By Alina Selyukh
WASHINGTON Dec 4 Satellite TV provider Dish
Network Corp will compete against smaller wireless
carriers and individuals when the U.S. Federal Communications
Commission auctions spectrum on Jan. 22, the agency said on
The FCC will auction the so-called H Block frequencies in
the first opportunity the regulator has offered companies to
acquire ownership of new airwaves since 2008.
Dish, a company known for aggressive moves, is the largest
and most formidable of the 34 applicants who indicated an
interest in bidding for ownership of airwaves in some geographic
areas, according to new FCC documents.
The H Block spectrum is adjacent to some frequencies already
owned by Dish, meaning the satellite TV company could end up in
control of a valuable contiguous slice of airwaves.
Dish, co-founded and run by Charlie Ergen, has been aiming
for an expanded role in the wireless industry. Acquiring the H
Block spectrum promises to be a critical boost, although what
Ergen plans to do with it remains a mystery.
"Clearly he thinks that's going to open doors for him," said
Macquarie analyst Amy Yong, who estimated that securing H Block
spectrum would add at least $3 per share to Dish's value net of
costs. "It creates a lot of optionality for him. That's really
the right way to look it."
Earlier this year, Dish had pledged to bid $1.56 billion for
the spectrum if the FCC gives it more flexibility on how fast
and how to use some of the spectrum it already has.
The FCC has yet to make such an agreement, but that amount
became the auction's base price, meaning the auction will not
close until the FCC has raised $1.56 billion.
The auction's proceedings are required to help fund a new
network for emergency communications. The applicants now have
until Dec. 18 to make certain upfront payments that will
indicate the scope of their participation in the auction.
Other than Dish, applicants included Mississippi-based C
Spire, Virginia-based wireless company nTelos Holdings Corp
, other regional and rural providers and several
individual investors, documents showed on Wednesday.
Sprint Corp and T-Mobile US Inc recently said
they had decided not to participate in the auction.
The top two wireless providers Verizon
Communications Inc and AT&T Inc were not expected
to be interested in the H Block spectrum.
On Dish's quarterly earnings call in November, Ergen said he
would look for ways to use wireless spectrum to enhance Dish's
video offerings rather than on areas such as voice, data and
Otherwise Ergen said that he was keeping all options open,
from the possibility of a purchase of No. 4 U.S. mobile operator
T-Mobile US, to forging a partnership, building a
wireless network or even selling Dish's spectrum.
"Whatever they end up doing, whether they merge or do some
network sharing agreement or offer their own service in some
capacity, it will have more value if it's contiguous," said
Stifel analyst David Kaut.
Dish, which applied for the auction as American H Block
Wireless LLC, declined comment on Wednesday.
Dish's potential entry into wireless has captured the
imagination of investors who see a chance for it to transform
into something other than a pay TV provider, less beholden to
the rising programming costs that bruise its margins.
Earlier this year Dish fought, and lost, a battle with
SoftBank Corp to take over Sprint and smaller operator
Clearwire Corp. It is now also fighting for the spectrum owned
by bankrupt LightSquared, submitting a baseline bid of $2.2
billion for them in the auction expected later this month.