Dish Network’s ‘Dream’ Would Be to Build Out All Its Spectrum in 5G, Says Ergen

The company will be unable to fulfill that dream because the FCC’s “buildout deadline” requires that “you have to have some of your spectrum in use by 2020,” said Ergen. “The problem is, the hardware for 5G is not ready and our 600-MHz spectrum is not ready and our AWS-3 spectrum is still in litigation. So it’s hard to plan for those.”

Dish “certainly” doesn’t want to build a 4G network, “and then the day we light it up, it’s obsolete, and we’ve got to go back six months later and convert it all to 5G,” said Ergen. “Logically, what we’ve said is, we’ll have to do it in phases. It’s maybe not our preference, but we’ll get a lot of experience and we’ll have a business in narrowband IoT. Phase two is to layer in full 5G connectivity.” Dish “won’t even start planning” a 5G network until planning for its IoT network is complete, and that won’t happen before 2018, he said: “Then we can start thinking about phase two.”

Ergen sees 5G as the “paradigm shift within the telecommunications industry," but it's "really kind of a 2020” story, he said. Standards for 5G “are not even set,” he said. “So the standards have to get set, and you’ve got to get product out there. So you’re realistically looking at 2020, 2021, 2022, to actually implement spectrum on a basis that uses the latest technology, and I don’t think you want to spend a tremendous amount of money on last year’s technology.”

Dish is “somewhat fortunate that we have more of a clean sheet of paper” to work with than do competitors in building out a wireless network, Ergen said. “Most networks today were really built for voice and they’ve tried to add all the other stuff on top of it, and that makes for more complicated and more costly networks than I think we can do.”

Ergen thinks the current “regulatory environment” is rife for mergers and acquisitions, and will remain so for at least the next two years, he said. “You can make decisions in the next two years and probably feel better about the regulatory environment than you probably had in the last nine years,” he said. “Expect that most companies and boards are looking at things they can enhance their businesses with, because one of the reasons you don’t do M&As is because you think regulatory might be an issue.” There are “logical moves that boards are probably talking about, and my gut feel is that we’ll be involved in some of those conversations over time,” he said.

Dish probably won’t be “going out and buying Verizon or AT&T tomorrow,” Ergen said with tongue in cheek when asked what targets might make sense. “We’re really interested in what we can control. We know that we control our own destiny for building out our network to meet our obligations to the FCC. We know the things that we want to do to enhance shareholder value would be long-term in nature, not short term.”

The company’s connectivity “vision” is “much broader” than what “most people are thinking about today,” said Ergen. “We have a lot of the building blocks that make that happen, and so we think there’s going to be like-minded people out there that want to get there the same way, and those are the people we want to work with.” He emphasized those need not be M&A deals, just “partnerships.”

“It’s realistic to assume” that Dish will “need some help” building out its network, whether in terms of “technical knowledge” or financial support, Ergen said. “Just like we needed help to launch satellites. We launched our first satellite in 1995, and I think we’ve launched 21 or 22 satellites now. We needed a lot of help to get there. We’re not afraid to ask for help.”

Unlike Sling TV, what most competitors that have entered the over-the-top space have “largely done is replicate the big bundle that the pay-TV industry already provides,” said Sling TV CEO Roger Lynch. “That was never our strategy.” Sling TV’s tack was to “create more flexibility, and let’s go after a different segment -- people who are rejecting traditional TV, cord-nevers, cord-cutters,” said Lynch. “When we originally thought about Sling, we thought about it fitting into that ecosystem. Today, it really provides us with a competitive advantage over everyone else who’s forcing you to buy locals and big bundles of channels, versus our more flexible package.”