Dish-Sprint merger may bring new bundles, deals

Dish has made a $25.5 billion unsolicited offer for Sprint, though the carrier currently has other merger plans. CNET breaks down what it means for you if a Dish-Sprint deal happens.

Dish founder and Chairman Charlie Ergen. Screentshot by Dan Farber/CNET

Consumers may potentially get an even bigger price break if Dish is able to snap up Sprint Nextel.

Dish's $25.5 billion unsolicited bid for Sprint certainly adds a wrinkle to Sprint's existing merger plans with Japanese wireless carrier SoftBank. But a deal with Dish may be a boon to consumers, particularly ones looking for a mix of video, mobile, and Internet services.

A combination between Dish and Sprint means the two could bundle satellite-TV and mobile service together. In select markets where the telecommunications and cable providers don't have a strong presence -- particularly in rural areas -- Dish could tack on a fixed broadband service. All of those could be bundled together for bigger savings for the consumer.

"There's a lot of opportunities for bundling," said Phillip Redman, an analyst at Gartner.

Beyond saving money, consumers get the benefit of paying one bill for multiple services, he added. The combined company would better compete with Verizon and AT&T, which already offer these multiple services.

Dish's satellite-TV business is known for its willingness to go aggressive on pricing, and Dish founder Charlie Ergen could bring the same the kind of direction to Sprint. Sprint isn't known as the low-cost service in the wireless industry. (T-Mobile has claimed that title with its lower-priced, no-contract plans.) Instead, Sprint focuses on its unlimited-data offering as its key selling point.

Under Dish, that unlimited offering could expand beyond phones and includes tablets and other mobile devices.

"With our extra capacity and Sprint's modernizing of its network, we can see what we can do for customers," Ergen said during a conference call.

Ergen quickly hedged on the idea of broadening the unlimited plan, noting that it would ultimately be up to the Sprint team to determine if it was feasible with Dish's additional spectrum.

Ergen also downplayed potential price breaks, saying that people should be focused less on the price and more on the seamless delivery of different services.

But the fact that he's entertaining the idea of broader unlimited gives some indication to how he wants to pursue his competitors. Throughout his career, Ergen has shown a willingness to undercut rivals or offer unique services in its attempt to take share from larger rivals.

"He's really serious about getting into the wireless business," said James Moorman, an equity analyst at Standard & Poor's.

Dish, for instance, has not only offered a lower-priced service than DirecTV, but it has offered more bells and whistles in the form of its well-received Hopper digital video recorder. (CBS, which owns CNET, is currently in active litigation with Dish over its Hopper DVR.)

Dish, however, has also dealt with a reputation for poor customer service over the years, though its image appears to have improved more recently. It ranked higher than DirecTV and other cable providers in the last American Customer Service Index.

With the wireless industry quickly boiling down to a game of coverage, Sprint needs to consider unique services to better stand out from the pack. Redman said Dish and Ergen can bring that kind of different perspective, adding that unique video services may give Sprint an edge.

"Sprint needs differentiation," he said.

While Dish brings a lot "to the party," as Ergen put it, the company lacks a management team with the expertise to capitalize on the opportunity, according to Jonathan Chaplin, an analyst at News Street Research. He noted that SoftBank's leadership has experience and deep pockets needed to turn a struggling business around, two things Dish lacks.

But Dish's experience with dealing with licensing agreements and movie and television studios will also come in handy as more of that media starts to land on Sprint mobile devices.

SoftBank, of course, also has a reputation for competing aggressively on price. And few believe that it will stay still and watch Dish snatch Sprint away from the company. Regardless of which company takes over, consumers are likely to see better deals down the line.

But the additional possibilities that come from Dish's video capabilities mean consumers should be rooting for a Dish-Sprint deal to ultimately win out.

Updated at 11:07 a.m. PT: to include a comment from an analyst.

 

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