Analysts See Latest Clues for Dish Network Online Video, Broadband Services

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"There is clearly an over-the-top service on the horizon" that would use Blockbuster content and compete with Netflix, says Wells Fargo's Marci Ryvicker after a Monday filing with the FCC.

NEW YORK - The master plan behind the recent acquisitions of Charlie Ergen's Dish Network, including video rental firm Blockbuster and a broadband network provider, is only slowly becoming clearer, but there are some latest clues, according to analysts.

The satellite TV operator on Monday filed a joint application with previously acquired mobile broadband network operator TerreStar with the FCC requesting the transfer of the latter's licenses to Dish and a waiver of the FCC's so-called "integrated service" rule.

"This would allow Dish to offer a fully terrestrial broadband service in addition to an integrated terrestrial-satellite broadband service to at least some consumers," said Credit Suisse analyst Stefan Anninger.

Analysts expect Dish will use he network to provide video services, including mobile video services.

At least one analyst saw Monday's FCC application as latest evidence that Dish will look to use Blockbuster content for a broadband video service a la Netflix. "There is clearly an over-the-top service on the horizon," said Wells Fargo's Marci Ryvicker in her report entitled "A Glimpse Into The Grand Plan." "As stated in the filing, Dish expects that the consumer equipment will include broadband-capable tablet computers, among other devices. Once the network is deployed, consumers will be able to use their devices for high-speed Internet access as well as a myriad of IP-based, over-the-top applications, including video."

Dish's filing said that it plans to use both Blockbuster and 700MHz spectrum it has acquired. "We get the sense that of the two, Blockbuster is the more important asset here," Ryvicker suggested.

Sanford C. Bernstein analyst Craig Moffett explained the importance of the Dish application this way: "Dish Network's transformation from satellite operator into wireless something-or-other took another step closer to reality."

In terms of building out  broadband network, he said that "to be sure, there is no commitment here for Dish network to go it alone." A partnership strategy is the most likely avenue based on past comments from management, he argued, citing potential partners such as Sprint/Clearwire, Leap Wireless and MetroPCS.

Moffet's conclusion was that there is cost risk. "Dish CEO Joe Clayton has repeatedly indicated in recent interviews that Dish Network is committed to being a “major player” in wireless – a strategy that he has confirmed again and again will include voice, video, and data," he said. "To us, that sounds expensive."

Anninger also said that "at this point, our overall view of the. [FCC] application is neutral to slightly negative." His concern is that the FCC could require Dish to build a costly network.

But given a lack of clarity from Dish about its plans and "the complexity of the document and the legal and technological expertise required to perform a thorough analysis," he said he has not yet finalized his analysis.


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