If you remember, Dish Network played a pivotal role in the merger between T-Mobile and Sprint, giving birth to a behemoth and also effectively reducing the competition by eliminating one of the top four players of the market.
As a part of this deal, DoJ (Department of Justice) wanted a company to take the place of Sprint and become the fourth nationwide facilities-based network competitor as it is worried that reducing the number of major US carriers from four to three would reduce the competition and fears higher pricing for consumers.
That’s where satellite giant Dish Network comes in, essentially trying to take Sprint’s fourth place within the US Wi-Fi panorama with the help of spectrum acquired from T-Mobile’s new daughter company, Virgin and Boost Mobile.
This deal allowed Dish Network to sell wireless service under its own name while building out a standalone 5G network. It has also agreed to cover 70% of the nation with 5G by 2023 or pay a hefty fine (around $2.2 billion to be precise). While Dish has been making a lot of announcements about the 5G wireless network it plans to build, the company hasn’t said much about how it will fund network Project and construction management – and that’s creating a lot of speculation in the market that Charlie Ergen’s word can’t be taken seriously.
This isn’t our first rodeo, in Q4 2020 earnings call, Dish Network co-founder and Chairman Charlie Ergen underscored his company’s commitment to roll out 5G wireless network by the end of Q3 2021, that is, by July – September period in its first major cities, and sounded optimistic in Dish’s ability to boost the position of US in global Network offerings.
At the current buildout rate, the real percentage of coverage in 2023 could well end up being much lower than that. One strong possibility is that the company enlists the help of a deep-pocketed partner like Amazon who could take an equity position in Dish and provide it with some of the funding required to build the 5G network and run the business. As Dish plans to spend $10 billion on the buildout of the network, Peter Adderton (via Seeking Alpha) believes it’s too far a modest goal and it might jump at least double the number by the time they are done with it. Naturally, Amazon with its deep pockets can fund that difference and it also has a motivation to get a foothold in this hugely profitable industry where Dish has a chance to cause massive disruption of wireless carrier revenue.
The disruption might come from the fact that the traditional carrier services can’t simply switch to network buildout strategy solely based on virtualization, as touted in the past by Charlie Ergen as cost-effective, without reworking the very foundations of their networks. Therefore it helps Dish to beat their service prices.
Unfortunately, the alliance between Amazon and Dish might not be announced anytime soon, as Amazon is merely planning to launch a “SIM service test” in an unspecified market outside the US at this time. Chances are Amazon will indeed test the mobile network operator waters somewhere outside North America with the intent to push into the U.S.,” Adderton said, predicting that an eventual alliance between Amazon and Dish would be a nightmare scenario for AT&T, T-Mobile, and Verizon.
DISH founder/chairman Charlie Ergen “has no choice. He has to get a deal done,” Adderton said. He also cautioned that the Dish deal may not happen right now, but sometime in the not too distant future. Amazon didn’t immediately respond to the request for comment after normal business hours.
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