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Don’t Count Dish Out Yet: Page 2 of 2
Ergen estimates that it will cost about $10 billion to build Dish’s 5G network. The estimate is probably on the low side, but it would be enough to fund the build-out in most major cities. Some funding will come from Dish, some will come from leasing or selling the 600-Mhz spectrum it owns to T-Mobile, and some could come from Ergen’s pocket (he has a net worth of about $11 billion). I expect Ergen will bring in some other investors, with candidates including Facebook, Microsoft, Amazon, and Google. These companies have been building out networks to feed their huge data centers. Simply put, funding won’t be a problem.
Then comes the question of who is going to build the new network. Dish already has expertise in running a satellite network. It also already has a national fleet of installers — both employees and contractors. This fleet not only is technically savvy, but also ready to go with trucks and ladders and a desire to find a new career. With the home satellite business not being what it used to be, Dish can also attract installers from DirectTV to work on installing this new 5G network.
Getting pole rights won’t be a problem either. Most of the existing providers have sold off their towers to independent companies that are eager to resell more space. Also, last August, the FCC loosened access to utility poles to speed up 5G deployments.
5G isn’t a minor upgrade or change, but a radical redesign of cellular services. In this regard, Dish has a few advantages in not having to maintain and migrate a legacy network. Dish has the benefit of using the new T-Mobile-Sprint 4G and 5G networks for the next seven years. Dish won’t have to split its attention across legacy and future infrastructure. Even better, it’s getting an immediate upgrade as the new T-Mobile network is better than the current Boost network. Dish will expand Boost with improved service, a larger footprint, and expansion from its current prepaid-only offer.
No sunk investment or current infrastructure also means a blank canvas. Ergen and Dish leadership have expressed interest in a cloud-native network that uses simpler base towers controlled by centralized operations. The architecture, which mirrors other cloud-edge computing models, will cost less and deploy faster than traditional cellular designs. Japanese provider Rakuten has planned a 5G cloud-native network that will use equipment from Cisco, Intel, Red Hat, and Altiostar.
Perhaps the biggest barrier to launching a cellular network in the U.S. is access to spectrum. Luckily, Dish has spent some $20 billion over the past decade acquiring bandwidth. This spectrum hoarding has been controversial but now seems prescient. Dish owns a considerable amount of spectrum about as much spectrum as Verizon.
The Triple Play
It’s not just 5G that’s changing. The cable companies invented the triple play, or the super bundle of TV, phone, and Internet services. The concept remains fresh, but the technologies are in flux. Cable TV is shifting to streaming services, telephone is switching to cellular, and 5G will likely become the major supplier of Internet.
The 5G providers are in a better position than the cable companies to carry the triple-play forward. That’s why Verizon and AT&T have made investments in TV entertainment (Oath and DirecTV, respectively). Both have largely failed. Conversely, Dish is the first to expand from TV into cellular, and while its core satellite business is declining, it has a head-start in streaming from its SlingTV streaming service launched in 2012.
Ergen seems to see 5G as a transformative opportunity, rather than an end goal -- a piece of the puzzle along with satellite, streaming, and telephony. Dish doesn’t have a backhaul wired network like Verizon and AT&T, but does have a satellite network to distribute content. I also expect Dish will embrace both residential telephony and business UCaaS.
We saw T-Mobile become the uncarrier with guerilla techniques such as elimination of contracts. The uncarrier label has stuck, but the radical concepts disappeared some time ago. Especially post-merger, the uncarrier will be the establishment it has fought against for years. It’s always up to the smaller, more agile companies to challenge an industry’s established practices. Ergen has already signaled new ideas such as time-of-day pricing to encourage off-peak calls. Dish also has hardware expertise, which could make the long-promised femtocell concept a reality.
It won’t be easy, but it’s not impossible either. Based on the bandwidth acquisitions, it’s reasonable to conclude Ergen has been planning this for a while. Suddenly, T-Mobile and Sprint want to help. Now, Dish has a path to Federal Communications Commission approval along with nine million subscribers. The time is right.
Certainly, 4G/LTE has replaced wired networks for some, but it wasn’t really designed to be a replacement. The economic opportunity for 5G is much larger than 4G. If Dish can build a basic network in major cities, sector growth will allow it to become a national carrier.
There’s plenty of remaining barriers I haven’t addressed. For example, the other carriers all have networks of direct retail outlets. Personally, though, my visits to those stores have declined. In fact, the last time I went into a Verizon store I was told I needed to call customer service for assistance to my particular request.