DISH needs more compatible devices in order to capitalise on its 5G spectrum investment

DISH Network (DISH) is the latest entrant in the US mobile market. It launched its cloud-native, Open RAN 5G network in May 2022. The network was first available in Las Vegas and the service is marketed as Project Genesis.

The long-awaited launch¹ came just a month ahead of DISH’s first mandated build-out deadline: the operator was required by the regulator, the FCC, to cover 20% of the US population with 5G by June 2022 and to expand its reach to 70% by June 2023.

DISH announced, on 14 June 2022, that Project Genesis would be expanded to over 20% of the US population (in 120 cities across the USA) only 42 days after the initial launch. As such, it just met the FCC’s interim deadline. The network is very advanced, completely cloud-native and reliant on Open RAN architecture.

However, DISH is now in an awkward position. It has a future-looking network, but not many existing devices can connect to it. This is because its network uses a variety of spectrum, some of which is commonly supported by commercial devices that are used by other operators, but some, such as that in band 70, is not yet supported by many other operators or by device makers.

The only somewhat compatible devices are based on the Qualcomm X65 modem: the NetGear 5G hotspot and two smartphones, the Samsung Galaxy S22 and the Motorola Edge+.² However, these devices do not fully support Band 70, but instead aggregate Bands 66 and 71.

DISH’s opportunity to grow its customer base will be hindered by the lack of devices that are compatible with its 5G network

The lack of compatible devices means that the adoption of DISH’s network is effectively on hold, or at least constrained. Even if DISH announced that additional compatible devices would become available throughout the year, not many customers will be willing to join DISH because of the very limited phone choice.

However, there are encouraging signs from Samsung, with whom DISH closed a USD1.2 billion deal for RAN equipment and software. The vendor announced that its collaboration with DISH will extend to providing 5G devices that are able to connect to DISH’s 5G network. DISH plans to continue to use Samsung phones as reference devices throughout the network deployment process. However, there is no sign of any deal with Apple, and the lack of a compatible iPhone may be off-putting for many customers.

Certainly, the need to capitalise on spectrum advantages is imperative in the competitive US market, and DISH had only two choices: either deploy the spectrum in a timely manner or pay fines to the FCC for late build-out (this would also mean losing a time advantage over Verizon and AT&T, which are only just starting to build out their mid-band 5G networks). However, perhaps DISH should have adopted a more cautious approach when it was bidding for spectrum that no other operators were using and for which no compatible devices had been developed. The key question for any operator when investing in niche spectrum such as Band 70 is whether OEMs such as Apple and Samsung will support the band and whether they will see a significant business case for developing a full range of devices.

The example of AT&T shows that investing in a spectrum band can deliver no returns if the market conditions are not correct

Past experience has shown that the actual value of spectrum depends on many factors including the ease of deploying services with compatible devices. There are plenty of examples of operators that have acquired spectrum but have been unable to find a viable case for deploying networks with it.

This was the case for AT&T. It spent 10 years attempting to monetise its two unpaired 5MHz C and D Block channels in the 2.3GHz WCS band, which it purchased with NextWave Wireless in 2012. It ended up transferring control of these airwaves to a satellite radio operator. The bands were initially assigned as vacant guard bands to prevent interference with satellite radio services, but were later permitted to support mobile broadband. They became the focus of AT&T’s many efforts to run LTE operations, despite having very limited ecosystem support.

The last effort, developed with Nokia, aimed to use the two spectrum blocks to sell private LTE services to utilities. AT&T seemed to have a healthy list of potential customers interested in leasing the spectrum to build private wireless networks for a range of services such as meter monitoring and disaster recovery. However, when the FCC made other spectrum bands available directly to utilities, many reconsidered their interest in leasing AT&T’s WCS spectrum.

These changes undermined AT&T’s pipeline and hindered its attempts to monetise its spectrum. As a result, AT&T passed the bands to Sirius XM for a potential satellite-based public safety use case.

Whether DISH’s bet will pay off is yet to be seen

AT&T provides a clear example of a series of efforts and investments in a niche spectrum band that delivered no return because of performance and ecosystem limitations. However, the costs were limited and the damage was contained; AT&T simply did not manage to use extra bands for LTE, but it still had adequate spectrum for its primary services.

The story is different for DISH, which has invested heavily in its spectrum and is using it to support its entire mobile business. DISH is also using the spectrum for the commercial launch of its first ever mobile network.

Perhaps DISH’s capex-light strategy has factored in the delayed customer take-up and revenue generation. The strategy centres around the operator’s claim that the overall cost of its network will be USD10 billion for a nationwide roll-out (put into context, that corresponds to half the amount that Verizon plans to spend in capex in 2022 alone). The risk taken by DISH may well have been calculated at the beginning of its transition to mobile operator.

¹ The network was initially expected to go live in 3Q 2021.

² The Motorola Edge+ is only available in Las Vegas.