DISH Network Bets Big on Spectrum

Results of the latest spectrum auction by the U.S. Federal Communications Commission (FCC) reveal a surprise big bidder – DISH Network (Nasdaq: DISH). In the auction of mid-band 3.45-GHz spectrum, DISH, bidding as Weminuche LLC, spent $7.3 billion on 1,232 licenses. Which prompts the question, What is DISH going to do with all that spectrum?

Only AT&T (NYSE: T) bid higher in the recent FCC Auction 110, spending $9 billion for 1,624 licenses. T-Mobile US (Nasdaq: TMUS) bid $2.9 billion for 199 licenses. Verizon abstained.

The question of spectrum deployment has been hounding DISH for years now. Even prior to the T-Mobile/Sprint merger, in which DISH was encouraged to become a fourth wireless competitor in the U.S., DISH was known to have spectrum in reserve. Skeptics claim that DISH has been hoarding spectrum for years in order to sell or lease it as needed to competitors at premium prices.

That chestnut resurfaced recently, as AT&T (NYSE: T) and Verizon (NYSE: VZ) faced delays in releasing their C-band 5G networks. Concerns by the Federal Aviation Administration (FAA) that C-band’s 3.7-GHz band is too close to the 4.2- to 4.4-GHz used by commercial airplane altimeters pushed back those carriers’ 5G rollouts from January 5, 2022, to January 19. There’s been speculation that DISH could use situations like this to offer to lease spectrum to tide its competitors over until full C-band deployments are approved. DISH chairman Charlie Ergen, confronted last November with questions about his willingness to lease some of DISH’s spectrum to other carriers, replied that DISH is open to wholesale arrangements.

Meanwhile, Back in Las Vegas…

Accusations of DISH as spectrum hoarder have been abetted by the provider’s apparent inability to activate its own 5G network. Despite being under regulatory pressure to meet commitments of coverage in the U.S., DISH has so far failed to deliver the wireless goods. An initial rollout planned for Las Vegas in the fourth quarter 2021 failed to materialize. Naysayers have accused DISH of being reluctant to do any more than the bare minimum it needs to to satisfy its regulatory requirements without overspending, while focused on its wholesaling hopes.

But there are indications that DISH may be on track to launch its wireless network. Early this month, DISH promoted John Swieringa to the post of president and COO of DISH Wireless, reporting to chairman Ergen. And during an earnings report last fall, executives were clear that DISH not only plans to meet the 20% U.S. wireless coverage mandated for this year by the Justice Department, but to make the other 70% available, as originally promised, by June 2023.

"I am excited to lead and further integrate our wireless strategy, deployment and operations efforts," said Swieringa in a statement. "We have a significant opportunity as we prepare to commercialize our wireless investments and deliver value to our customers, company and shareholders." [Emphasis added]

DISH at a Crossroads

Clearly, DISH has a lot to prove as a serious 5G contender, and its recent spectrum acquisitions raise the stakes. Will the company move toward a future as a spectrum wholesaler, or will it fulfill its stated mission to become the fourth largest wireless carrier stateside?

There could be yet another fork in the road for DISH. The New York Post reports that a long-anticipated merger between DISH and DirecTV is back on the table, with private equity firm TPG bucking for the merger. TPG owns 30% of DirecTV; AT&T retains the rest.

Would a merger with DirecTV further distract DISH from its 5G rollouts? And if not, does that point to a lack of commitment to full-bore 5G on DISH’s part? A few months should reveal DISH's direction.