Amazon, Dish and a Shared Vision of a Wireless 'Internet of Things'

By Shalini Ramachandran, Laura Stevens and Ryan Knutson Features Dow Jones Newswires

For years Dish Network Corp. Chief Executive Charlie Ergen has sought out deals and partnerships with just about every major telecom company, from Sprint Corp. to T-Mobile US Inc. to AT&T Inc. -- so far, to no avail.

Continue Reading Below

Now, the satellite-television mogul is turning his attention to the technology world and a new -- and somewhat surprising -- potential partner has emerged: Amazon.com Inc. CEO Jeff Bezos.

The two men -- eccentric billionaires with geek tendencies and shared interest in space and robotics -- have gotten to know each other better over the past year and have discussed a partnership to enter the wireless business, according to people familiar with the matter.

Among the ideas: Amazon could help finance a network Dish is building focused on the "Internet of Things" -- the idea that everything from bikes to Amazon's drones can have web connectivity everywhere. Another idea is that Amazon, as a founding partner of Dish's new wireless network, could offer an option for Prime members to pay a little more a month for a connectivity or phone plan, one of the people said.

No deal is imminent and it is unclear if the companies will move forward with a partnership. Dish has discussed versions of the "founding partner" concept with other technology firms, one of the people familiar with the matter said.

Amazon "is taking a walk vs. a run approach with Dish," adds one person familiar with the talks. The two companies struck deals in May that allow some Dish customers to control their set-top boxes through artificial intelligence assistant Alexa on Amazon's Echo speakers and make Dish streaming-TV apps available on Amazon Fire devices.

Continue Reading Below

An all-out acquisition of Dish by Amazon is highly unlikely, the people say.

Amazon and Dish declined to comment.

The possibility of an Amazon-Dish tie-up comes amid a swirl of deal and partnership talks in the wireless industry. Cable companies, tech giants and the incumbent telecom carriers are all trying to position themselves as smartphones and the mobile web capture more of consumers' attention, and as Washington regulators throw up new opportunities and obstacles.

Sprint Corp. was holding merger talks with T-Mobile before putting those temporarily on hold to explore a deal with Comcast Corp. and Charter Communications that could bolster those companies' plans to offer wireless service. Some industry observers think the Sprint-cable talks could push T-Mobile and its parent Deutsche Telekom AG to rekindle deal discussions with Dish after an earlier round in 2015 collapsed.

Of late, Messrs. Ergen and Bezos have been crossing paths more often. They spent time together in March at a satellite convention, where Mr. Bezos' rocket company Blue Origin LLC gave a presentation to Mr. Ergen's EchoStar Corp., Dish's sister company that builds satellite technology, people familiar with the matter said. Mr. Ergen in March also attended Mr. Bezos' secretive, invite-only MARS robotics and space conference. More recently, the two moguls met in May in Seattle, other people familiar with the matter said.

The two executives are both eager disrupters: Mr. Ergen, who had a stint as a professional blackjack player, founded Dish in 1980 to take on cable TV and in 2015 launched Sling TV, the first online live TV service aimed at cord-cutters created by a traditional pay-TV provider. Mr. Bezos has upended business models from books to media, and is venturing into food retail with Amazon's acquisition of Whole Foods valued at $13.7 billion, including debt.

Mr. Bezos is no stranger to uncertain terrain. "We look into the future and we always see an intensively competitive environment, a world that is awash in disruptive change and new technologies," he said at Amazon's annual shareholder meeting in May.

Joining with Dish on a wireless network could potentially advance the online retail giant's ambitions in a range of new businesses. It could give the company quality control over connectivity for its Amazon Dash buttons -- which allow people to reorder household goods easily -- and its Echo speaker powered by Alexa. And it could help improve Alexa's technology by putting the intelligence throughout the nodes of a wireless network, said one wireless executive who has worked with Amazon and Dish, enabling Alexa to be faster and more human-like in its responses to searches due to proximity to users' locations.

Amazon could also offer a one-way broadcast signal for Amazon Prime video on a slice of Dish's airwaves, ensuring shows and movies stream without hiccups everywhere, one person close to Dish's plans said.

It also could help Amazon's plans to operate a network of drones delivering packages to customers, wireless executives and people familiar with Amazon's thinking said. The company could "command and control" those drones and "consider real-time changes in directions or multi-stop delivery routes through messages from the network," wrote Citigroup analysts speculating about a Dish-and-Amazon partnership in the wake of a May report from Satellite Business News.

Dish has been seeking to enter the wireless business for several years as a way to diversify away from its shrinking core satellite TV business. Dish and its affiliated entities have spent more than $21 billion over the course of a decade to acquire airwaves nationwide, but Dish lacks a network to deploy the spectrum and has been on the hunt for a partner.

To meet a March 2020 government-mandated deadline to offer service on some of its spectrum, Dish is building a bare-bones, so-called "fifth-generation," or 5G, network that will cost less than $1 billion.

Citi analysts said a partnership between Dish and a technology giant like Amazon or Google could take many forms. Amazon could become a "preferred customer" on a new wireless network and commit to spending a certain amount on connectivity in exchange for a below-market rate. It could also invest cash upfront in Dish's network to help pay for the build out, in exchange for a significantly-discounted price upon the launch of the network.

In a private meeting with investors and J.P. Morgan analysts in May, Mr. Ergen indicated that he believed technology companies could be looking seriously at the wireless business, especially as the Trump administration seeks to roll back "net neutrality" rules that were meant to guard against carriers extracting tolls from content companies for better service, according to an attendee.

"They're going to have to make sure that in a world of net neutrality...being eliminated, that they're positioned so that they're not in a situation where their connectivity is clogged," Mr. Ergen said earlier in May.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com, Laura Stevens at laura.stevens@wsj.com and Ryan Knutson at ryan.knutson@wsj.com

(END) Dow Jones Newswires

July 06, 2017 05:44 ET (09:44 GMT)