The upcoming AWS-3 spectrum auction that the FCC is holding is almost over, and Dish Network may come out as a major competitor once the dust settles. Analysts think that Dish may end up with paired spectrum licenses in several major markets, putting the company in a great position to compete with both Verizon and AT&T. Several analysts think that Dish big up prices and that AT&T and Verizon both paid big money for the spectrum they won. “Some investors have argued that it is circular to apply auctions values to Dish’s spectrum, given that Dish is very likely driving much of the bidding. Not so,” said New Street analysts. “Dish is helping make the auction an effective price discovery mechanism. For any license that is won by a carrier, the winning bid is at least what the spectrum is worth (if Dish had bid again the carrier may have bid higher still). For any license that Dish wins, the bid immediately before the winning bid is what the spectrum is worth to a carrier. Some have suggested that Dish is distorting prices by bidding against themselves (Dish has three bidding entities that can’t communicate with each other during the auction). While possible, this is highly, highly unlikely.”
Dish probably didn’t spend any more than $10 billion at the auction, but if they win paired licenses in certain markets, they’ll be able to work out new deals to put the spectrum to use themselves, or even sell it off. “If Dish is a seller, Verizon and AT&T will need to buy the spectrum even more urgently,” said the analysts. “The prices in this auction show that the carriers believe they need more capacity urgently and Dish will have set themselves up as the De Beers of mid-band spectrum. If Dish intends to deploy the spectrum and sell capacity wholesale to the carriers, this business is augmented by owning more spectrum in key markets. Finally, Dish could sell just the AWS-3 licenses they acquire to the carriers at cost in exchange for interoperability across all of the AWS bands (including their AWS-4). As always, there are multiple ways for Dish to create value.”
Dish Network could be in a good position to make some serious money with their new spectrum, either by selling it or putting it to use by partnering with wireless carriers and leasing their new airwaves. Dish currently owns 10 MHz of 1900 PCS H Block spectrum and 40 MHz of AWS-4 spectrum. Verizon and AT&T are both scrambling for more spectrum, and Dish could come out of this auction with exactly what they need.