Dish Not Ready to Discuss Its ‘Go-to-Market’ Strategy in Wireless, Says Ergen

The “consumer wireless financial model” that Ergen presented at trial in closed-door testimony Dec. 18 (see 2001280064) should be permanently “sealed in its entirety,” Dish wrote (in Pacer) U.S. District Judge Victor Marrero Wednesday in the Southern District of New York. Marrero approved T-Mobile's Sprint buy Feb. 11 in a 173-page decision (see 2002110026).

Ergen's document contains a “detailed analysis” of Dish’s planned wireless business, including anticipated revenues, margins, churn, capital expenditures and customer acquisition costs, it said. The material “would be of great interest” to Dish’s competitors, including T-Mobile, it said. Dish also requested redaction of seven other exhibits presented at trial and in depositions.

The 20,000 cellsites and relatively few retail stores Dish would inherit from T-Mobile are “potentially positives, particularly the towers,” said Ergen. “Obviously, towers are a big part of what we’re going to need.” T-Mobile is required to give Dish notice when it’s “going to vacate a tower,” he said. “That probably helps on the margin of our buildout, and perhaps reduces some of our costs.”

Dish will enter the wireless business “obviously with a very low base” of retail locations, said Ergen. He thinks Dish nevertheless has a “decent” retail opportunity in wireless, he said. “One size doesn’t fit all. There’s a lower cost structure and flexibility in how we do it. We think there are some things we can do to build that business.” But Dish will be “a very, very, very distant fourth” to AT&T, Verizon and T-Mobile in retail store count “for a long period of time,” he said.

Dish has “determined architecturally” to make its wireless offering compatible with open radio access network (O-RAN) specifications, said Ergen. “That’s something some of the big guys don’t do,” including “none of the incumbents” in the U.S., he said. “Once you architect it that way, it opens up a whole different range of options. When you talk about some of the security concerns in this country with Chinese vendors, the way to compete is to build a better network, not to build the same network using old technology.”

O-RAN is “the big trend in the industry,” said Chief Network Officer Marc Rouanne, the former Nokia executive Dish hired in November to supervise the strategy and architecture of its 5G network buildout. “Everybody is working towards O-RAN,” he said. Since O-RAN is based on what its backers say are smarter open interface standards, there’s a wider choice of vendors and “we can change our software as fast as we want,” he said. Automation is another of O-RAN’s big pillars, so Dish will be able to run its network with fewer people, said Ergen. “Our costs are materially less.”

With July’s agreement for Dish to buy Boost and Sprint's other prepaid businesses and gain access to T-Mobile’s network for seven years (see 1907260071) came “an increase in interest from prospective partners” to help Dish build out its 5G network, said Tom Cullen, executive vice president-corporate development. The interest “ramped further” with Judge Marrero’s Feb. 11 decision, said Cullen. “It’s probably a shorter list of who we’re not talking to.”

Dish doesn’t feel “any particular urgency around striking a strategic partnership at this point,” said Cullen. Its top priority is preparing “to integrate the Boost business” once T-Mobile/Sprint closes so it’s “operational from day one,” said Cullen. A second priority is to “finalize the architecture” of Dish’s 5G network, he said. “We’re encouraged by the progress.”

A third “area of focus” is to complete contracts with "key" 5G vendors, and a fourth is to “plan deployments,” said Cullen. “We want to start deploying later in 2020. We’re very cognizant of the FCC obligations that we’ve made, and we actually look forward to beating them.” Dish will "enjoy" favorable “economics” once it begins to “unleash nearly 100 MHz of spectrum on a market-by-market basis,” he said.

Dish’s “costs per gig will be so much lower” than those of the wireless “incumbents,” said Cullen. That will give Dish incentives to “price aggressively and compete aggressively,” he said. Dish’s FCC commitments include offering 5G broadband service in the 600 MHz band to at least 70% of the U.S. population by June 2023. It's also committed to at least 20% U.S. 5G market coverage in each of three other spectrum bands by June 2022.

That Dish gains access to the T-Mobile network for seven years, plus the 20,000 towers, gives it “more leeway in terms of how we build our network,” said Ergen. “We can take a few more chances. We can experiment a little bit.”