Will Dish Get Clearwire?

A surprising counteroffer for Clearwire may upset Sprint’s big strategic plan. But it also illustrates where the real value in wireless is today.

Wireless carrier Sprint has been remaking itself big-time in recent weeks, first via an infusion of cash from Japan's Softbank (really, an acquisition), reasonably aggressive plan pricing with unlimited data still an option, and then via the initiation of an acquisition of longtime partner Clearwire (really, just picking up the 50% that Sprint does not already own), famous for its groundbreaking if unproductive and ill-advised thrust into mobile WiMAX. Clearwire is converting to LTE, of course, but the real value here is in Clearwire's spectrum at 2.5 GHz. It goes without saying that spectrum is everything in wireless, and, as I will explain, half the story here.

So all was going well here until satellite-TV provider (and, as of a recent FCC ruling, terrestrial wireless broadband carrier as well) Dish Network made a better offer (this being a matter of opinion, of course, but better in dollar terms by about 10%) for Clearwire. Clearwire gets the financing it needs, and Dish gets the LTE network it wants - and even more spectrum, again the chief asset Clearwire brings to the table no matter who the buyer might be.

But what we saw in wired communications - a shift to broadband and carriers provisioning the "Big Three" services of voice, data, and video - is also happening in wireless. It's possible that any carrier not offering all of these will over time be seen as being at a significant competitive disadvantage with respect to marketing and customer acquisition. Look at USA Mobility, for example, which is the last company in the US offering paging. Not pretty; but, then, after all, who really wants to buy just a pager these days? Whereas carriers could once prosper with a single-service strategy, economies of scale and simply creating an appealing offering today demand a lot more. And alliances and MVNOs are insufficient in achieving this goal; ownership of the facilities required, prominently including spectrum, is the only good strategy for building sustainable value for investors. So - spectrum and a broad services offering - that's what's required. Maximize ROI by merchandising lots of services across lots of spectrum. Everything for everyone.

OK, everything? Maybe not. Maybe it's really more about re-farming. I'm becoming more disenchanted with commercial TV all the time. Dish's desire to broaden its appeal and maximize the value of its assets may be an acknowledgement that broadcast TV is near or even at its limits as a business. Their Hopper product, designed to facilitate the skipping of TV commercials, is really irritating the broadcasters, but I'm sure pleasing customers despite the obvious damage to the broadcasting business model. But with closely-spaced base stations (kind of required by Clearwire's 2.5 GHz. spectrum, especially in high-density, high-demand locales) and augmented by Wi-Fi (as all cellular carriers will do), purely on-demand video could be big - and I think all of what is today broadcasting will move in that direction over time, relying on subscriptions on a more granular level and less on advertising that is now so easily hopped, I mean, er, skipped.

Back on point, though, while many have noted that Clearwire's 2.5 GHz. spectrum is less than optimal for mobile broadband applications, there's clearly still big value there. This will be an interesting battle between highly-motivated players, and the outcome could be a key element in reshaping the mobile broadband world - and beyond.

BTW - Google was reportedly (subscription required, but the headline is really all you need here) in talks with Dish about who-knows-what late last year. And Google is also reportedly building a wireless network operating in the 2524-2625 MHz. range - Clearwire territory. Curiouser and curiouser... Oh, and just for fun, check out this hilarious (read it all!) Google spoof of themselves and perhaps their wireless plans.

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