At CES, Dish touts $50 million grant alongside spectrum transaction

LAS VEGAS – CES – Dish Wireless' goal of building a greenfield 5G network on an open RAN architecture got a $50 million vote of confidence from the US government Wednesday, in the form of a grant to help it create the Open RAN Center for Integration and Deployment (ORCID).

NTIA administrator Alan Davidson announced the award, part of an almost $80 million allocation under the administration's Public Wireless Supply Chain Innovation Fund, at an event staged at a Dish open RAN 5G cell site a few blocks west of Interstate 15 here.

At the event, Davidson and Dish chief Charlie Ergen took turns talking up open RAN as a development that would both benefit the entire wireless industry and speed Dish's efforts to become a viable fourth nationwide carrier in the US.

"Just a few firms today provide the full set of radios and computers that power mobile phones, and some of those equipment vendors pose national security risks to the US and our allies around the world," Davidson said. "The result is that we have a wireless equipment market where costs are high, resilience is low and American companies are increasingly shut out."

ORCID will be set up in Cheyenne, Wyoming, in collaboration with Dish vendors Fujitsu, Mavenir and VMWare. It will host interoperability testing to ensure that open RAN can deliver on its promise of opening those vendor lock-ins. Cheyenne is the location of Dish's sole C-band spectrum license.

The Innovation Fund behind Wednesday's awards, launched with $1.5 billion in funding over 10 years as part of 2022's CHIPS and Science Act, has distributed earlier funding rounds to other wireless companies, universities and industry consortiums.

"Open, interoperable networks will drive competition," Davidson continued. "They will make our supply chains more secure and they will lower costs for consumers. They will improve resilience, and they will protect our national security."

Open RAN as a lynchpin

Charlie Ergen, co-founder and chair of Dish's parent firm EchoStar, pitched Dish Wireless as proof of open RAN's ability to help carriers rapidly scale their networks.

"Dish has been able to see the benefits of open RAN firsthand," he said. "In 2019 we didn't have a single 5G tower; today we have over 20,000 operating sites and we cover more than 250 million Americans with open RAN technology."

The site behind them featured a traditional concrete-clad, roughly garage-sized structure for Verizon's network gear, with Dish's mix of components from different vendors confined to a cabinet behind it about the dimensions of a refrigerator. 

Dish launched its 5G service here in late 2021 as the first step in a Department of Justice-approved plan to have it become a fourth national carrier after T-Mobile's purchase of Sprint reduced the country to a triopoly of nationwide carriers. Last June, Dish reported that it had met an FCC deadline to cover more than 70% of the US population with its 5G service via a network that included 15,000-plus 5G sites. 

Dish's next deadline comes in June 2025, when its 5G network must cover 75% of the territory in each of its spectrum licenses. But even as its coverage has advanced and speeds have improved, Dish's wireless business continues to struggle and the company continues to face skepticism about its ability to meet that goal.

A complicated spectrum transaction

EchoStar's other news Wednesday came with far less fanfare: its transfer of certain spectrum licenses to a new holding company, among other moves. The company said the efforts would provide "optimized strategic and financing flexibility" and followed the company engaging outside legal help "in evaluating potential strategic alternatives."

The transaction raised questions about whether Echostar would seek to sell or refinance some of its spectrum holdings to cover future capital needs. Asked about that Wednesday, Ergen first gave a lengthy exposition about the potential utility of the company's spectrum for non-terrestrial uses, and then he brushed aside the notion of a sale.

"We don't think that selling the spectrum is the right answer," he said. But he left a door open to non-terrestrial partnerships: "Maybe we partner with people to do that because we don't have all the expertise, just as we've partnered with the folks here to build open RAN."

The financial analysts at MoffettNathanson also cast doubt on the idea of a spectrum sale. In a note to investors, the firm characterized the transfer as an expected move after EchoStar merged with Dish Network to boost its ability to secure capital.

"This seems a logical next step," the analysts wrote. "It does not, however, appear to presage a sale." Indeed, Dish is restricted from selling its spectrum under the terms of its 2019 deal with the Department of Justice.

Other analysts agreed. For example, the financial analysts at New Street Research wrote in a note to investors that the new spectrum transaction gives Dish and EchoStar more flexibility. "The company has more options now (the purpose behind the reshuffle), with a broad array of spectrum transferred to EchoStar and some DBS subscribers having been transferred to Dish Network," they wrote in a note to investors Wednesday. "The company can now raise debt at EchoStar, backed by all the assets there, or they could do notes backed by specific tranches of spectrum at either EchoStar (AWS-4) or Dish Networks (AWS-3)."

And, according to the financial analysts at Raymond James, the moves are necessary as Dish/EchoStar works to position itself for the future. "It is not a surprise to us that EchoStar is looking at the next possible strategic alternatives following the now-closed Dish-EchoStar merger, as the combined company continues to navigate the daunting [debt] maturity schedule, build out the greenfield 5G network and ramp retail and enterprise wireless businesses," they wrote in a note to investors Wednesday.