ANALYSIS: Dish-rupting the peace
By the end of 2012, it appeared the scene had been set for the US wireless market going into the New Year. As Richard Karpinski, senior analyst at Yankee Group, describes it: "We seemed to have settled in to a nice sort of equilibrium."
Verizon looked set to nurture its lead in LTE by increasing its roll-out, with closest rival AT&T aggressively competing to consolidate its position by closing a slew of spectrum deals. Softbank-backed Sprint looked set to take Clearwire, and in turn, its spectrum, while T-Mobile was to increase presence and power through MetroPCS. A profitable year all round, on all accounts.
Colorado-based satellite provider Dish Network has other ideas. Its unsolicited bid for Clearwire announced on Tuesday took that ephemeral state of order in the US market and blew it right out of the water.
The bid, higher than Sprint's, was certainly surprising and may have come as an unprecedented shock to the US's third largest player. Sprint's easy path to taking full ownership of spectrum-rich Clearwire was simply thought of as a prerequisite to it competing with AT&T and Verizon.
Karpinski notes, rightfully, that even if Dish, as expected, proves unsuccessful with its bid, the real story lies in the company showing its hand for the future.
For many market watchers, Dish spectrum was well and truly up for grabs in 2013. Now, it appears the company is looking to increase its presence, and indeed looking for a partner.
Sprint has the option of leaving Clearwire open as a spectrum wholesaler/hoster, but it cannot afford to be without its spectrum in its bid for market share. Dish's sweeter offer could force Sprint's hand to up its offering for Clearwire, and concede to the clamour of the Clearwire shareholders that the company is worth more, despite Softbank's insistence that it will not do so.
The question now remains: What will Dish do next? Yankee Group predicts Sprint will fend off Dish in the end, with AT&T the most likely company to acquire Dish spectrum if it goes up for sale as a result of the failed bid. T-Mobile, on the other hand, is the most likely network sharing partner, considering its position. Karpinski even throws Google into the hat as a likely wildcard partner.
Already, the US market is not shaping up as everyone thought it would. Dish's bid for Clearwire is just the first step towards a long and convoluted end game.