Industry Voices—Madden: The time has come for Dish to move
by Joe Madden |
Dish, which operates a satellite TV network, has been collecting spectrum licenses for years.
Several years ago, as Dish started to accumulate spectrum, speculating on spectrum assets seemed like a good idea. The value per MHz-POP was increasing steadily, and the government was not moving quickly to make new blocks available.
Things have changed. For multiple reasons, the big payoff has not materialized for Dish:
New spectrum has been "created" by the FCC much more quickly than anybody expected 10 years ago. In the U.S. market, we've added bands at 600 MHz, 700 MHz, 2 GHz, 3.5 GHz, 28 GHz and 39 GHz. The 3.7-4.2 GHz band is coming next. Nobody expected so many new bands to be available in 2008, when Dish started on this adventure.
The unlicensed bands have opened up. The big operators are now deploying Licensed Assisted Access, taking advantage of another "free" block of spectrum that adds capacity.
Dish bought some spectrum that is not easy to use. The H-block spectrum, for example, requires new filters in a smartphone that are difficult to manufacture. That's why Dish was able to buy this band for only about $0.50 per MHz-POP and has not been able to sell it since.
Network technology has changed. Before 2008, small cells and Massive MIMO were not available, so we looked at network deployment as a simple process of putting up macro towers and achieving blanket coverage only. In the macro-only network paradigm, spectrum is irreplaceable. But now, we have small cells and Massive MIMO, so we can boost spectral efficiency by a factor of four (from 2 bps/Hz to about 8 bps/Hz).
Two weeks ago, the FCC issued a letter to Dish, asking some pointed questions about their planned NB-IoT network build-out. NB-IoT has a channel bandwidth of 200 kHz, but Dish has 53 MHz in multiple licenses. Reading between the lines of the FCC questions, it seems clear that they're not satisfied that an IoT network using 0.4% of the spectrum justifies an extension of multiple licenses.
In real estate, when limited land is available, prices go up. Speculators can collect big profits if they buy just before the supply of new land runs out. Dish's failure was that they didn't anticipate new spectrum assets coming out, and they didn't anticipate new technologies that created the equivalent of "high-rise" buildings on existing real estate properties. Now they find themselves surrounded by skyscrapers, and they are proposing to build a small shack on their large property.
Dish is hoping to put off a major investment as long as possible, hoping that somehow the value of spectrum will head north again. I would advise them to give it up. It's now cheaper to "densify" the network instead of "sprawling" across the spectrum. This is a familiar picture in San Jose, where it's cheaper to build three-story condos on a single acre than to buy the vacant lot next door.
Now, it's time for Charlie Ergen to make a deal with a cable company. If Dish waits another two years, the cable providers may be too weak, due to accelerating "cord cutting." He should know about this; it's happening in the Dish television business also. The cable companies need to push hard into the mobile market with their own LTE/5G networks before they lose their customers. Comcast, Charter and Cox need readily available spectrum without waiting for the next auction. The time is now, Mr. Ergen.
Joe Madden is principal analyst at Mobile Experts LLC, a network of market and technology experts that analyze wireless markets. The team provides detailed research on the Small Cell, Base Station, Carrier Wi-Fi, and IoT markets. Madden currently focuses on trends in 5G, IoT, and Enterprise markets for wireless infrastructure. Over 26 years in mobile communications, he accurately predicted the rise of Digital Predistortion, Remote Radio Heads, Small Cells, and the rise of a Mobile IT market. He validates his ideas with mobile and cable operators, as well as semiconductor suppliers, to find the match between business models and technology. Mr. Madden holds a physics degree from UCLA. Despite learning about economics at Stanford, he still obeys the laws of physics.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.
wireless spectrum Charles Ergen Dish Network Mobile Experts
Joe Madden