Dish Network, based in Englewood, pulled off what some observers thought it could never achieve. It built a state-of-the-art 5G cellular network reaching more than 240 million U.S. residents in three years for a fraction of what legacy wireless carriers have spent.
As Herculean as building the country’s fourth-largest cellular network from scratch might sound, the company faces an even tougher task, one that could secure its future and support thousands of jobs in the metro area or bury it under a huge pile of unpaid debts and unfulfilled potential.
In a brutally competitive market, Dish Wireless needs to find customers, as many as it can and as fast as it can, for its new network.
“The technology is now in place. A lot of people said it would be difficult and they figured out how to do it,” said Roy Chua, an industry analyst and principal at AvidThink in San Francisco. “Obviously, that is great, but it doesn’t matter unless you get subscribers.”
From a technological perspective, the 5G cellular network Dish has built is the equivalent of a “field of dreams.” The question now is, will people come?
Dish Wireless made a big push in that direction last month by marketing its monthly cellular service — Boost Infinite — to the 150 million members of Amazon Prime in the U.S. For $20, Prime members can order a discounted SIM card kit, delivered to their homes, without going through a soft credit check.
The Boost Infinite plan comes with unlimited talk, text and data for $25 a month, plus fees and taxes. Technically, the data gets throttled after 30 gigabytes per line in a given month, so it isn’t completely unlimited. But that is a lot more data than what most people use and the monthly price is guaranteed for life. That initial spend on Amazon Prime converts to a $25 credit on the first month’s bill.
“We have passed the crux in terms of all the new technology we deployed. We are shifting from deploying a network to optimizing and running a network,” said John Swieringa, president and chief operating officer at Dish Wireless.
Boost Mobile, which Dish acquired as a regulatory condition of the T-Mobile and Sprint merger, is the company’s prepaid offering with just under 8 million customers. Boost Infinite, which launched at the start of the year, represents the newer postpaid or monthly plan offering that Dish Wireless is looking to grow.
Cellular traffic from Dish is primarily carried on the existing networks of T-Mobile and AT&T, making Boost primarily a Mobile Virtual Network Operator or MVNO.
The Dish 5G network operates in about 50 markets covering 70 million potential customers. To get the full benefit out of its investment and realize the full potential of its new technology, Dish Wireless needs to switch on more of its network and switch subscribers over.
Dish Wireless first tested its new 5G network, called Project Genesis, in Las Vegas. And in Colorado, the network went live in Grand Junction and Pueblo last summer. Metro Denver is set to gain access by the end of the year, Swieringa said.
When Dish Wireless first unveiled Boost Infinite at $25 a month for unlimited data, it looked like it was ahead of the curve, given that competitors were charging $35 to $40 a month for something similar, said Mike Dano, editorial director of 5G & Mobile Strategies at Light Reading, an industry publication.
But in only a few months the bar has moved lower. Unlimited plans at $25 a month are now available at rivals like Visible and Metro, Dano said. Getting consumers to convert to an untested network, even if it is cutting-edge, won’t be easy. Establishing a stronger identity could require an expensive marketing push, ala what Ryan Reynolds has done at Mint Mobile.
“Not only is Dish competing against the big names — AT&T, T-Mobile, Verizon — but it is also competing against other companies — Google Fi Wireless, Mint, Comcast. They are facing a lot of competition,” Dano said.
The availability of compatible devices is another challenge. Most mobile devices made within the past five years will work with Boost Infinite after swapping out the SIM card. But they work on the AT&T and T-Mobile networks, which doesn’t benefit Dish in the long run.
Over several years, Dish Network acquired a massive amount of wireless spectrum. Most mobile phones currently available can’t handle it. Manufacturers are bringing out more compatible devices, most notably Apple with its iPhone 14, but options are still limited.
Most of those signing up via Amazon or Boost’s website will at some point need to upgrade their phones. For an extra $25 a month spread over 36 months, Boost customers can obtain an iPhone 14. Swieringa said more device offerings will come to the market in the months ahead.
A team approach
Amazon has largely stayed away from offering postpaid cellular plans, focusing instead on prepaid plans. So why did it abandon neutrality and advocate for Boost Infinite in such a direct way?
Dish Wireless views itself more of a systems integrator, Swieringa said. The company has teamed with several high-profile partners like Cisco, Oracle, VMware and Intel to name a few. Working with others provides the technical expertise needed for a faster build-out of its network.
The new network emphasizes software over hardware, making it more adaptable and flexible, based on an architecture called Open RAN. And it is cloud-based, with Amazon Web Services, a subsidiary of Amazon, serving as a host.
Chua said the deal struck with Amazon was a smart one, but it remains to be seen what kind of payoff it will offer. At least Amazon didn’t roll out its own private-label phone service, one of the rumors circulating.
Competing on price alone may not be enough but Dish Wireless also wants to set itself apart in the services and features it can offer on its network via 5G. Because the network is open, rather than completely fenced off, outside developers can bring forward applications and innovative uses. Most will probably focus on the commercial side, but consumers could get interesting features that help Boost stand out in a crowded field.
The success or failure of Dish’s new cellular network carries implications for metro Denver’s economy and the state’s telecommunications industry.
Of Dish’s roughly 6,000 employees, more than 2,000 are focused on wireless and based in the metro area, Swieringa said. The company is recruiting for another 700 open positions, of which 250 are on the wireless side.
Dozens of Dish partners have located operations to be near the company, adding even more wireless expertise to the region.
“This project is a very important economic engine for the Front Range,” he said.
Wall Street remains skeptical
For now, Wall Street appears to be betting that Dish will at some point run out of both time and money. Two years ago, shares of Dish Network traded for above $40 each, and a year ago they were just under $20. This summer they have traded in the $6 to $8 range, a substantial discount.
Rather than gaining confidence with each technical milestone that Dish Wireless achieves, investors seem to be saying it doesn’t matter.
When Dish Wireless announced on June 15 that it had hit the FCC target of covering 70% of the U.S. population with its new network, the stock price barely moved. Swieringa said Dish actually reached 73.5% coverage after building more than 15,000 5G sites across the country.
The company’s ability to bring on enough cellular customers to stay ahead of subscriber losses on the satellite television side represents one source of skepticism. But a bigger worry may be the company’s debt burden, which became a lot more burdensome after the Federal Reserve started raising interest rates to fight off inflation.
Dish Network spent about $25 billion to acquire the wireless spectrum that it is now deploying, and about $21 billion of debt remains on its balance sheet, of which $5 billion is coming due in 2024 and 2025, notes Robert Cyran, a technology columnist with Reuters.
The company’s depressed stock value makes it much more costly to issue new equity, and any additional money borrowed will come at a high price. When Dish Network issued $1.5 billion in senior notes last January, it had to pay a rate of 11.75%, even after offering up wireless spectrum as collateral.
Nor can the company’s wireless spectrum be easily sold to raise more money, given that about 40% of that is locked up until 2027, Cyran points out.
“It is not an easy situation given the increase in interest rates, given Wall Street’s increased skepticism of their ability to meet goals,” Chua said. “They need to be given enough runway to actually reap the benefits of the foundation they have laid down.”
It didn’t help when Dish Wireless lost some key executives this year and when the entire company had key systems go down because of a cybersecurity breach in late February.
Bank of America analysts sounded the alarm earlier this year that the company could spend more than it brings in by next year as it tries to meet another FCC target for its network and add more wireless customers.
By June 2025, the company’s network must provide 75% coverage to every “economic area” in the country, a more involved task than just population coverage. Chua estimates that another 10,000 to 15,000 5G cellular sites will be needed, and those will have a lower payout for the company than the ones built over the past two years.
Setting up cellular sites is easier in more populated areas, given existing towers and buildings, and they can serve more customers. But in sparsely populated rural areas, more towers will be needed, with high-speed internet connections to carry out those cellular signals much harder to come by.
Rivals won’t be standing still. Investment bank UBS noted in a research report that cable providers Comcast and Charter are pushing hard with their own cellular offerings, viewing them as tools for customer retention rather than profit centers. That could push prices down even more.
“We have the cash to continue to build the network and operate it. We are always looking at ways to fund the business and we are active there,” Swieringa said.
He adds that the company and its partner are on a roll and that proving skeptic wrongs has been part of Dish Network’s history, its very DNA, going back to when founder Charlie Ergen went from selling satellite dishes to launching satellites.
“We will continue with our plan to transform the company and become a national wireless carrier,” he said.
