Dish moves to rule mobile video, upend competition

April 15 Mon Apr 15, 2013 5:47pm EDT

April 15 (Reuters) - Dish Network Corp's offer for Sprint Nextel Corp holds the promise of upending U.S. mobile video services, further stoking the deal frenzy among telecommunication companies and pay-TV providers.

Charlie Ergen, the colorful chairman of Dish who orchestrated the surprise counter-bid on Monday, said that by marrying the No. 2 satellite TV carrier with the No. 3 mobile services provider, the combined company would be able to offer consumers more.

"Obviously (the deal) would be unique in being able to offer video more robustly than the competition in part because of our broadcast spectrum. We have twice as much spectrum as anyone else," Ergen said in an interview with Reuters.

Dish on Monday outlined the benefits of the deal, including a quad-play package: customers would have access to a bundled subscription of video, data and Internet services in, as well as outside, the home.

The move is designed to capitalize on the growing popularity of smartphones and tablets, which depend on wireless carriers and Internet providers and are increasingly used to check social media sites like Twitter and Facebook, watch TV shows and YouTube videos, or read newspapers, magazines or books.

"The quad play certainly becomes relevant with streaming mobile video on the HD side," said Wunderlich Securities analyst Matt Harrigan. "It has an appeal that it didn't have before."

TWISTS AND TURNS

Japan's SoftBank Corp made an offer to buy Sprint in October. Dish's counter-offer for Sprint is the latest turn over the past year that has seen a boom of deals in a scramble for valuable spectrum.

Dish said in a presentation to investors Monday that combining with Sprint would allow it to offer bundled subscription packages unlike those from its competitors, Comcast Corp, Verizon Communications, AT&T and DirecTV .

Verizon has its own quad-play package, but it is limited in scope, reaching only about 16 percent of the pay-TV market, said Harrigan. Dish's large chunk of spectrum would allow it to increase the market size and offer bigger data plans for streaming video.

Verizon spokesman Bob Varettoni declined to comment.

"The idea that Dish can take this huge spectrum holding and pretty quickly put it to use as a mobile services product really adds a new competitor element to the landscape," said Bill Menezes, principal research analyst at Gartner.

Still, competing cable carriers have tried a different tact. Comcast Corp and Time Warner Cable sold their spectrum to Verizon last year, and in doing so, appeared to abandon any plans to offer a wireless service on their own.

As part of that deal, Verizon and the cable companies agreed to sell each others' service in markets where they don't compete.

"They declared peace," Ergen said about that agreement. "The good old boys clubbed it up together and split it up. We say, the consumer doesn't want that split up, the consumer wants that all in the same manner."

If the Dish purchase of Sprint does happen, it could prompt other media players to rethink whether they need to bolster their product offerings. AT&T Inc, for example, has been on the hunt for more spectrum, and for years rumors have swirled that it would merge with Dish.

Now, Dish's potential tie-up with Sprint turns up the heat on AT&T, which could make an offer to buy Dish, suggested BTIG analyst Walter Piecyk.

"If you are a competitor and you don't make a move it's a lost opportunity," Piecyk said.

AT&T spokesman Mark Siegel declined to comment on speculation that AT&T might try and buy Dish.

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