EchoStar’s Ace: Content relationships

RCR Wireless News
Look at a map of the lower 700 MHz E-Block auction results and one thing is clear: Dish Network Corp. and Qualcomm Inc. were battling for a nationwide swatch of spectrum ideal for broadcast services.

Neither got a nationwide footprint, but Dish just may have ruined MediaFLO USA Inc.’s chances for a more immediate nationwide expansion of service. The company bid nearly $712 million and won 168 licenses for 6 megahertz of unpaired spectrum in channel 56 throughout most of the country except for major cities in California, Arizona and the Northeast, which Qualcomm picked up. Dish’s license holdings cover 76% of the U.S. population.

“TV equals in today’s view a whole mess of channels,” Bill Ho, a senior analyst at Current Analysis, told RCR Wireless News. “You need more content and people have got to relate to it.”

MediaFLO USA Inc.’s network currently operates on channel 55 on which the Qualcomm subsidiary says it can support 20 live TV channels and a variety of other services such as audio and datacasting.

Many analysts expected Qualcomm to go after channel 56 to bolster its capacity. Although it’s not a technical requirement, having adjacent spectrum to its current holdings would be ideal.

“One would think that if you were going to expand your empire and your channel lineup,” Ho said. “But they lost it to EchoStar (Dish’s former name).”

By looking at the rounds of bidding, Ho determined that Dish won the bulk of its licenses early on, while Qualcomm outbid it on the more heavily contested licenses in later rounds. So while Dish may have thwarted Qualcomm’s attempts at a bigger channel lineup, Dish also suffers from not having nationwide coverage.

“Echostar definitely had a plan to make national availability,” Ho said.

But the real question is what would Dish do with the spectrum?

Many expect the company to leverage its mobile capabilities through Sling Media Inc., which it bought last fall for $380 million. Since the company sold its first SlingBox in mid-2004, it has expanded its reach into mobile with SlingPlayer Mobile, a mobile application, which it has now developed to work on most mobile operating systems.

Nic Covey, director of insights at Nielsen Mobile, agrees that SlingPlayer Mobile would be the obvious push, but suggested that the company could make a wireless play with its existing offerings.

“The opportunity is there for them to use that space to further activate SlingPlayer Mobile,” he said.

Despite what some may view as a slowing revenue generator, on-demand continues to be important for Dish, Covey said.

“For them it’s not necessarily just the revenue of an on-demand strategy,” he said.

“I think there are probably some creative ways that they can use it to execute on their on-demand,” he said. “I don’t want to underestimate the importance of that ondemand capability to them.”

Although he doubts the company will do both with the spectrum. “They can afford to do one of these things and make a big splash,” Covey said.

Don’t count anything out for Dish, said Current Analysis’ Ho.

“You can’t count out the technology,” he said. “Technology may work — it’s just a matter of, you know, you can make technology for everything.”

Content connections

Without knowing Dish’s plans it’s difficult to gauge the cost of a wireless network buildout, but it won’t come on the cheap, Ho said, adding that it’s current infrastructure comes with heavy cost as well. “Wireless is where everybody is going,” he said.

“Using satellite resources to deliver content is expensive,” Ho said. “Having another means of delivery, a broadcast mode, it could work.”

He adds that Dish’s current relationships are the most compelling aspect of any potential play in wireless. “The whole thing is that they’ve already got the content relationships,” he said.

Rights clearances and other usage limitations have been a major sticking point for entertainment companies looking to push content to mobile devices. Mobile TV providers have been equally perplexed by the bottleneck in content availability.

Indeed, Dish may never fully utilize the spectrum before it gets picked up by a larger competitor. Two months after EchoStar Communications Corp. purchased Sling Media, rumors surfaced that AT&T Inc. was eyeing the company for $29.5 billion.

“AT&T does have deep pockets,” Ho said, but even that acquisition would cause many to pause.

Dish and Qualcomm declined to comment for this story.