Dish Wireless is gearing up for a busy 2022 as the new 5G network is nearly ready to launch in Las Vegas and the company plans to turn up service in 25 major markets and 100 smaller cities ahead of its June buildout deadline.
Under commitments to the FCC Dish needs to cover 20% of the U.S. population with 5G by the middle of this year and expand to reach 70% by June 2023.
Speaking on Dish Network's fourth quarter and year-end earnings call CEO Erik Carlson said Dish will meet that milestone, with the wireless network team marking significant progress in Q4 and recent weeks.
“We currently have over 25 major metro markets ready to be deployed before the deadline,” Carlson said.
Those 25 markets include: Albuquerque, New Mexico; Charlotte and Raleigh-Durham, North Carolina; Cleveland and Columbus, Ohio; Dallas, El Paso, Ft Worth, and Houston, Texas; Hartford, Connecticut; Indianapolis; Kansas City; Nashville; Norfolk, Richmond and Virginia Beach, Virginia; Oklahoma City; Orlando; Reno; Rochester and Syracuse, New York; Salt Lake City; Spokane, Washington; Springfield, Massachusetts; St. Louis; and Stockton, California.
The additional smaller cities span several states, including Alabama, Arizona, Colorado, Iowa, Michigan Mississippi, Missouri, Tennessee, and Wyoming, among others.
According to its 10-K filing, Dish has over 50 markets under construction, compared to 35 markets in the fourth quarter.
It also has the necessary capital to fund its deployment plans for the rest of the year, when spending is expected to ramp up compared to 2021.
Dish already has its 5G network in Las Vegas up and running, with friends and family serving as beta testers, but plans to expand access to additional customers in the coming weeks through its "Project Genesis," according to Carlson. Originally Dish had expected to launch service in its first market of Las Vegas in the third quarter, but that timeline was pushed back multiple times.
Las Vegas O-RAN network is working, more to do
Dish Network Chairman Charlie Ergen said that since the last quarterly report a key positive on the network front is that 5G in Las Vegas is operational in standalone (SA) mode based on O-RAN principles with cloud native architecture using AWS.
It also has Voice over NR (VoNR) operational – something that’s only possible with SA 5G and one feature others, such as T-Mobile, have been working to make progress on.
“That is the most advanced network in the world,” Ergen said on the call, saying it looks more like an IT network than a wireless one. He noted that Dish ended up doing a lot more technology development with vendors than it had expected.
“And when it works, it works pretty well,” he said of the Las Vegas network. “We still have work to do, we’re not ready to spike the football.”
Some of that involves optimizing in certain areas and markets that it’s preparing to launch. Still, Ergen said the technical challenge has been resolved for some core activities Dish needed to complete.
A greater amount of work contributed to delays, as he acknowledged that Dish is six months behind the schedule that it originally planned and called out VoNR in particular.
Operators in China have been working on VoNR as well as others, who Ergen said ran into trouble themselves meaning Dish couldn’t exactly follow their lead.
“We had hoped to ride a little bit more on their back” but ended up becoming a bigger part of the development.
Another aspect, which comes into play particularly with the O-RAN-based network such as Dish’s that uses several different vendors, is that the company had to act as systems integrator.
“Ultimately, we found that we had to become the system integrator, it wasn’t a role we thought we were going to take on,” he said. “But with all the vendors, somebody’s got to be the middle man between there and the glue that holds them together. And we’re much more involved in that than maybe we thought we were going to be.”
He acknowledged some time was likely wasted, but said there were a lot of lessons learned and Dish is “certainly moving at a very fast pace now.”
So what still needs to be done before a commercial launch?
Ergen cited ongoing network optimization, as well as regulatory issues – particularly E911 which Dish hasn’t overcome yet but needs to before it can launch service commercially. It’s using a third-party for E911 and doesn’t have as much control as the company would like, he said. Other items include ensuring handset manufacturers support VoNR and Dish’s frequencies, as well as developing a marketing plan.
“None of these things in and by themselves are difficult” but they all need to be done and come together at the same time, Ergen commented.
$10 billion price tag still holds
Questions on the estimated cost of the build were once again raised, which Dish has long said would total around $10 billion dollars – a figure some analysts believed to be too low.
Ergen reiterated that $10 billion is a real number, pointing to a simpler network build compared to competitors thanks to the greenfield nature, and citing real competition on tower leases because of its large number, the need for only one set of antennas with one low band radio and one high-band, and that most of the cost resides in the cloud rather than at the base of the tower.
Dish spent around $1 billion in capex on its 5G network in 2021 and is forecasting $2.5 billion for 2022.
Ergen said with $3.5 billion spent by the end of this year, Dish will already be well ahead of the 20% population coverage it needs and suggested it gives confidence for how Dish can stay within that $10 billion target. The 2022 capex figure also includes some advanced spending in markets needed to hit the 70% milestone in 2023.
Additional elements that help keep within the total target come back to the cloud-based nature of its network, which Ergen said lowers labor costs because it can automate and provision in a way competitors can’t.
Dish spent money to acquire C-band and CBRS spectrum licenses, and most recently $7.3 billion for 31 MHz of 3.45 GHz spectrum, which sits adjacent.
“We are able to use C-band and CBRS for fill-in, where we will have some gaps in coverage,” Ergen said, noting in some locations like Denver, building a macro tower or rooftop would be very expensive. “Part of our investment in C-band and CBRS actually pays dividends for us in saving buildout costs for us on the backend.”
In terms of when network spending will ramp to reach $10 billion, Ergen noted the amount would cover the build until 2025.
“We’re on a cadence…of so many towers per month and that’s just going to go on for the next three years.”
The network deployment is funded through the next year, but he expects the company will probably need to raise capital at some point in 2023.
A report from MoffettNathanson pointed out that Dish reported a $61 million EBTIDA loss in its 5G network deployment segment that was better than Wall Street’s expectation of $97.3 million.
MoffettNathanon analysts led by Craig Moffett noted progress with construction in more markets but ahead of the earnings call still expressed doubt as to whether the $10 billion budget is reasonable, while acknowledging several questions remain about how Dish plans to leverage its network.
Not included in the $10 billion are tower lease commitments, according to Moffett, which the firm said already exceeded that amount “by a wide margin.”
Dish inked earlier deals with major tower companies as well as smaller infrastructure players.
Private networks more attractive than fixed wireless
Dish also sees fixed wireless access as a potential use for its spectrum holdings, but see better economics in using network capacity to support private networks.
“Giving people the ability to run their business in their cloud or public cloud if they want to and use some of our frequencies in a private way to make sure they have access to the data,” Ergen said.
Private networks may use data 24 hours a day, versus consumers, which he said is another way to get capacity usage up on a network.
He said when doing the math on economic models of networks currently using around 25% of their available capacity today, and increase that up a percentage point or two, or even up to 35% then “for all the wireless providers that is huge incremental revenue potential.”
While it’s active in the space with projects currently underway, Steven Bye said Dish doesn’t expect anything material from private networks in 2022, but sees that coming as momentum picks up in 2023.
Ergen cited some like Amazon, Cisco or Dell as major players in the space, saying “hopefully we’ll be working with one or more of those folks to make sure that we have the right product at the right time.”
Dish already has a retail wireless business, via its Boost Mobile acquisition, running as an MVNO. It lost 245,000 net subscribers in the fourth quarter, ending 2021 with 8.5 million retail wireless customers.
Dish will host an analyst day on May 10.