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3 May 2022

Will Dish succeed in hitting its 5G targets despite Open RAN challenges?

Dish Network is six months behind on its 5G network roll-out plan, something its chairman, Charlie Ergen, acknowledged on the company’s most recent earnings call.

“We’re six months behind where we thought we’d be. It’s my fault. We just didn’t maybe anticipate that we would have to do as much on the technical side,” Ergen told analysts.

Dish is required by the FCC, as a condition of its licences, to cover 20% of the US population with 5G by June 14 this year, but so far has no commercial services on offer, despite its original pledge to launch in several cities by the end of 2021.

Ergen’s comments highlight some of the challenges that face greenfield deployers of virtualized, open networks. The efficiencies of such networks, and the advantages of having no legacy equipment in place, are often the focus of discussions with new, cloud-native operators like Rakuten Mobile and Dish itself. But both these companies have experienced delays in reaching 5G coverage targets, and of course, new architectures are no guarantee of commercial success, as Rakuten has found in Japan (though its vendor and services arm, Symphony, is likely to be the real moneyspinner).

Cloud-native, multivendor networks entail working with a variety of suppliers, many unfamiliar to these newcomers to the mobile market; new and often hard-to-find skills are required to deploy cloud-native 5G; some elements of the solutions may be immature or more difficult to test and integrate than expected; and there are still the old-fashioned challenges too, such as finding and negotiating the best cell sites.

Ergen pointed in particular to the need to support voice, which has proved challenging. Voice remains one of the biggest issues for MNOs as they migrate to 4G or 5G, and away from circuit-switched networks, and the effort this involves must scarcely seem justified, given the small revenues that come from voice services nowadays. Yet data-only propositions, with no native cellular voice, have rarely succeeded, even for greenfield. Many existing MNOs have jumped most of the hurdles in implementing Voice over LTE, but for a 5G-only player like Dish, the complexities must be addressed first with Voice over NR, a technology that has not been commercially deployed by any operator except China Mobile.

The other major challenge for Dish has been the need to integrate the different hardware and software elements that make up a multivendor RAN. In successive operator surveys that Rethink has conducted over the past two years, the complexity and potential cost of systems integration has always been the most commonly cited barrier to deploying multivendor Open RAN in the next 2-3 years. Ergen said on the earnings call: “I think that, ultimately, we found that we had to become the system integrator. It wasn’t a role that we thought we’re going to take on. But with all the vendors, somebody has got to be the middleman 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. So a lot of lessons learned there.”

Dish is trying to compensate for this added time and expense by making the ongoing operations of the 5G network as efficient as possible, and has restructured 5G activities under the lead of wireless COO John Swieringa.

And Ergen continues to insist that the delays are teething problems, which will become trivial in retrospect, when the cost savings and agility of the 5G network become clear. He said Dish spend $1bn in capex in 2021 and will spend another $2.5bn this year. By contrast, T-Mobile USA spent $2.9bn in one quarter on its 5G network; and Verizon’s capex was $5.8bn during the first quarter, a $1.3bn year-on-year increase, driven by $1.5bn invested in C-band spectrum.

Dish continually sets out its vision of a wholesale-only network driven by network slicing, in which even its own consumer brands will be customers with their own slice. This will enable innovative services and many enterprise offerings, the company says, within a highly flexible, software-driven platform.

However, Dish cannot afford to brush aside any further delays. Next week, on May 10, it will hold an event in Las Vegas, where its beta network is running, to expand on its plans, and investors will hope for firm commitments to hit the June 14 deadline. Under the terms of an agreement with the US Department of Justice in 2019, which saw Dish acquire customers and assets from the merging Sprint/T-Mobile, Dish will be fined $16m for each frequency band that misses the coverage target on June 14 by 25% or less. If it misses the targets by 26-50%, the fine will be $32m per frequency band while the sum will rise to $48m for each band that misses the goal by 51-75%, and $66m for more than 75%. Those fines could ultimately total $2.2bn.

One set of companies that are benefiting from Dish’s accelerated roll-out are the towercos. Dish has agreements with all three major US tower operators and some smaller site owners. Jeffrey Stoops, CEO of the third largest towerco, SBA, talked about the Dish deployment during his company’s recent earnings call. “They’re very active, actually busier with us than we thought they would be for a rolling 12-month period,” he said.

His counterpart at Crown Castle, Jay Brown, said on his own quarterly earnings call: “We have obviously seen a significant commitment from [Dish] as they’ve committed to go on 20,000 of our towers nationwide. So in terms of behavior, that’s a significant number of our sites, nearly half the sites that we have in the USA, they have a commitment to go on.” He added: “They’re certainly behaving as a company that we would expect would get to nationwide coverage.”