Dish focused on things, not people, during incentive auction: Ergen

Dish Network focused on buying spectrum licenses in urban areas during the FCC’s incentive auction, CEO Charlie Ergen said Monday. And it is placing a high priority on the potential number of connected devices—not people—as it prepares to build a network dedicated to the internet of things.

Dish spent $6.2 billion to buy licenses during the auction of 600 MHz that wrapped up last month, far exceeding the expectations of most analysts. Dish earlier this year outlined plans to build an NB-IoT network to provide connectivity to a wide range of devices other than traditional tablets and smartphones.

“We were pleasantly surprised that as the auction went on it became clear—at the end of the first round, at the second round—that the price was not going to go up it was going to stay sub-$20 billion based on our projections,” Ergen said during the company’s first-quarter earnings call Monday. “And we felt that was probably in excess of 50 cents on the dollar in terms of the real value of the spectrum. So we were then able to not only get our nationwide spectrum but also then to stay in the bigger cities where we felt particularly the internet of things would be beneficial.”

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Indeed, the auction fetched $18.2 billion in total proceeds, falling far short of analysts’ estimates that had ranged from $25 billion to as much as $80 billion. T-Mobile was the only company to bid more than Dish, committing to spend nearly $8 billion on the airwaves.

Dish is eschewing the traditional MHz/POP spectrum valuation, Ergen said, looking instead at the potential value of megahertz per device.

“Based on the population, every analyst always quotes megahertz per POP, but the last several auctions we’ve kind of looked at where we think things are going. We looked at it (as) megahertz per thing, not megahertz per POP,” Ergen said. “So whether it be streetlights or heart monitors or drones or whatever, we’ve always looked at it as megahertz per thing. And when you do that, obviously, the more densely populated cities are quite a bit of a bargain discount, if you believe our strategy is right.”