Could DISH (DISH) Partner with Google (GOOG) in Wireless? Maybe...

November 19, 2012 12:40 PM EST
DISH Network (Nasdaq: DISH) shares are seeing some pressure on a largely favorable trading session Monday amid reports it has been pulling out all the stops in making a move to wireless communications... and none appear to be taking hold.

The WSJ said that DISH secretly made an $11 per share bid for MetroPCS (NYSE: PCS) last August, a sign that CEO Charlie Ergen and company were getting more serious about breaking into the industry. (The offer was declined by MetroPCS, saying it undervalued the company. Ergen said it's recently improved stock price made it difficult for DISH to submit an "acceptable" offer...usually not a good negotiation tactic.)

However, Ergen recently commented that the effort is becoming "increasingly risky."

Some speculation has surrounded DISH and whether or not a merger deal with DirecTV (Nasdaq: DTV) might make sense and Ergen has even hinted at it. One key aspect for any deal is the Federal Communications Commission (FCC) decision over DISH's spectrum holdings, which is valued in the billions of dollars range. Currently, Ergen is petitioning the FCC to allow use of the spectrum, which was acquired for satellite communications purposes, for terrestrial cellphone traffic. The FCCs concern is over whether use of the spectrum for different purposes will interfere with a neighboring spectrum band.

That said, the FCC might be close to approving the new spectrum use with one overhang: connectivity. According to the WSJ, DISH might be able to use the spectrum for its new purpose, but would have to do so at a lower-power range. That means call service would be worse than at a higher power range. Ergen has stated that the caveat would reduce DISH's "uplink" spectrum by as much as 25 percent with an additional 25 percent impaired due to interference.

Acquisitions in the tightly-controlled communications market are largely limited, meaning DISH might seek a partnership to break into the segment. Whispers have DISH eying a partnership with Google, Inc. (Nasdaq: GOOG).

Given that Ergen himself has said wireless service is "vital" to the company, investors will be paying close attention as this one pans out. Shares are down 1.7 percent Monday.

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