Dish Network’s announcement that it is teaming up with French technology firm Alcatel-Lucent to test DVB-SH (Digital Video Broadcasting-Satellite Services to Handhelds) mobile-TV technology on U.S. soil may indicate the satellite operator’s long-term plans for the 700-megahertz terrestrial spectrum it acquired earlier this year for $712 million through a Federal Communications Commission auction.
According to a research report from Merrill Lynch equity analysts Jessica Reif Cohen, Curtis Snyder and David Lipner, Dish’s planned DVB-SH trial with Alcatel-Lucent confirmed their suspicion that Dish acquired its 700-MHz licenses with a mobile-video service in mind, since DVB-SH can also use terrestrial frequencies to fill in coverage gaps
Other analysts have previously suggested that mobile video would be a possible use of Dish’s 700-MHz spectrum, since the unpaired licenses Dish acquired in the auction’s E-block are generally thought to be unsuitable for two-way mobile-broadband applications.
“One-way, mobile broadcast video appeared the most likely use for Dish’s spectrum, and Dish’s trial with Alcatel-Lucent would appear to affirm that Dish is following this route,” the Merrill Lynch report said.
The report noted that DVB-SH can be used in any frequency spectrum below 3 gigahertz, including UHF, L-band and S-band satellite frequencies and in terrestrial, satellite or hybrid networks, making it possible to use the UHF licenses EchoStar acquired in the 700-MHz auction to transmit terrestrial DVB-SH signals.
It also detailed some investments in L-band spectrum that have been made by EchoStar Holding, the satellite-spectrum and set-top business that was spun out of the Dish consumer business in January.
Dish hasn’t indicated that it will perform terrestrial tests of DVB-SH during its trial, which will take place in the company’s laboratories in Atlanta from May-August. But spokeswoman Francie Bauer didn’t rule out a possible terrestrial test, which would obviously require some cooperation from local broadcasters that currently occupy the 700-MHz spectrum. “That’s certainly a possibility,” she said.
Regardless of the technical feasibility of Dish using the 700-MHz spectrum to deliver mobile video, Merrill Lynch wasn’t that excited about the financial potential of such a service. Its report noted the existing competition in the mobile-video space from mobile-broadcast-TV services such as Qualcomm’s MediaFLO and the potential of third-generation wireless networks to deliver rich video to devices like Apple’ iPhone, as well as the capital investment required to launch such a service, and it placed a “sell” rating on Dish’s stock.
“It appears that Dish is embarking on a costly path into a new market opportunity against competitors with many advantages,” the Merrill Lynch analysts wrote. “We view this as a long-shot and likely to be a drag on results.”