(DISH) DISH Network Gains FCC Confidence

Recently, DISH Network Corp. (DISH) received a favorable ruling from department of Federal Communications Commission (FCC) to use its existing satellite spectrum of 40MHz for setting up terrestrial wireless network.

Such a move initiated by the FCC will benefit DISH Network to deploy mobile broadband network, which in turn, will support smartphone and tablet usage, hence avoiding other inconvenient devices. Moreover, the company will able to offer triple play services (voice, video and internet), which they lacked in their product portfolio.

The acquisition of DBSD North America Inc. and TerreStar Networks Inc. for  $2.9 billion has given DISH Network 40 MHz of satellite spectrum. Such massive satellite spectrum portfolio has encouraged them to appeal to the FCC for a waiver in order to set up terrestrial wireless network in the domestic market.

With respect to the earlier proposal made by DISH Network, FCC plans to set different guidelines on usage of satellite spectrum for mobile wireless network, which is time consuming. However, FCC decided to accelerate its rule making process in order to lend strong support to the company for building its terrestrial wireless network and at the same time deal with the spectrum shortage issue.

With the growing popularity of smartphones and tablets, the demand for data usage has increased by leaps and bounds, resulting in huge demand for spectrum from the telecom and cable operators. Such shortage of spectrum has caused large carriers like AT&T (T) and T-Mobile to opt for a merger.

Similarly, the largest telecom carrier in the U.S., Verizon Communication Inc. (VZ) also entered into an agreement with Comcast Corporation (CMCSA), Time Warner Cable (TWC) and Bright House Networks to buy 122 Advance Wireless Spectrum (AWS) for $3.6 billion.

However, FCC declined the merger proposal from AT&T due to the fact that it may give rise to a duopoly market in the U.S. telecom sector while the Verizon deal still remains under scanner.

Therefore, FCC’s recent decision to free up 40 MHz of mobile wireless spectrum to DISH Network will be a major step to address the spectrum shortage issue in the U.S. telecom market. Moreover, we believe that such initiative undertaken by the FCC will also encourage higher data usage, which in turn, will drive the overall U.S. economy by means of increasing data revenue.

Currently, DISH Network has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

DISH Network Corporation is headquartered in Englewood, Colorado. The company together with its subsidiaries operates the DISH Network direct broadcast satellite (DBS) subscription television service in the U.S.
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