Dish Wish

Can Dish Network disrupt the US market?

In the coming months, as an ancillary part of the deal between T-Mobile and Sprint, Dish Network will become a supplier of wireless communication services in the US. When the merger between the two carriers is in place, it’s estimated that Dish will have about 8 million mobile subscribers, thanks to its $1.4 billion acquisition of Sprint’s Boost Mobile prepaid service brand. This would make Dish the fifth largest service by subscribers in the US, after Verizon, AT&T, T-Mobile and Tracfone. Company executives said they’ve already been working with Boost Mobile during the past few months as part of the takeover.

But Dish has much greater ambitions than being a mobile virtual network operator. It wants to leapfrog into 5G by building out a nationwide network using its own stockpile of spectrum licences acquired over the past dozen years. With a goal of promoting “America’s leadership in 5G”, the company is certainly telling regulators and politicians what they want to hear. But Dish does have the assets and is a leader with the foresight to pull this off. It also needs to shift into new services given its shrinking core business.

Dish is known as a provider of satellite-based pay-TV services in the US. With 9.4 million TV broadcast subscribers, it’s a large, but not one of the major providers of pay-TV services in the country. It lost 334,000 satellite subscribers during 2019, in line with the cord-cutting industry trend. Its total revenue for that year was $12.8 billion, slipping from $13.6 billion in 2018, and net profit dropped to $1.4 billion, from $1.6 billion in 2018.

Dish also owns Sling TV, an Internet-delivered live TV service with about 2.6 million subscribers. This is an expanding but increasingly competitive area for Dish, with AT&T, Hulu and YouTube TV as major rivals.

Dish has been making big bets and bold statements in 5G. Since 2018, it has spent more than $11 billion for spectrum licences in the US and billions more investing in other companies that hold spectrum rights. Dish will take 13.5 MHz bandwidth of Sprint’s nationwide 800 MHz spectrum licences for $3.6 billion. It will also have access to the new T-Mobile’s network for seven years, which would allow Dish to supplement its wireless service during the build-out. Dish refers to this ability to roam on T-Mobile’s network as a “safety net”.

For its 5G network, Dish would use an amalgamation of 600 MHz, 700 MHz, 800 MHz, 1700 MHz AWS-3 (uplink only) and 2000 MHz AWS-4, as well as 24 GHz with various channel bandwidths.

As a result of use-it-or-lose-it regulations introduced by the US Federal Communications Commission, Dish has made a series of commitments to implement its spectrum. It has committed to offer 70% of the 5G coverage in the US, relying on 600 MHz spectrum, by June 2023. It has also promised to cover 20% of the US population with its 5G service using its lower 700 MHz spectrum by June 2022 and 70% by June 2023. It made similar commitments with its other spectrum holdings. Using a combination of its spectrum, Dish should cover much of the US with 5G services within three years.

Dish expects to spend $250 million to $500 million in 2020 on its 5G build-out, and a total of $10 billion to finish its nationwide 5G network. It says that it has the advantage of starting from scratch as this will allow it to exploit standalone efficiencies. Charles Ergen, the company’s co-founder and chairman, highlighted that Dish will be able to concentrate on its 5G infrastructure, as it’s not bogged down by 2G, 3G or 4G networks to maintain.

Dish is exploiting the need for more competition in the US market during a time of industry consolidation. If the company can live up to its public statements, it could really shake up the market, delivering a combination of connectivity and content services to existing and new customers.

It’s too early to say if T-Mobile has created a giant through its indirect support of Dish, but the carrier might learn that you have to be careful what you wish for.

Written by: Raghu Gopal

Posted on March 3, 2020

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