt movie and video game retailer Blockbuster Inc. Theacquisition provides DISH the rights that Blockbuster currently enjoys to stream movies over the Internet. DISH can combine Blockbuster’s movie streaming services through its wireless broadband network to offer a highy innovative bundled service. In this respect, DISH may become a viable competitor to online video streaming companies, such as Netflix Inc. (NFLX - Analyst Report) , Hulu, and YouTube.

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