DISH Network Corp. (DISH - Analyst Report), the second largest satellite TV operator in the U.S., has decided to launch a nationwide satellite-based broadband service starting from late September or early October 2012. The company will use a satellite of EchoStar Corp. (SATS - Snapshot Report) to deliver this service.
DISH Network is already providing satellite Internet service using the network of ViaSat Inc. (VSAT - Snapshot Report) in certain parts of the U.S. particularly in the West Coast. The newly deployed nationwide Satellite broadband will cover around 2 million people with a starting speed of 5 Mbps.
We believe from October 2012, DISH Network will offer bundled satellite TV and Internet to its customers and become a formidable challenger to large cable pay-TV and telecom service providers, which also offers triple-play video, voice, and data services. Moreover, DISH Network is currently waiting for the FCC nod to launch a nationwide high-speed wireless broadband network to offer mobile Internet and phone services to its customers.
Management is trying hard to develop DISH Network as storage for spectrums that can be used to grow a viable pay-TV distribution network. The newly acquired spectrums from TerreStar Networks Inc. and DBSD North America Inc. provide most valuable assets to the wireless industry. 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.
Today, cable TV and telecom operators have the technical advantage of being able to offer the ‘triple play’ package of VOD (video-on-demand), local HD, high-speed Internet access and telephony. The satellite TV operators, on the other hand, including DISH Network, cannot provide VOD, Internet access or telephony as their platforms lack two-way interactivity (no uplink).
The decision of DISH Network to launch satellite Internet service will solve this problem. Further, if the company gets the green signal from FCC to use its airwaves then the company can offer a unique quad-play bundled service of satellite TV; satellite Internet, mobile Internet, and mobile phone services.
We maintain our long-term Neutral recommendation on DISH Network. Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.