Dish and Sprint: Can they really deliver on a 'unicast' vision?
If successful, Dish and Sprint could untether businesses and homes with a treasure trove of wireless spectrum. The problem: The "if" in Dish and Sprint's potential success may be as tall as a wireless tower.
Dish Network is proposing a $25.5 billion bid to trump Softbank and land Sprint all on a vision that revolves around network unicasting and connecting people to content home and away. If successful, Dish and Sprint could untether businesses and homes with a treasure trove of wireless spectrum.
The problem: The "if" in Dish and Sprint's potential success may be as tall as a wireless tower.
Here's the technology vision in a nutshell:
On a slide that vision makes some sense. However, so much of that vision depends on bundling. Can a No. 3 pay TV player and a No. 3 wireless company in the U.S. really forge a No. 1 powerhouse?
Dish chairman Charlie Ergen said on a conference call on Monday:
We've obviously been an innovator, from the first DVRs, now the award-winning Hopper with automatic prime-time recording -- Sling, we've been a disrupter. We've been a builder in terms of very complex assets, launched over 15 satellites, call centers and so forth, a nationwide installation network. So, these things can't be built over night. It's taken a lot of years to do that, a lot of expertise here and very complex situations. But what's really exciting about this is the future, and we can run lots of numbers and lots of ratios and so forth, but what really -- you've really got to take a step back and look at what's the future going to be? And this combined Company is going to take advantage of that future.
And how long until the Dish revolution occurs? Here's Ergen again:
Well some of it would be almost immediately envisioned, right. Obviously we could combine your video subscription and your mobile subscription together. But it would take -- it probably would take two or three years to really instill the vision where you would have a quality of service that you could count on and you would know for example that if you had your home video and you wanted to watch it outside the home that you could in fact watch it and you wouldn't pay any more for it. And of course some of that has to do with programming opportunities for our programming partners, where they can get additional eye balls outside the home and working with them in a way that makes sense.
For example, one of the great opportunity is advertising, where the Hopper in your home is pretty smart, knows what you're watching, and we can pull very specific ads to you. But when you get outside the home with the smartphone, it's even smarter. It knows where you go on the web, it knows who you call, it knows physically with GPS where you are. In the future that phone is also going to be your wallet, so it knows what you spend money on. So when you combine those two things together, there's a lot of opportunities for our programming partners and a lot of opportunity that's probably not in this model from an advertising perspective. But long story short, you probably -- almost immediately we could do maybe 50% of where it's vision is, and it probably take two or three years to get to the end result.
But there are a few caveats. Ergen noted that Dish/Sprint won't top FiOS in densely populated areas. In rural areas, the TDD-LTE can be the broadband highway to the home and small businesses.
Will this wireless as broadband highway plan work? Perhaps. But a lot has to go right. Meanwhile, Dish has to win over Sprint. Softbank could also counter. Some analysts expect Dish and Softbank to even team up. Macquarie analyst Amy Yong said in a research note:
We expect SoftBank will likely raise its bid for Sprint to $7.50+ and tender for more than the 55% of the stock currently proposed. SoftBank would be our favorite to prevail at the end of the day. However, it is also possible Masayoshi Son and Ergen could come to some type of network and content JV in which Dish would own a minority stake in Sprint with SoftBank as the controlling shareholder.