Dish Network Highly Unlikely to Enter U.S. Mobile Market as "Fifth" National Provider

Dish Network arguably has for decades always approached spectrum assets in terms of options. Owning spectrum provides options, in other words. The big question about Dish Network’s mobile spectrum is how the options will be exercised.

Dish Network is in a “use it or lose it” position with respect to its spectrum. Unless the spectrum is used to support an active retail network, Dish loses the licenses. Nobody expects that to happen.

So the important subsidiary question is whether Dish Network somehow will reach agreements to deploy its spectrum actively, with a partner, or will sell the spectrum to a firm that can immediately put it to work.

Recent statements by Ergen suggest the only path Dish Network would not take is to build its own mobile network. “I don't personally see a fifth operator in the United States unless it was something like a neutral hosting where the existing carriers could use it,” Ergen said recently.

That arguably takes one possible option--Dish becoming a retail mobile provider--off the table.

There is one exception to that scenario, and that is if Dish Network decided it could partner to build its own network, but then act solely as a wholesale provider, leasing capacity to other retail providers. It isn’t clear there are sufficient customers to support that option, many would argue.

At least so far, none of the big four mobile carriers, or new providers such as Comcast, have in the past been willing to build their businesses primarily on leased facilities. The possible wild card is some new contestant that is willing to take a gamble on major entry into the U.S. mobile business using leased facilities.

That is possible, if it has not happened in the U.S. market before.

So even with a partner, it seems unlikely Dish Network would build and operate its own network.

That almost prohibitively suggests an eventual sale of spectrum. That does not preclude an equity interest being obtained by Dish Network, in at least some potential acquirers. Some might consider that an unlikely outcome as well.

Some have suggested Dish Network would entertain a sale of the whole company. Few buyers are likely to want to do that.

“In terms of spectrum, obviously we've talked in the past about a lot of optionality,” said Charles Charlie Ergen, Dish Network chairman and CEO. But the exercise increasingly is looking like a sale of spectrum to a retail provider of some sort.

“We're starting to spend a lot more time looking at 5G because you're probably, realistically when you look at our spectrum being used, it's most likely to be used in a 5G format,” said Ergen.

The problem for Dish Network is the limited pool of potential buyers. So one possible outcome is a Dish Network agreement to activate its spectrum by means of a virtually-perpetual lease agreement with a firm such as Verizon, which would then fulfill the “activated network” requirement.

What is unclear is Verizon’s desire to lease all the capacity. If not, then Dish Network might have to find one or more additional anchor tenants. Most people can think of at least a few logical names.

The point is that Dish Network seems increasingly unlikely to emerge as a “fifth national competitor” in the U.S. mobile market. One way or the other, “four” is likely to remain the number characterizing the number of U.S. national mobile providers.