Analyst: AT&T Should Acquire Dish Network14 Jan, 2013 By: Erik Gruenwedel
At issue is the spectrum used to operate wireless networks
Dish Network’s surprise, unsolicited $5.15 billion bid last week for wireless network operator Clearwire prompted one analyst to suggest that telecommunications giant AT&T acquire Dish.
In the burgeoning battle for wireless superiority in the telecom and tablet space, Dish has emerged as a significant player seeking to control spectrum, the invisible channel required to deliver video, data and audio wirelessly via the Internet. Spectrum, which is regulated by the Federal Communications Commission, is the lifeblood for wireless networks upon which smartphones, tablet computers and related devices operate.
With the proliferation of smartphones, which reportedly use 24 times more data than a traditional cellphone, and tablets, which use 122 times more data than a landline phone, the quest for spectrum, and value of a license to use it, is acute.
The FCC controls how much spectrum is available through a cap. In recent years, due to the evolution of wireless technology and devices, the government has been auctioning off spectrum licenses to the highest bidder. In 2010, the FCC said it had begun steps to free up 500 MHz of additional spectrum by 2020 — a process some say is languishing.
Meanwhile, Englewood, Colo.-based Dish has been quietly acquiring available spectrum throughout the years — a strategy observers believe portends a future rollout by Dish of a wireless network.
Indeed, Dish-owned Blockbuster LLC currently sells third-party smartphones and service contracts under the rental icon’s Blockbuster Mobile banner.
As a result, Tim Farrar, analyst with TMF Associates, said AT&T or DirecTV should consider acquiring Dish and its spectrum licenses.
“If Dish appeared to be making progress with a Clearwire deal, then that might prompt AT&T to act more quickly [partnering with Dish] than it would otherwise do,” Farrar wrote in a blog post. “With [Dish CEO Charlie] Ergen reiterating his lack of desire to sell spectrum, it also seems like the message to AT&T is that a knockout bid for the whole of Dish is the only acceptable option.”