Dish's mystery partners probably won't bring the big bucksDish's mystery partners probably won't bring the big bucks
Facebook is investing $5.7 billion into one of India's leading mobile network operators. Could Dish Network score the same kind of agreement with an Internet company for its 5G ambitions?
April 29, 2020
Dish Network has hinted at mystery "partnerships" that would aid the company in its 5G ambitions. However, Dish probably shouldn't hold its breath for the kind of partner that Facebook recently became for Jio in India.
Facebook recently invested $5.7 billion into India's Jio with an eye toward potentially conducting e-commerce through its widely used WhatsApp service. It's the biggest investment the social networking giant has ever made, and some argue that it's a further signal of an inevitable collision between the global telecom industry and the Internet services sector.
Dish, which is on the hook to build a 5G network in the US, is undoubtedly hoping for that kind of mash-up – and the money that would come with it.
"We estimate that Dish needs $9 billion to fully fund its [5G] ambitions which, given the scale of the market opportunity, is not very different from what Facebook invested in Jio," wrote the Wall Street analysts at New Street Research in a recent note to investors. "We think a tech company would be wise to take a stake in Dish."
"We could see big moves from the likes of Amazon, Alibaba, Baidu and Google in fast-scalable ISPs such as Dish, which come with greenfield networks and no legacy tech baggage," wrote analyst Neil Shah with Counterpoint Research. He pointed to a number of other examples of Internet behemoths – flush with cash – pushing into the telecom sector, ranging from Facebook's Telecom Infra Project to Amazon's CBRS investigations to Microsoft's purchase of Affirmed Networks to Rakuten's mobile network in Japan.
And analyst Dean Bubley with Disruptive Analysis argued that both telcos and Internet companies are focusing on the same areas of research and development, from silicon to data centers to radio access networks. He said their paths would inevitably cross as a result.
Dish, however, is nothing like Jio Platforms, which is a subsidiary of one of India's largest multinational companies. And the US is not India. As the analysts at New Street explained, the main thrust of Facebook's investment into India likely involves the Internet giant's efforts to overcome the regulatory obstacles it has faced, not necessarily its general interest in telecoms globally. After all, Indian regulators banned Facebook's "free basics" program over concerns it violated the country's net neutrality framework.
Others are far more skeptical about a Facebook-style investment into Dish. "For any strategic partner – say, Amazon or Google – to even seriously consider putting their own customers onto a new Dish-built network, they would have to have incredibly high conviction that Dish will successfully build out a network that will be fully ready to replace the T-Mobile MVNO when that deal expires in 2027. That may sound like a long time away, but it's not; building a credible network takes a long time," wrote the analysts at Wall Street research firm MoffettNathanson in a recent note to investors, pointing to Dish's plan to sell T-Mobile services as an MVNO while it builds its own 5G network.
The MoffettNathanson analysts argued that Amazon "would never accept the business/reputational risk of putting their retail or AWS commercial customers on a network that might simply 'expire' (or, less dramatically, offer customers a wholly inadequate experience) after seven years." Dish's agreement with T-Mobile expires in seven years, after which time the company will have to rely solely on its own 5G network.
Bubley, with Disruptive Analysis, speculated that Amazon could find some common ground with Dish. He suggested a partnership between Dish and Amazon could involve Amazon running Dish's 5G network operations inside data centers in its Whole Foods grocery sites. Or Amazon could use Dish's network as a roaming option for the private 3.5GHz CBRS networks it has indicated interest in.
Following the money
It's clear that telcos and Internet companies are increasingly ranging into each others' areas, whether in business services like videoconferencing or streaming Hollywood entertainment. And newer trends like edge computing will only exacerbate the blurring of those lines.
The real question, though, is whether Dish can expect to get any cold, hard cash from potential Internet partners. So far, it doesn't have much to offer outside of a flagging satellite TV business; Jio, on the other hand, launched 4G services in 2016 and now has more than 300 million mobile subscribers.
And one of the few certainties of the pandemic is that risky investments will be viewed with an extra level of skepticism.
Regardless, Dish has indicated it is moving forward with its plan to purchase roughly 10 million prepaid customers from Sprint's Boost brand. And as for its mobile network, the company last week inked a supply agreement with vendor Mavenir for the software that will control its 5G antennas.
So far, Dish hasn't really opened up its pocket book. Whatever partners it may attract in the near-term probably won't either.
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