DISH lit up a new 5G cellular network in more than 120 cities on June 14, meeting an early target federal regulators had set for the construction of the nation’s fourth wireless network.
Whether Project Genesis, as the network is called, succeeds or fails will determine the fate of one of Colorado’s largest public companies, and could weigh heavily on Denver’s future as a center of telecommunications innovation, a legacy that goes back decades to the early days of cable television.
“Through DISH’s efforts, Denver is becoming a wireless hub,” said John Swieringa, president and chief operating officer of DISH Wireless. “Our partners are coming here, too, and investing in people and resources in this market. We expect Denver to become a leader in 5G.”
DISH Wireless has hired more than 1,600 workers in the past 18 months and is looking to add 500 more, Swieringa said. DISH, the parent company, already employs 6,000 people along Colorado's Front Range. A successful launch of the new network could provide a big boost to the region economically for years to come. Failure could cost thousands of jobs.
5G stands for fifth-generation mobile network. The technology can move larger bundles of data at much faster speeds and lower lag times than 4G. That added capacity promises to open up a host of uses such as self-driving cars, smart cities, remote surgery, and enhanced virtual reality. It also allows wireless carriers to better compete in providing home and business broadband service and makes possible multiple new commercial applications.
The big three carriers — AT&T, Verizon and T-Mobile — have built their 5G networks on top of existing and proprietary 4G networks, which in turn were built on top of 3G networks. DISH, by contrast, is building a 5G network from scratch, using something called Open Radio Access Networks or OPEN-RAN. That approach is software-focused, cloud-based and flexible in terms of using technologies from outside partners.
“One of the biggest advantages is that the cost of upgrading and maintaining the network is far lower. We will more readily adapt to evolving technologies and standards. We are relying heavily on automation. Our network is forward-looking,” Swieringa said.
Genesis cell sites have a much smaller footprint than those of older carriers, and much of the signal processing is pushed out to centralized server centers.
Favoring software over hardware lowers overall costs, provides more flexibility and allows for a more open and automated network. Established technology players such as Amazon Web Services, Dell and VMware, to name a few, are actively involved in Project Genesis, contributing resources and development expertise to ensure its success.
“They (DISH) are leveraging the desire of multiple vendors to participate in the only new national wireless network being built. Their vendors are contributing in the form of development and assets,” said Roy Chua, principal at AvidThink, an independent telecom and technology research firm in San Jose, California.
DISH has invested more than $30 billion in wireless spectrum and expects to spend about $10 billion to build out and launch the network, Swieringa said.
Compared to what legacy carriers have invested and continue to spend to maintain their more equipment-intensive networks, that is a bargain price, analysts said. Those savings should eventually translate into lower costs for cellular service once the network is built out and customers added.
After meeting the 20% milestone, Project Genesis has a year to ramp up to 70% national coverage, which will be no easy task, given labor and supply-chain shortages. In the interim, DISH has signed deals with AT&T and T-Mobile to carry wireless traffic in areas where it doesn’t have service.
Some people were skeptical DISH could even reach 20% coverage on schedule, but the company did, said Roger Entner, founder of Recon Analytics, in a podcast last week.
Putting up antennas on towers is not the difficult part of rolling out a new wireless network, Entner said. The “hard birth” came in creating new software to take on tasks previously handled by hardware and could take fuller advantage of 5G.
“In the end they got it to run. You have to give them a lot of credit for it. There are a lot of firsts that they did,” he said.
Reinvention or extinction
DISH, based in Englewood, Colorado, traces its roots back to 1980 and a company called Echostar. Charlie Ergen, his wife Candy and Jim DeFranco, distributed C-band satellite television systems to customers in mostly rural areas.
In 1995, the company launched its own satellite using lower-cost but untested Chinese rocket technology. Charlie Ergen, speaking in May to analysts gathered in Las Vegas to learn about Project Genesis, described how that launch, if it had failed, could have ended everything. But the gamble paid off for Ergen, known for his skills as a poker player.
“As I sat there, I knew that we had everything to be a Fortune 500 company 20 minutes after that launch,” Ergen said.
Over the past decade, the company has acquired billions of dollars worth of wireless spectrum at government auctions and sat on it, raising complaints it wasn’t getting a return on its capital and “hoarding” valuable bandwidth.
But the company was waiting for the right opportunity to come along. Ergen said in 2018 he thought that creating a 4G LTE network was the way to go, but realized that waiting for 5G would offer more potential, given the more abundant applications and demand the new technology would create.
In late April 2018, wireless carriers T-Mobile and Sprint announced they would merge in a $26 billion deal, but federal and state regulators were wary the combination would reduce consumer choice and result in higher costs.
DISH saw the opportunity it had been waiting for, one where it could restore a fourth national cellular network, alleviate regulatory concerns, and leverage that to get a good deal from T-Mobile and Sprint on the assets that regulators wanted spun off.
Dish Network paid $1.4 billion for Sprint’s Boost Mobile, Virgin Mobile, and prepaid business, making it a cellular player with 9 million customers. It paid $3.6 billion for 800 MHZ spectrum, filling in gaps in its coverage. T-Mobile also agreed to allow DISH paid access to its network until it built out its own, although that agreement soured when T-Mobile shut down 3G CDMA services earlier than DISH wanted, impacting some Boost Mobile customers.
For its new network, DISH followed a model pioneered by a Japanese company called Rakuten, which built the world’s first cloud-based wireless network using OPEN-RAN. Project Genesis represents the first network in the U.S. to use that architecture.
“We have built the most modern network in telecommunications today. The DISH Network will be at the center of where technology is going,” Ergen told analysts.
Ergen acknowledged that the patience of stock investors in DISH has been severely tested waiting for a payoff from the wireless spectrum investments. The company’s stock has moved up and down over the years, but it is now back down to where it was two decades ago after accounting for adjustments.
Even though the company got ahead of the cord-cutting trend in cable and satellite television in 2015 by rolling out Sling TV, a package of streaming television channels, it hasn’t escaped the unrelenting downward pressure on pay television subscriptions.
“It is hard for companies to identify technical shifts and do something about it,” Ergen said. “It is hard to stay in business as a company for a long period of time.”
Only a tenth of the Fortune 500 companies that existed in 1980, when Echostar got its start, are still around, Ergen said. But Ergen argued to analysts that DISH has found the path to reinvention, and will leverage the cash and expertise from its legacy businesses, which still make it a Fortune 200 company, to launch a new one.
“I believe we have passed the crux,” Ergen told analysts in Vegas. “I feel very confident we have everything we need to become a Fortune 100 company. We have work to do, and we aren’t spiking the football. We have several years of deployment. We have to monetize.”
As innovation cycles played out, Colorado also has seen its status as a leader in telecommunications grow and shrink. The state was a pioneer in the early days of cable television thanks to executives like Bill Daniels and John Malone. Liberty Media and its group of companies still call the metro area home, but industry consolidation has taken the center of gravity in cable elsewhere.
Metro Denver was also a leader in the nation’s buildout of high-speed fiber-optic networks thanks to companies like Qwest, Level 3 Communications and TimeWarner Telecom, among others. But high-speed data networks got overbuilt and eventually became a commodity business. All three firms were swallowed up in mergers.
DISH was a pioneer in satellite television, but that business line is fading. The company’s shift to 5G wireless opens up the possibility that Denver could once again be back on the cutting edge of telecommunications in a meaningful way.
“With DISH at the helm, it could be a chance for Denver to become a new center for mobile innovation. There is that possibility. Denver has a lot of talent already from the telco market,” Chua said.
A different kind of network
DISH Wireless has about 8.2 million Boost Mobile customers and is targeting about four times that many once it builds out Project Genesis.
“We anticipate growing our retail wireless business to more than 30 million subscribers in the next several years on the heels of our 5G network,” Swieringa said. “We would anticipate the team to grow here in town significantly.”
Boost Mobile offers a $30 a month plan which is solid but isn’t in and of itself a game-changer, said Sascha Segan, lead mobile analyst at PCMag and author of the “Best Mobile Networks” report. But that price should drop as more traffic moves onto the Genesis network and less is paid out to T-Mobile and AT&T.
“I don’t think there is going to be a massive price war in consumer wireless, at least for now. The big three are more interested in expanding their businesses in different ways,” Segan said. “DISH is not going to try and be the No. 1 fastest network. They are going to try to be a good enough network that you can afford.”
DISH Wireless also plans to roll out a Boost Infinite plan that takes better advantage of the Genesis network but hasn’t unveiled details. Rakuten started with a free, limited time cellular plan to build its customer counts and eventually moved to $10 a month, Chau said.
But pursuing a lowest-cost strategy could result in more customer churn and may not be the best approach, he argued. DISH, which has expertise in bundling content, should explore the additional features and applications that 5G allows, he advised.
DISH also expects to place a heavy focus on the commercial market, which could surpass the consumer market in terms of revenue potential. That would include providing companies with private wireless networks they could control and manage. The networks would allow them to do things such as overseeing robots in the warehouse or pinpointing where delivery trucks are on the road.
Chua also notes that while the Genesis network is up and running, it hasn’t been stress tested with heavy loads of traffic. DISH right now seems more interested in finding customers who want to be on the cutting edge of technological innovation and can provide feedback on what is working and what needs improvement. It isn’t making a big push for the mass market until it gets the bugs worked out. At the same time, it has to keep adding more cities.
There also remains the problem of getting more devices that will work on the Genesis network. DISH has accumulated a very specific set of wireless spectrum that isn’t compatible with handsets now on the market. DISH Wireless will need to convince manufacturers to roll out multiple devices, and not just one or two, as is currently the case with Motorola and Samsung.
“We are waiting for the Apple iPhone. We will know the network is ready for prime time when they sign on,” Chua said.
