DISH Network Corp.
) reportedly suffered a setback as the Federal Communications
Commission (FCC) has proposed a resolution, which will allow DISH
to use its 40 MHz airwaves to deploy a nationwide wireless
network with limited power. From late 2011, DISH Network was
waiting for the FCC nod to launch a nationwide high-speed
wireless broadband network to offer mobile Internet, voice and
video services to its customers using its newly acquired
satellite airwaves from bankrupt DBSD North America Inc. and
TerreStar Networks Inc.
The FCC proposed that DISH may start installing its nationwide
wireless network using a truncated power level than what the
company is currently holding. A reduction in DISH's frequency
level is required to avoid interference with an adjacent PCS H
Block frequency that FCC will put in auction in 2013.
Sprint Nextel Corp.
), the third largest telecom operator in the U.S. is desperately
eyeing the PCS H Block frequency for its proposed expansion of 4G
The FCC proposal will reduce DISH's power and emission levels
to establish a profitable venture in the wireless market. The
company has spent over $2.9 billion to purchase wireless
spectrums and has altogether spent more than $4 billion till now
to pursue its wireless broadband ambitions.
Although the final verdict of FCC is yet to come, we believe
the initial decision of the FCC Chairman clearly points to a
preference for the LTE network of Sprint over a new entry by DISH
in the wireless market. This may be because Softbank's decision
to purchase a majority stake in Sprint Nextel has given the
company sufficient cash to pursue super-fast 4G LTE network and
to become a formidable challenger to incumbent
Verizon Communications Inc.
). On the other hand, DISH still keeps its decision open to
either develop its own wireless network, which will increase
competition, or collaborate with any existing wireless company,
or just sell its airwaves for monetary gain.
Whatever be it, we believe a truncated deal for wireless
network will be a huge setback for DISH especially when the
company was trying to become a unique bundled service provider of
wireless voice and data together with a state-of-the-art video
distribution network. This combination was necessary for DISH in
the face of severe competition in the pay-TV industry from
telecom giants and online TV streaming providers, and DISH is no
We maintain our long-term Neutral recommendation on DISH
Network. Currently, DISH enjoys a short-term Zacks #3 Rank (Hold)
on the stock.
DISH NETWORK CP (DISH): Free Stock Analysis
SPRINT NEXTEL (S): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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