DISH Kicks "Plan B" Into Action

DISH Network (NASDAQ: DISH  ) still wants to buy either Sprint Nextel (NYSE: S  ) or Clearwire (UNKNOWN: CLWR.DL  ) . In a perfect world, the satellite company would walk away with both of its buyout targets and a fully functional turnkey wireless network.

But the company could very well end up with neither asset if Sprint ends up buying Clearwire and then jumps into the waiting arms of Japanese peer Softbank. This could very well happen (and might be the best outcome for Sprint and Clearwire), so DISH has a serious Plan B. In fact, the company just started implementing a wireless network strategy that doesn't involve winning any of these buyout bids.

Is this the next nationwide cell service provider? Chairman Charlie Ergen sure hopes so.

Regional network operator NTELOS Holdings (UNKNOWN: NTLS.DL  ) is partnering up with DISH to build a high-speed broadband network in nTelos' coverage area. That means Virginia and West Virginia, spilling over into neighboring states like Ohio and Maryland. nTelos provides the wireless towers and hardware; DISH brings some spectrum licenses to the party.

"By working with nTelos, we believe we can create a service that simultaneously addresses the mobile and in-home requirements of rural residents," said DISH chairman Charlie Ergen. This program will also serve as a test bed for larger deployments of DISH's portfolio of spectrum licenses, "with the potential to serve as a model for how we can utilize spectrum more effectively while creating differentiated consumer offerings."

nTelos shares jumped as much as 4.1% on this announcement, while DISH shares blithely followed the general market lower. But the nTelos network may end up serving as a blueprint for DISH's wireless plans if all else fails, so it's one to keep a close eye on. And you'd better believe that Ergen has his mind set on becoming a wireless player on a nationwide level -- not so much to compete with the established cell-phone services but to build a hybrid communications and entertainment platform all his own. If the future of media is all digital, then every serious broadcaster will eventually need a captive broadband service. nTelus is simply helping DISH to fulfill that vision.

DISH argues that having Softbank own Sprint would be a threat to national security. You can dial down the threat level several notches and still reach the comforting conclusion that the future is made in America. Domestic manufacturing is poised to once again become the investment driver of the world, and all because of one disruptive technology. You can uncover the three companies that will become the American Steel of tomorrow in The Motley Fool's new free report. Just click here to read more.

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  • Report this Comment On May 26, 2013, at 2:37 AM, nivegulu wrote:

    Ergen just needs to make a knockout bid of over $8 pps for 100% of CLWR (including Sprint's 51% existing stake), and that will force the Clear BOD to accept it. This will have a domino effect on Softbank's Sprint bid (SB will most likely walk away because Sprint without Clear is useless to them). The spectrum and 2.5GHz TD-LTE data revolution is just getting started.

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CLWR.DL $0.00 Down +0.00 +0.00%
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