Dish Network Aspires to Be America's Rakuten in 5G

Mike Dano
3/5/2019

Most analysts remain skeptical, to say the least, of Dish Network's plans to build a new, nationwide 5G network in the United States.

"Dish Network... isn't that the old satellite TV company that's quietly fading into obscurity?" they ask. "Is the company really going to challenge behemoths like Verizon and AT&T in 5G?"

According to Dish executives, including Charlie Ergen, the answer is a resounding yes. And a big part of Dish's strategy involves using the latest in networking technology, technology that won't be encumbered by the legacy "brownfield" trappings of 2G, 3G and 4G.

Basically, Dish wants to be America's Rakuten.

For those who missed this year's Mobile World Congress trade show, Rakuten is the Japanese e-commerce giant that plans to build a brand-new 4G network in Japan to directly challenge the market's three incumbents: Docomo, SoftBank and KDDI. The company plans to do so in large part by eschewing traditional vendors like Ericsson and Huawei and instead developing a completely software-powered, virtualized cloud-based network. Basically, Rakuten wants to completely throw out traditional wireless architecture in favor of cheaper Internet architecture.

As detailed by Rakuten executives in a seemingly endless parade of MWC appearances, the company plans to roll out a wireless network with roughly 100 core technicians, using roughly 1% of the number of equipment models that traditional telecom operators manage, by spending roughly half of what it would cost to build a 4G network via traditional methods. Oh, and when you factor in Rakuten's 5G plans, that cost-savings figure goes up to 70% to 80% versus traditional wireless networks. Rakuten plans to test its network this year and launch commercial services by October.

Could other operators import Rakuten's strategies? "Yes, other operators can replicate that," Cisco's Bob Everson told The Mobile Network. (Cisco joins Nokia, Intel, Red Hat, Ciena, Netcracker, Mavenir, Quanta and others as supplying Rakuten.) "We get this question a lot from operators as well. The thing with Rakuten is it is a whole system with a bunch of different elements that are replicable. Sure there are very few scenarios that look exactly like theirs but if you look at the platform they have built out, the programmable infrastructure piece can be reused."

Dish executives appear to be listening. "We're also excited about is what's happening around virtualization and the opening of interfaces within radio access networks, which we think will have a significant impact on capital and operating expense in a network," said Dish's Tom Cullen on the company's recent earnings call, according to a Seeking Alpha transcript of the event.

"I believe that 5G with the proper architecture, right and a clean sheet of paper has the ability to be far more reaching then the marketplace understands today," added Dish's Ergen on the same call.

Further, Rakuten's CTO, Tareq Amin, hails from Reliance Jio in India, where he helped develop that operator's cloud-based, ground-up approach to launching an inexpensive wireless network. Jio began offering services in 2015 and by 2020 is expected to have over 400 million customers.

"Yes, we of course, have looked at Jio and they've graciously spent some time with us to help us better understand how they approach the market," Dish's Cullen said. "It's pretty well documented how disruptive they were in terms of elimination of many carriers and forcing prices and competition to respond."


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So is Dish employing this kind of radical approach to network deployment with its NB-IoT network? It certainly doesn’t look like it. Dish is teaming with perhaps the most traditional vendor in the space, Ericsson, for its ongoing NB-IoT network build out. Further, Dish will probably be walled off from any vendor with even a whiff of Beijing influence given Ergen's deployment of the "for the good of the nation" 5G argument that T-Mobile is also using for its own proposed merger with Sprint.

Regardless, based on the success of Jio and the rise of Rakuten, some analysts are beginning to see Dish's side of the argument.

"The technological underpinnings of what Dish has been saying may not be as far fetched as many seem to believe," wrote the Wall Street analysts at New Street Research. "Dish still has a long way to go before it becomes an American Jio. It needs a lot of capital, even at 60-70% lower cost to build a network. It needs a partner(s) to help it deploy the spectrum. And then it needs to go head to head with entrenched incumbents to take share and generate revenue. The fact that the technology is ready is a small step on a very long journey. But it is a step."

Dish, of course, is in the midst of spending between $500 million and $1 billion by 2020 to construct a nationwide NB-IoT network for Internet of things (IoT) services. Analysts generally believe that effort is mostly geared toward making sure Dish can hold onto its spectrum licenses by meeting the FCC's spectrum buildout requirements.

But Dish has said that, after the stand-alone version of 5G is released by the 3GPP in 2020, it plans to spend roughly $10 billion to build a brand-new 5G network that will directly compete with the likes of AT&T and Verizon.

At least, Ergen thinks it will be around $10 billion. "I think we're going to be in that range, could be a little higher, it could be lower," Ergen said, when questioned whether the advancements by Jio and others are helping to reduce the cost of a greenfield 5G network.

So, ultimately, will Dish actually follow through with its promises and build a new, nationwide 5G network? Possibly. It's worth noting that Ergen has a history of skating to where the puck is heading -- after all, Dish's Sling TV was the first company to launch a streaming TV service, before YouTube, Hulu and AT&T (though Sling has had a rough go of it).

However, many believe Ergen and Dish are just treading water in the hopes that the merger between T-Mobile and Sprint ultimately will be rejected by federal regulators. Dish -- a vocal opponent of the transaction -- could then potentially sell its vast spectrum holdings to T-Mobile. After all, T-Mobile has made no secret of its desire for more spectrum.

But if the merger between Sprint and T-Mobile is approved, and the availability of additional spectrum like CBRS and the C-Band further reduces the value of Dish's spectrum holdings, Ergen may well want to turn to Rakuten's Amin for more advice. Or maybe even a job (Amin is no stranger to the United States, having worked at T-Mobile in the US from 2002 to 2008).

Either way, it's probably just a coincidence that Rakuten just launched a major advertising campaign in the United States to begin pushing its e-commerce offerings.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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Cloud 4G
Cloud 4G
7/27/2019 | 10:13:32 AM
The Great Unknown Beckon Promise or Peril
Great article that pulls together two examples of the common disruptive approach to wireless.

 

What makes an analysis of the prospects for Dish and Rakuten difficult to compare are the large differences in country size, population density and accessible deployed fiber optic.  The distributed Internet method of deploying wireless depends on either fiber optic or Gigabit wireless broadband for backhaul/fronthaul. Rakuten's VNF, virtual network function, cloud network approach relies heavily on fiber-optic to connect to the 'network node' radio heads to reach the lower cost of deployment and flexible virtualized "internet" type architecture.  The prospects look a different in the USA: Japan is among countries that deployed dense fiber-optic grid networks that provide lowered cost.  The USA's fiber-optic plant is haphazard and costly by comparison. 

 

DISH and all other MNOs face a highly varied geography and other factors that drive up the costs of deploying distributed networks.  There are ways to cut through some cost differences between these scenarios that help the Rakuten example service as a template for Dish.

 

Both companies ride a similar MVNO to network infrastructure deployment strategy that eases market entry and building of networks on a pay-as-you-go basis. That, however, places the burden of proof on company performance.  In theory, the new wave of virtualized and distributed network architecture provides a much lower cost of deployment and ongoing operation while being more capable of providing multiple services. The market is more mature, which makes populating greenfield networks more difficult to reach the ROI breakeven.  

 

It is exciting to see companies that are taking up the distributed network banner in attempts to be the next disruptive wave of wireless/ICT.  The proof will be in the execution that delivers results as this shifts from theory to the risking of capital.