Joseph Palenchar On Feb 25 2013 - 1:00am

Ergen: Dish Has Options If Clearwire Deal Fails

 

ENGLEWOOD, COLO. — “We think we have other options” to build a terrestrial wireless voice and data network if Dish Network’s proposal to buy 25 percent of Clearwire’s spectrum isn’t approved, EchoStar chairman Charlie Ergen said.

In an analysts’ call last week Ergen said, “We don’t think Clearwire is the only alternative for us,” he said during Dish’s financial conference call, but Clearwire “is the best option for us today.”

Dish has no interest in selling its spectrum if the Clearwire bid doesn’t go through, he stressed. The company has never said it would sell its spectrum if its bids for Clearwire fell through, he added.

Last month, Dish made a proposal to buy 40MHz of Clearwire’s 160MHz of national 2.5GHz-band spectrum for more than $2.5 billion to supplement Dish’s own 2GHz and 700MHz spectrum and obtain the aid of a partner to help build out its terrestrial 4G LTE cellular network.

The bid is opposed by Sprint, which owns 63 percent of Clearwire shares but doesn’t control the Clearwire board. Sprint made its own bid to buy out the shares of Clearwire that it doesn’t already own and contends it would have to approve Dish’s bid because of Clearwire’s contractual obligations to Sprint.

Ergen disputes Sprint’s assertions, saying Dish’s bid is actionable because Sprint does not control Clearwire. He also said Dish’s bid at $3.30 per share is superior to Sprint’s bid of $2.97 per share.

Dish’s bid for Clearwire would be good for all parties, Ergen continued. Cash-strapped Clearwire would get needed capital to build outs its LTE network, Sprint would get capital to aid its network improvements and LTE buildout, and Dish would likely get a partner in Sprint in helping to build out the Dish network, Ergen explained. Sprint has said it wants to share the new towers and other infrastructure that it is building for use by other carriers, he noted.

If Dish’s bid is not accepted, “Sprint is probably not a likely partner,” Ergen said. Dish’s preference “is to partner with someone in the business today,” he noted.

The most profitable use of Dish’s spectrum will be to create a mobile data, voice and video service, but the spectrum in some areas might also make sense for fixed-broadband service, Ergen noted.

Because the wireless market has matured, he continued, “we have to be better and less expensive” to take wireless share.

In general, Dish’s 2GHz spectrum and Clearwire’s 2.5GHz spectrum would best be deployed in urban areas because propagation is not as far as it is in lower bands, allowing for efficient spectrum re-use, Ergin said. Dish’s 700MHz spectrum propagates farther and generally is more suitable for rural areas, he said.

Dish has seven years to build out its 2GHz spectrum from the time it gets its 2GHz license, expected from the Federal Communications Commission in March, and it also has four years to build out its 700MHz spectrum. Dish is already testing 700MHz equipment and hopes to test 2GHz equipment sometime by late this year, Ergen said.

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