Dish Wireless Pushes Forward

Dish Wireless
(Image credit: Dish Network)

Dish Network chairman Charlie Ergen told analysts Monday that its much awaited wireless service is expected to launch in its first major market in Q3, adding that the satellite giant doesn’t necessarily need a strategic partner to help it build what he said is going to be a state-of-the-art 5G network.

Dish has been accumulating spectrum and finalizing plans to build out its wireless system -- it forged a deal with T-Mobile in 2019 where it will pay $3.6 billion over three years for 800MHz spectrum -- and Ergen said its first major market should go live in the third quarter. He didn’t name the city, only to say it will be an NFL market. 

Also Read: Ergen: We Stumbled with Sling TV 

Ergen also put the kibosh on speculation as to who Dish’s strategic partner in the wireless venture will be. Early on, the Dish chairman speculated that he would need a deep-pocketed partner -- some had speculated it would be Amazon -- to help him build out the service. Now, fresh off a convertible notes offering in December that raised $2 billion, and with about $4 billion in cash on its balance sheet, Ergen said Dish has the funding he needs. He likened the company’s current situation to the early days of the satellite TV business. 

“I think we always thought we might need a strategic partner when we didn’t have any capital,” Ergen said, referring to the early days of Dish’s satellite business. But just like that time, he said once the company’s vision became clear, and it began to hit execution milestones, that partner was no longer needed.

Also Read: Dish Loses 133,000 Subs But 4Q Earnings Increase 

“Ultimately, we got confident enough and good enough in what we were doing, that it just made sense to keep the equity,” Ergen continued. “And it didn’t make sense to give up the equity. I think we’re probably in a similar situation today, in the sense that we do have enough capital on our balance sheet today to build our network.”

In the past, Ergen had estimated that its wireless network would cost about $10 billion to build, although some analysts have said that figure may be dangerously low. 

Although Dish may not need a partner to get its wireless service off the ground, it will likely need one after its launches have passed the test phase. Ergen said that already Dish has enlisted tower companies as partners and has other companies in the pipeline. The company has said earlier that one of its next steps would be in seeking out an agreement with a cloud provider like Oracle, Microsoft or Amazon.  While that decision hasn’t been made yet, Ergen said the network’s cloud provider has to be “best in class technically” and there are several vendors that can live up to that criteria. Later, EVP of corporate development Tom Cullen, said “We clearly expect our cloud partner will have to bring a go-to-market component to the relationship.” 

Dish’s wireless network will utilize Open Radio Access Network (ORAN) architecture, which Ergen said allows for more flexibility, lower costs and the network slicing capabilities of its cloud-native technology should be attractive to enterprise business customers.

“So they can have what looks like their own network, and they get access to the data in the cloud where they can actually use that data to make a better product,  a less expensive product and a safer product,” Ergen said. 

Ergen said he isn’t expecting the first market launch for the wireless product to go without a hitch. Like most new rollouts, he expects some glitches, but added Dish will work quickly to iron out any bugs by the time the next market goes live. Dish is up against federal deadlines to have about 20% of the country covered by June 2022, and 70% by June of 2023. 

“We’re not going to be running on our first city, we’ll be crawling,” Ergen said. “And hopefully we’ll be walking by the end of the year.”

At the same time, Dish will be facing a big shakeup in its Boost prepaid wireless business. In its 10-K annual report filed with the Securities and Exchange Commission, Dish noted that it has been informed by T-Mobile that it will discontinue its CDMA network on Jan. 1, 2022. Dish said the majority of Boost customers ride on the T-Mobile CDMA network, meaning that once the network is shutdown, Dish will have to provide a huge number of customers with new devices. On the call, Ergen doubted that could be done.

Ergen said that most Boost customers are “economically challenged” and having to upgrade from one phone that works on the CDMA network to another phone that works on a different network, could be a burden. In addition, that new phone wouldn’t work on Dish’s new network, because it is 5G. 

“If you run the numbers on that, and there would be significant fallout in my opinion,” Ergen said. “The second thing is, I don't even think we could get the supply of the phones we would need. You can’t order phones and not know that you could move the phones, and the supply is somewhat limited of the phones we would need for that.”

On the positive side, he said the Boost team  has shown that they can turn around things in a short period of time. Later, he hinted that there may be a regulatory solution. 

Asked later if he had contacted the Federal Communications Commission about T-Mobile’s CDMA shutdown, Ergen said he hadn’t spoken to the agency personally, but it is possible one of his staff may have. He added he believed T-Mobile’s decision to discontinue the CDMA service is anti-competitive.

“I can’t speak to the motivations,” Ergen said. “But what we can say is that one of the beneficiaries of a premature turn off of the CDMA network would be T-Mobile.” 

Mike Farrell

Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.