Dish's Wireless Plans is a Ticking Time Bomb!
Chris is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
It is amazing how slow the FCC has been on approving Dish Network airwaves compared to other deals like lightsquared. The slow decision rate by the FCC has been a big blow to Charlie Ergen's ambitions. Verizon's (NYSE: VZ) deal with the cable companies flew through the regulation process with ease, but Dish's desire to have the FCC set rules on using the spectrum for terrestrial service has been very slow and painful to watch as the wireless industry seems to have gone in a consolidating frenzy. It goes to show that big money talks and the other thing walks and politics is deeply involved in deal making.
Dish Network Corporation Chairman Charlie Ergen is a gambling man who loves to go all in. He realized the paid TV market was dwindling and had started acquiring wireless licenses though acquisitions over the past years. He acquired airwaves for a fraction of what the big players paid for licenses. For instance, back in 2008 Dish put in a winning bid of $712 million for airwaves that had recently been reclaimed from television stations. This was a huge bargain compared to the price other carriers paid for their chunks of airwaves.
Now with Softbank taking control of Sprint Nextel and then T-Mobile and MetroPCS combining, it has left fewer players for Dish to partner with. The time the FCC has taken on ruling on Dish's airwaves has really cut into Charlie's partnership deals he can make.
Clearwire (NASDAQ: CLWR) had been rumored as another possibility, but now with Sprint taking controlling interest of Clearwire that seems less likely. Clearwire had looked like it could have Dish and Sprint as suitors which made its stock rocket off from the low $1.30's to $2.90's. Now that Sprint Nextel (NYSE: S) has tied Clearwire's hands and is pulling the strings telling them when and how they are going to do things it is very unlikely that Charlie will want to work with a company that is controlled by another company causing the stock to fall back down to the $1.90's.
At a recent news conference Charlie Ergen said that T-Mobile / MetroPCS and Softbank / Sprint are still in the running to be potential partners. He also mentioned he would not sell the spectrum unless there is no other option. Charlie's view on Verizon is that they made a deal with his arch rivals so there is no way he would partner with them.
With Dish being another potential wireless carrier, the duopoly of the two large carriers might have to rethink their plans. It's easy to sell mobile service at high rates when you're the only two companies in town competing. When a new and more flexible company comes along like Dish or Softbank / Sprint it will be a interesting future for the wireless industry. I currently do not own any of these stocks except for Clearwire which Im currently long. Dish has a huge potential to shake up the wireless industry all based off how the FCC ruling goes.
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