While EchoStar’s failed bid for Sprint focused attention on the maverick CEO’s mobile strategies, what may really be afoot with Ergen’s amassing of wireless spectrum is something much bigger than a me-too mobile service. Looking at the combination of datacenter infrastructure, broadband terrestrial spectrum and advanced technologies that EchoStar has at its disposal, it’s not hard to imagine what a smart entrepreneur with a stable cash-cow satellite TV service to backstop his plunge into the unknown might do with such assets to break out of the bundled-channel subscription strait jacket.
The cable side of the MVPD business is in a state of growing apoplexy over the perceived constraints of pursuing the traditional pay TV service model. On the one hand, thanks to recent statements from cable mogul John Malone, there’s much talk about amalgamating MSOs to where a couple of giants would be left to throw their weight into bending programmers to their will, negotiating lower prices and new ways of packaging content to meet consumers’ demand for better value. At the same time, cable executives like former Insight Communications CEO Michael Willner are suggesting operators would be better off fashioning a business model built around use of their broadband pipes and the abundance of content available from Internet suppliers.
What makes Ergen an intriguing subject for speculation in this scenario is the fact that, unlike the cable guys, he could have his cake and eat it, too. In other words, rather than simply using terrestrial broadband to deliver a TV Everywhere version of his Dish content to connected devices, he could develop a full-blown wireless infrastructure with sufficient bandwidth and national coverage to pursue the type of business Willner is talking about while keeping the traditional pay TV business going for as long as it takes either to build the new business or to demonstrate it’s a non-starter.
A year and a half ago Ergen tried leveraging his technology and storage infrastructure through EchoStar Technologies to provide a portfolio of products and support services for others in the multiscreen service market. This wholesale TV Everywhere service, dubbed Aria, was specifically targeted to smaller operators and brought into play the benefits of the set-top Slingbox technology as a way to circumvent licensing hassles in getting an OTT-based multiscreen service to users outside the home.
While EchoStar Technologies pulled back from its pursuit of customers in the cable business, it has continued to leverage its resources to support its Dish TV Anywhere service, which now uses Sling with the Hopper DVR to deliver live and recorded programming to all types of devices, including downloading of programming to iPads for viewing without requiring a live broadband connection. But all of this is just an extension of the Dish pay TV service.
As evidenced in its cloud-based Aria strategy, EchoStar has an infrastructure and technology platform in place that can support an entirely new type of broadband TV service if it so chooses. Resources include a massive data center, national MPLS (Multiprotocol Label Switching) infrastructure and software systems capable of supporting cloud-based VOD and network DVR with universal navigation across legacy linear, VOD and OTT content on all devices.
The missing ingredient to all this, namely a terrestrial network that could deliver a broadband TV service as an exclusive component with an EchoStar labeled broadband connection, could be implemented wirelessly if Ergen can aggregate enough spectrum. Under an FCC ruling, 40 MHz of his satellite spectrum in the AWS band has been freed up for mobile service. He could get the rest of what he needs if he’s successful in contentious efforts to acquire L-band spectrum from LightSquared, Inc., which is in Chapter 11 bankruptcy proceedings.
Press reports detailing Ergen’s pursuit of a mobile broadband partnership with Google as well as the failed attempt to buy Sprint make clear he is determined to find a way to operate terrestrially over his own network. What he might do with that network should he succeed at acquiring spectrum could prove to be a bellwether in the evolution of the pay TV business.