Dish Seen Meeting 2023 Wireless Coverage Milestone; 2025 a Bigger Question Mark

"I think they think they met the deadline," though Dish in the past "pushed the limits" on some rules interpretations, Summit Ridge Group's Armand Musey told us. However, it's unlikely Dish would materially risk its authorization and at most it might fall short by an immaterial amount that would likely get a slight extension from the agency. A bigger issue before it is where it would get the $3.6 billion needed to buy 800 MHz spectrum from T-Mobile, he said. Dish also faces money challenges in all the spending needed to become a major wireless carrier, with expenses including marketing and customer acquisition, Musey said. A Dish partnership with Amazon, as was rumored, would solve a lot of those problems, Musey said, but Dish's other options aren't clear. Amazon didn't comment.

“As best as we can tell, Dish is on track to satisfy this round,” with the next round "more difficult," said MoffettNathanson’s Craig Moffett. “Dish has talked about a ‘pause’ in their capital spending, but it’s hard to see how they can meet the requirements for 2025 without not only maintaining their buildout pace but actually accelerating it,” he said. Dish doesn’t have the money on hand to sustain the current build out, “let alone step it up,” Moffett said: “Something has to give. The most obvious course is to sell some of their spectrum. But if they can’t find a buyer, you simply can’t rule out a bankruptcy.”

New Street’s Blair Levin sees Wall Street concern about meeting the next deadline, which occurs in 2025. “There is a lot of speculation” of ways Dish could “try to either sell assets or obtain flexibility from the FCC to meet that deadline,” he emailed. “Both the DOJ and the FCC essentially made a big bet on Dish when they allowed T-Mobile to buy Sprint on the grounds that Dish would provide a fourth facilities based competitor,” Levin said: “I am not saying they made a mistake. I am saying that to improve the odds of that bet paying off, they may have to be flexible in enforcing certain requirements. Agencies hate being asked to be flexible in enforcement, but the FCC here will have to figure out what is its policy priority in terms of dealing with Dish and its risks and opportunities.”

Said LightShed’s Walter Piecyk: “Hopefully the FCC realizes that quickly providing the financial markets with some clarity on where Dish stands with its buildout requirements is in the public's best interest regardless of what determination they make ... Uncertainty on Dish's progress helps no one and keeps spectrum fallow for longer, either because of the resulting challenge of Dish to finance, or the alternative start of a process to otherwise get that spectrum in the hands of someone that will build it,” he said.

Questions remain about both milestones, emailed Recon Analytics’ Roger Entner. If the test is “the ability to make a voice call on the 5G network then there are still question marks,” he said. The 2025 milestone will be much more difficult to achieve, he said. “Reportedly, Dish has stopped building out until it has more money,” Entner said: “In the past, Dish has been absolutely masterful in getting the FCC to change its rules to accommodate it. The other big question is will the FCC and DOJ accommodate Dish and push back the 75% of each [market] deadline, or will they hold Dish to their own commitment?”

The Dish network isn’t comparable to what the other major carriers have built, noted John Strand of Strand Consult. The number of customers Dish has on its network is “still extremely limited,” he said: Dish is in a very early stage and it takes time, and a lot of money needs to be invested before they have a network comparable to the other operators' networks.

Most of the coverage requirements have been enabled by collocating on existing sites rather than having to build new ones, emailed S&P Global Market Intelligence analyst Lynnette Luna. She said Dish's plan is to launch services in several markets this year, but the sticking point has been getting voice services to work over a greenfield 5G network. While existing carriers are carrying voice services over their legacy network equipment, voice over 5G is a new concept, she said.

Luna said the Amazon chatter seems to reflect beliefs Dish doesn’t have the ability to do this on its own and will need to partner. "Reaching its coverage requirements in 2025 will be more challenging for DISH," as it will likely need to build many sites from the ground up, which will require substantially more capital, she said. That could be a problem if interest rates stay elevated, she said. Compounding the business challenge is that Dish's prepaid Boost business continues to lose subscribers and the demand for private 5G networks remains low. "It is likely that DISH will need a big partner to help it move to the next level, which is why the entire market was excited about Amazon as a partner," she said. "If DISH pulls this off, it will have the most advanced 5G network in the market, given the fact that it doesn’t have a legacy 4G/3G network to deal with."

Meeting the 2023 deadline isn't nearly as important to Dish's future trajectory as the 2025 deadline, which "is much more onerous," emailed spectrum consultant Tim Farrar. "In particular, can they grow the business, either through a partnership with Amazon or on a standalone basis?" he asked. "Is there really a new enterprise opportunity created by [open radio access network]? Or will DISH just be selling cheap bits through a dumb pipe?"