DISH - Dish Network

[changegonnacome]

I dont see anyone really being interested in getting into the acquisition & capex cycle required.........Dish is the more I think about it goosed.....they have to try and build out this asset as dumb as it is to do so.....to not would be for Charlie to admit he burned billions of dollars on spectrum............the only viable plan I can see is that this thing gets stood up and Dish/Charlie pray that were still in ZIRP world in five years time and they've somehow managed to demonstrate this 4th captive carrier can generate some $Xbn dollars of OFCF and some desperate for 'infrastructure' PE firm pays up as if it was a youtube/instagram/tiktok toll road collecting an in perpetuity toll on the the lowest earning quartile of the American population. 

Everyone you've named there Amazon, Comcast, Google can achieve their strategic goals without actually owning the pipes i think...............connectivity has evolved such that even the lowest quality network, say Tmobile, provides a 'good enough' service to load your favorite YouTube or TikTok video quickly......one can argue that anything above 10mbps sustained, LTE speeds, is overkill for 99% of tasks performed on a cell phones today perhaps future capabilities (AR/VR) will require more but not today or over the next few years from what I can see.........connectivity has improved so much from the GPRS / 3G days where it really did matter who your provider was to a point where the challenge for the three carriers now is sufficiently differentiating themselves from each other in a meaningful & demonstrable way such that consumers can point to X vs Y difference. Verizon has this slightly today where it can seem to rightly claim that you're less likely to see a 'No Service' sign with them than any other carrier as you move around the US.....I'd argue this might be the last remnant of pricing power/ differentiation left in this commodity business...and wealthy people are willing to pay 20-30% more over T/ATT to have this covered.

Put simply, excepting slightly the above, cellular connectivity has become a true commodity product with only the high capex/spectrum barriers to entry protecting the big three from bloodbath type pricing.

In regard to the three companies you mention Amazon, Comcast & Google I just dont see the need:

Amazon - cant see what advantage owning a captive cell network might bring to them. Becoming an MVNO provider and bundling a Prime Cell service may be a move in the future to reduce Prime customers churning out but right now that is simply not a problem. Amazon is in the Prime business and would only own something, with high capex demands, that provides exclusivity & customer acquisition benefits (see MGM).......cell service as I posit above has turned into a commodity product

Comcast/Charter - fixed mobile convergence is a big trend in Europe where for example Liberty Global is driving the FMC mergers........its a very different market.....being a cell provider is brutally competitive in Europe with usually a national incumbent with legacy monopoly power from the copper days beating you to death + aggressive wholesale MVNO deals mandated by regulators. The folks in V, T & ATT should wake up every day and thank baby jesus they aren't operating in Europe. Pairing together with a cable provider might be the only way to rational pricing/profits in those markets where broadband speeds can still provide differentiation and by bundling you can increase ARPU inside larger wallet share while increasing NPS and lowering churn. The cable/cell footprint overlap in Europe also makes FMC a sensible approach there....Virgin Media in the UK for example reaches at least a third of the country c.22m people......Comcast/Charter just dont reach the same proportion of the population (what less than 15% of US pop across both) or land mass of the USA which limits the synergies in owning a cell provider outright and cross selling.......the same FMC benefits - bundling, lower churn, higher NPS......can be provided by an MVNO deal just with poorer economics than Europe

Google - Google Fi MVNO is achieving i think whatever strategic aim Google has with the product...........endangering their Android operating system duopoly by vertically integrating a captive cell carrier into that ecosystem is just a dumb move especially as anti-trust noises ramp up

Some left field scenario for this cell business and Dish legacy outside of PE scenario above is that things get so bad in the Sat TV land and wireline business & regulators are so desperate for a No.4 competitor to T/V/ATT that they allow a merger of misfit assets like Directtv, Dish and who knows Centurylink/Level3 to form some kind of mutant connectivity/legacy TV business that might have enough firepower to be sustainable. We'd be in cloud cuckoo land by then I think.

Edited June 1, 2021 by changegonnacome

[dwy000]

Yeah.  That.