In August 2019, Dish Network Corporation agreed to pay $3.6 billion for spectrum and $1.4 billion for Sprint’s prepaid business, which serves 9.3 million customers nationwide. The wholesale agreement and prepaid divestitures would let Dish become a reseller in the near term, offering service to consumers over the T-Mobile/Sprint network. Upon completion of the Sprint/T-Mobile merger, Dish was to acquire 14 MHz of Sprint’s nationwide 800 MHz spectrum.
Dish also committed to building a 5G network as a precondition of T-Mobile’s acquisition of Sprint. Dish said its 5G network would cover 20% of the US population by 2022 and 70% by mid-2023. At the time, Dish founder and CEO Charlie Ergen stated that not building the 5G network would amount to “financial suicide, and we’re not suicidal.”
However, as the coronavirus pandemic sends tremors through the U.S. economy, Dish faces a hostile operating environment: the company continues to shed subscribers from its pay-TV business (which is now suffering from the loss of live sports); big banks have pulled back on loans; and Dish decided to cut staff to help weather the economic fallout of the pandemic.
The New York Post earlier reported that Ergen’s plans to build the country’s fourth nationwide wireless network by 2023 were being thrown into doubt, quoting a source saying there is no financing to build a new 5G wireless network.
Business Insider spoke with the president and CEO of NATE, Todd Schlekeway, who elaborated on the biggest challenges that the coronavirus poses for tower technicians:
“Number one: The PPE [Personal Protective Equipment] that they need is becoming very difficult to obtain from not only their normal supply channels, but [even] trying to go outside of those has been very difficult. Number two: Access to restaurants hasn’t been too big of an issue because a lot of places have drive-throughs, but some companies have narrowed their scope geographically during this pandemic … due to [limited access to] hotels. [This allows] their tower crews and their techs to come home every night, whereas before they may have been on the road a whole week. The logistics of sending a crew on the road is harder now because restrictions could be different between jurisdictions.”
These challenges will likely slow down and increase the costs of Dish’s plan to deploy 10,000 sites for its 5G network by 2022. Given Dish’s already questionable $10-billion budget for a complete network build-out, it appears improbable that Dish will reach its ambitious network build-out targets.
Though Dish will be hit hardest by the logistical challenges of performing telecom field work during the pandemic, we expect the impacts will be felt by the industry at large. Dish is in a particularly challenging position, as it must build a network from scratch in order to compete as a network operator once its seven-year MVNO deal with T-Mobile expires.
But the big three U.S. wireless carriers likewise have ambitious 5G network build-out plans. For example, the New T-Mobile intends to cover 99% of the U.S. with 5G within six years, as part of a plan that includes 10,000 new towers and 40,000 additional small cells.
As long as quarantine measures remain in effect, it will be more difficult for network operators to carry out extensive network upgrades. This presents a greater threat to the business strategies of would-be telco disruptors, as incumbents can fall back on their existing network capacity which doesn’t exist for the upstart wireless carriers like Dish.
Is Dish’s 5G network plan a pipe dream? NY Post infers it is:
NY Post composite photo