DISH's Plan: Wireless for the Underserved

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In a move that might signal a broader mobile broadband plan, DISH is expanding its previously announced pilot program with nTelos, a relatively small wireless provider serving 455K subs in 7 states, to co-develop a fixed wireless broadband service. The pair plans to offer the service commercially in several VA markets where they have a high concentration of customer overlap. Targeting early next year for a rollout, the services could potentially reach a half million homes. "With nearly a fifth of US households underserved by broadband, a fixed wireless solution could deliver an additional broadband option to millions of consumers," Tom Cullen, DISH evp of corporate development, said in a statement. Though not seemingly a major development, the move caught Wall Street’s attention. Wells Fargo analysts noted the 15%, or 15-20mln HHs underserved by wired broadband is "an excellent expansion market" for DISH’s HSD services. The planned rollout could be the next step to DISH offering an even more competitive HSD service inside the home, which could provide ARPU and subscriber benefits, the firm told clients. And while the nTelos service doesn’t use DISH’s AWS-4 spectrum, an identical service using DISH’s band could be created "quite quickly," according to the analysts. DISH has been "aggressively trying to build alternatives and strategic optionality to its core business" by investing in spectrum, deploying DISHNet, a satellite data service, and also partnering with existing mobile providers like nTelos, Macquarie Securities’ Amy Yong said. "I expect they will add 2-3 million broadband net adds over the next few years." DISH’s wireless appetite became well-known as it joined the bidding war to acquire Sprint and Clearwire earlier but didn’t win out. While satellite companies like DISH have felt the squeeze from cable MSOs, telcos and even OTT players, the good news is DISH’s spectrum provides "an array of options outside of pay-TV," such as fixed and mobile broadband, New Street Research’s Jonathan Chaplin said. "Wireless capacity will be an increasingly valuable commodity as usage grows," he said. Having said that, "the only way to make [satellite] pay-TV a better business is to combine DISH and DirecTV," according to Chaplin. That would transform the DBS providers’ negotiating leverage with the programmers, eventually ending "the days of double-digit content cost increases."

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