Ergen: Dish has 80% chance of succeeding with broadband wireless; FCC has hand on 'self destruct button'
Dish Network (Nasdaq: DISH) chairman Charlie Ergen said Thursday that he thinks Dish has an 80 percent chance of successfully launching a broadband wireless and phone business, noting that the FCC has the power to determine if Dish will eventually be able to market a triple play of video, high-speed Internet and phone service that could compete with cable operators.
While Dish is eager to enter the wireless business, the company is waiting for the FCC to approve its acquisition of broadband wireless spectrum from TerreStar Networks and DBSD North America. Ergen compared the risk that Dish faces from the FCC proceeding to the first satellite that Dish launched from a facility in China in 1995. Dish wouldn't have had a chance at competing in the pay TV space if that rocket had failed, Ergen said, adding that the FCC has its hand on the "self-destruct button" with the spectrum waiver.
Ergen said on Dish's fourth-quarter earnings call that LightSquared's recent failure to win approval for its broadband wireless venture could help Dish, noting the absence of competition in the wireless sector for AT&T (NYSE: T) and Verizon (NYSE: VZ). Consumers prefer to order bundles of video, high-speed Internet and phone service from a single provider, Ergen said. "Right now, the cable industry is in the best spot to take advantage of that," he added.
Ergen floated the possibility of Dish teaming up with Sprint (NYSE: S) or T-Mobile to share their wireless networks, but said Dish would still need the FCC to approve the TerreStar and DBSD deals in order for the company to expand into mobile broadband and voice services. "That would potentially be a way to enter the marketplace sooner, and reduce risk. But you have to be in the game to be able to do that, and as I said, we're not in the game right now," Ergen said regarding Dish teaming up with a mobile carrier.
Analysts also pressed Ergen on the possibility that the FCC could issue a notice of proposed rulemaking related to its spectrum deals, which could significantly delay its plans. "Our risk profile would increase substantially if the FCC does a rulemaking. All options would be on the table for how we move forward with the company and the spectrum," Ergen added.
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