The New York Post, citing unnamed sources, has reported that Verizon is talking with Dish Network about the possibility of buying Dish’s AWS spectrum. But while such a deal would make sense for Verizon, the potential benefits for Dish are not so clear.
Verizon/ Dish Spectrum Deal Possibilities
AWS spectrum includes several different blocks in a relatively high frequency band in the 1700-2200 MHz range. High-frequency spectrum has less range but greater capacity than lower-frequency spectrum making it well suited to serving high-traffic urban areas.
Verizon initially built its LTE network using lower-frequency spectrum, minimizing the investment necessary to gain near-nationwide coverage. But more recently Verizon has begun to deploy LTE using its existing AWS spectrum holdings in urban areas – and has even come up with the brand name XLTE for the service. According to Verizon, XLTE supports faster peak speeds than other technologies.
Verizon won some AWS spectrum in an initial auction and since then has been amassing more – having purchased some from a cable company consortium, from Cincinnati Bell and from T-Mobile. So it wouldn’t be surprising to see the company also talking to Dish about another AWS acquisition.
What’s In It for Dish?
What Dish would gain by selling its spectrum to Verizon is less clear. Of course the company would gain cash. But it would shut itself out of the possibility of building its own wireless network – and with TV Everywhere expected to skyrocket, video providers without their own wireless networks could be at a disadvantage.
Some industry observers have long been skeptical about whether Dish has the ability to build its own wireless network and have been expecting the company to eventually sell the spectrum and potentially pursue a different path to obtaining wireless connectivity. Dish tried and failed to acquire Sprint. But with a cash infusion from the sale of spectrum to Verizon, potentially Dish would be in a good position to make a play for T-Mobile.
If that is indeed Dish’s plan, it may not want to wait much longer before pursuing it, however, as rumors continue to circulate that Sprint plans to buy T-Mobile.
Why Not a Merger?
A merger with or outright acquisition by Verizon would also give Dish a wireless network. And considering that AT&T has announced a plan to acquire DirecTV, the idea of Verizon buying Dish outright might seem to have some merit, as it would have the added benefit of helping Verizon gain better deals with content providers. But according to the Post report, Verizon CEO Lowell McAdam said recently that he wasn’t interested in buying a satellite company.
The Verizon/ Dish deal rumors also call into question the future of the fixed wireless broadband offering that Dish has pursued in partnership with Sprint and nTelos. Some industry observers were expecting to see Dish eventually use some of its own spectrum to support a fixed wireless broadband offering.
Verizon already has a fixed wireless broadband offering based on LTE called HomeFusion. But that offering was launched when the company had only deployed LTE in lower-frequency bands – and I would expect the company to rely on lower-frequency spectrum for that type of offering because lower-frequency spectrum has greater range and does a better job of penetrating walls and other obstructions.