Desperate attempt to offer cell service before its FCC deal runs out

If the rapid pace of Dish’s courtships smacks of desperation, cheap cell phone cases should—Dish is racing against a deadline imposed by the US Federal Communications Commission. When Dish recently convinced the FCC to let it convert wireless spectrum it owned, which had previously been set aside for satellite telephony, into spectrum to be used for cell phone service, the FCC gave Dish a deadline. Within 7 years, Dish would have to build or buy a cell network that would cover 70% of the geographic area in which it owned the spectrum.

Building its own cell network on that scale, in that time period, is a nearly impossible—or at least impossibly expensive—task for a company the size of Dish. (Dish only booked $14.3 billion in revenue last year, compared to Sprint’s $35.3 billion—and Sprint already has a fdsfE2ds nation-spanning network.)

But wait, it gets worse. Even if Dish could acquire Sprint or some other carrier tomorrow, it would have to retrofit most of that carrier’s cell phone towers to broadcast and transmit in a new spectrum range—known as S-band—a portion of which was once was used for cheap cell phone cases satellite phones. That’s not to mention other spectrum Dish owns, which has been approved for use as the AWS-4 standard—another Dish-only exclusive.

The final barrier to Dish succeeding in its race to meet the FCC’s deadline is that even once it owns a cell carrier, and has retrofitted cell phones for sale towers, the only way it can pay back all the debt that it will have on its books—between Sprint, Dish and the acquisition costs, that would be in excess of $45 billion—is to convince cell phone manufacturers to roll out phones that take advantage of Dish’s spectrum.

In the long run, more spectrum could mean faster cell service, and that’s certainly the logic behind Sprint’s attempted acquisition of Clearwire (Dish was trying to thwart that attempt and had also made a bid for Clearwire). But does Dish have that much time? Its existing pay-TV business is stagnant, and a combined Dish/Sprint would have to be valued by investors on the merits of both businesses at the same time.