The Market Potential for Dish Network’s Broadband Business
Dish’s broadband business
Dish Network (DISH) provides satellite broadband services through its dishNET brand. Dish’s dishNET service primarily targets rural customers with limited or no access to wireline broadband services. In 2016, Dish entered into an agreement with Hughes Communications and ViaSat (VSAT) to use their satellites to provide this service.
Dish Network elaborated on its agreement with Hughes Communications during its 2Q17 earnings call on August 3, 2017. The company stated that Hughes Communications would pay Dish Network for every sale and installation of its satellites.
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However, subscribers acquired by Dish as a part of this agreement would be Hughes-branded subscribers and would not be a part of Dish’s subscriber numbers. As a result, Dish Network expects the number of broadband subscribers acquired through the Hughes service to decline.
Dish’s broadband business and its margins
Dish Network (DISH) pointed out that it had lower margins in the broadband business and did not incur SAC (subscriber acquisition costs) for the business. The company was selling its broadband product for Hughes Communications, receiving a one-time commission in the process. As a result, Dish Network does not appear to view its broadband business as a venture that would provide the highest returns for its capital.