Possible Dish/T-Mobile merger could be trouble for AT&T and Verizon

Dish Network is reportedly in talks to merge with T-Mobile US, a deal that would give T-Mobile what it has been looking for: more spectrum. Dish, a satellite TV provider, has been buying up spectrum licenses for years but has not yet used its airwaves to offer cellular service. Dish and T-Mobile (owned by Deutsche Telekom) "are in close agreement about what the combined company would look like, with Dish Chief Executive Charlie Ergen becoming the company’s chairman and his T-Mobile counterpart, John Legere, serving as the combined company’s CEO," The Wall Street Journal reported. Dish has almost as much spectrum as T-Mobile and combined, the companies would have more than either AT&T or Verizon, according to a report in May by Recon Analytics. The total amount of spectrum isn't necessarily as important as the type of spectrum, as evidenced by the fact that Sprint has more than market leaders AT&T and Verizon. But Dish's holdings could fill a gap in T-Mobile's portfolio.

While T-Mobile has complained that the top two carriers control the lion's share of low-band spectrum -- ideal for covering long distances and penetrating walls -- Dish owns low-band licenses in the lower 700MHz range. T-Mobile owns some 700MHz licenses as well but says it needs more low-band airwaves. While a merger would boost T-Mobile's network capacity, it makes sense for Dish, too. "Dish lacks the robust broadband Internet service that cable companies can lean on to offset a declining TV business," the Journal wrote. "It also has amassed billions of dollars of wireless licenses but hasn’t built the cellular network needed to put them to use. T-Mobile’s wireless service would help address both needs."