|
One of the most interesting aspects of the proposed merger of Sprint and T-Mobile is that the agreement now includes selling some of Sprint’s spectrum to Dish Networks to enable them to become a 5G cellular provider. This arrangement is part of the compromise required by the Department of Justice to preserve industry competition when the major wireless carriers shrink from four to three.
This agreement would have Dish Networks paying $5 billion for the spectrum assets, which complement the spectrum already owned by Dish. The agreement also includes an MVNO agreement between Dish Networks and T-Mobile that would let Dish enter the cellular market immediately before having to build any network. As part of that arrangement, Dish would purchase Boost Mobile from T-Mobile for $1.4 billion, providing them with an immediate base of cellular customers.
Dish already owns spectrum valued at several billion dollars. The company has been under pressure from the FCC to deploy that spectrum, and Dish recently began building a nationwide narrowband network to support IoT sensors. The company admits they are not happy with the IoT sensor business plan but didn’t want to lose their spectrum. Perhaps the best aspect of this deal from Dish’s perspective is that they are being given a new time clock to use existing spectrum in a more profitable way.
This deal has plenty of critics who don’t believe that Dish can turn into a viable competitor. This includes numerous consumer groups as well as a group of state Attorney Generals who have filed to block the merger. The merger is far from a done deal and is going to court, although it has crossed the major hurdles of getting DOJ approval and informal approval from the FCC.
Dish Chairman Charlie Ergen says the company is ready to become the fourth facility-based cellular carrier in the market. He thinks that launching with a new 5G network will provide some advantages over carriers that will be upgrading older networks. The company faces some significant challenges, such as gaining access to tower space in crowded markets. The other cellular carriers have also been busy and have invested significant amounts of capital in building fiber to support cellular small cell sites.
The challenge of building a new nationwide cellular network from scratch is intimidating. As a satellite provider, the company does not already operate an extensive landline network. The logistics of hiring the needed talent and constructing the core network infrastructure is a major challenge. A few years ago, Dish had estimated the cost to build a nationwide cellular network at $10 billion. The company says they have already released an RFI and an RFP to start the process of hiring contractors to build the new network.
Ergen says the company could build the core network in 2020 and could construct a network to cover 70% of the homes in the country by 2023. As far as being competitive, Dish says they would enter the market with ‘disruptive’ pricing to capture market share.
Dish needs something like this if it is to survive. The company lost over 1.1 million satellite TV customers last year, a little over 10% of its customer base. It looks like cord-cutting is accelerating this year and one has to wonder how long they will remain as a viable business.
Interestingly, Dish won’t be the only new competitor in the cellular market. Comcast recently spent over $1.7 billion on spectrum. The company has been reselling cellular service and offering low-price broadband as part of its bundle for the last few years. The company reporting hitting 1.2 million cellular customers at the beginning of this year. While Comcast is not likely to tackle building a nationwide network, they could become a formidable competitor in the urban markets where they are already the cable provider. Other cellular companies like Charter and Altice are considering a similar path.
Sponsored byWhoisXML API
Sponsored byIPv4.Global
Sponsored byRadix
Sponsored byVerisign
Sponsored byVerisign
Sponsored byDNIB.com
Sponsored byCSC