Dish's IoT Plans Could Signal Tech Commitment or Time-Buying Strategy
Dish Network's IoT plans have bought more time for the company to use its AWS-4 and lower 700 MHz E block spectrum, but whether that ultimately is how the satellite-TV provider uses it remains a big question, company watchers told us. Some are skeptical of an IoT network business plan and see a strong likelihood Dish will end up either partnering with a third party on such a network or selling its spectrum. Dish earlier this week told the FCC it expected to have a NarrowBand (NB) IoT network in operation by March 2020 (see 1703080026). Dish didn't comment. It announced Friday plans to perhaps buy additional spectrum.
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There's no IoT business model "that would remotely support the value of the spectrum," but such a deployment would give Dish CEO Charlie Ergen more time to realize full value, New Street Research analyst Jonathan Chaplin emailed. "Ergen is patient; he would rather spend a little money to buy time than sell the portfolio he has built for less than it is worth." Chaplin said another business model in the meantime could emerge. An NB-IoT network would be cheaper than a traditional mobile broadband network since IoT applications need less throughput, meaning fewer transmitters to provide coverage to an area, said New Street's Vivek Stalam.
Demand for an IoT-only network "is a big unknown," said Technology Policy Institute President Scott Wallsten. "In principle, it seems like a viable plan."
A greenfield IoT network covering 70 percent of the population doesn't seem to be "a terribly profitable enterprise" unless it's done in partnership with -- or after merging with -- a conventional mobile ISP, said Michael Calabrese, director of the Wireless Future Program at New America. He said it's no surprise Dish opted for the 2020 deadline, since it buys the company another three years to strike a deal with a facilities-based carrier or sell its spectrum to an ISP. Buildout requirements on Dish's AWS-4 and 700 band licenses required it provide service to at least 40 percent of the AWS-4 and E block populations by March 7 or 70 percent of the population in each of its license areas by March 7, 2020.
Now Dish has numerous options, Calabrese said, pointing to Comcast and Charter Communications planning to enter the mobile market -- an entry that potentially could be done through a joint venture with Dish and a mobile carrier. Aside from the additional time, the IoT plan was "a shrewd move" by Dish since the 5G standards should be completed by 2020, increasing the likelihood of compatibility between a Dish IoT network and any potential partner's 5G network, Calabrese said.
The company could opt to sell the 700 MHz spectrum, since it would fit well with spectrum held by mobile carriers, but it also would be easy to combine it with the AWS-4 in an IoT network since they have complementary characteristics, Calabrese said. The one thing missing would be more capacity provided by wide channels at higher frequencies, such as millimeter wave spectrum, Calabrese said, saying Dish could get that high-capacity spectrum by partnering with a carrier or selling to an ISP. He called it "highly unlikely" Dish would meet the buildout requirements for AWS-4 spectrum but not for the 700 band.
A spectrum sale remains more likely than a buildout, and the filing goes to the heart of what has always been a big Ergen goal -- preserving options, said Doug Brake, telecom policy analyst at the Information Technology and Innovation Foundation. The NB-IoT filing "avoids a fire sale," Brake said. He said Dish directions should become more clear after the incentive auction quiet period is over. "So many deals are likely to start happening soon after that," Brake said.
The $1 billion in new debt Dish plans to offer is to be used for strategic transactions that could include wireless and spectrum deals, the company said in a news release. In a note to investors, Wells Fargo analyst Marci Ryvicker said that cash could be aimed at the incentive auction, though the company was believed to have dropped out, or some spectrum-related buy. Moody's in a note to investors on Friday on the debt issuance said it believes Dish is likely to continue pursuing its national wireless broadband strategy through some kind of a partnership.