Dish Network’s agreement to build a new national wireless network has the potential to bring thousands of jobs to metro Denver and restore the region’s faded status as a telecommunications hub.
As a condition of approving T-Mobile’s $26.5 billion acquisition of Sprint, the Nos. 3 and 4 wireless carriers in the United States, the Department of Justice demanded a new national wireless carrier be formed to address anti-trust concerns and preserve competition.
Dish Network, which was sitting on $21 billion worth of wireless spectrum, was in a rare position to take on the challenge. Dish, based in Douglas County, will pay $1.4 billion to acquire Sprint’s three prepaid brands and their 9.3 million customers. Sprint is providing necessary wireless spectrum for another $3.6 billion.
T-Mobile will allow Dish to use its wireless network for seven years as Dish builds out a 5G network from scratch, something the company estimates will cost around $10 billion.
“Imagine if somebody was building electric car today that was superior in every way, went faster, so it’s more robust, cost half as much money and you didn’t have to wait in line to fill it up. That’s what we’re going to have,” Dish Network chairman Charlie Ergen told analysts Monday.
Ergen is promising a cheaper, faster and more advanced network than what rivals will offer. If Dish delivers, it could put Denver back on the telecommunications map after a series of wrong turns and dead ends.
“Traditional home phone services have been widely replaced by wireless phones, and (phone companies) without a mobile offering have seen their residential businesses shrink along the way,” said Ian Olgeirson, a research director for Kagan, a media research arm of S&P Global Market Intelligence.
US West, the Denver-based telecom that came out of the breakup of AT&T, launched its own cellular network in 1998 and got up to a million customers. Qwest Communications, which acquired US West, placed its bet on fiber-optic networks and high-speed data. The wireless assets that used to be based in Denver eventually became part of Verizon.
“You could certainly tie US West’s decision not to develop its own wireless unit as a missed opportunity for the city (Denver) to maintain a higher profile as a telecom hub,” Olgeirson said.
Qwest, in hindsight, made the wrong bet. Fiber-optic networks were overbuilt and broadband became a commodity. Qwest, along with other local broadband providers like Level 3 Communications, ended up as gems in the crown CenturyLink, a provider based in Monroe, La.
CenturyLink, without a wireless offering, has lost landline customers in droves. Dish itself has struggled with cord-cutting of a different kind. It bled 31,000 televisions subscribers in the second quarter and 259,000 in the first quarter, continuing a long streak of declines.
At the same time, content providers have continued to demand more and more money, resulting in a series of running battles and blackouts. Dish was on a path of diminishing returns if it didn’t do something different.
Helen H. Richardson, The Denver PostDish team member Brandon Stepp, middle, checks on the equipment in the base band unit while teammate Bryan Bren, right in reflection, helps to set up a COW, or Cell On Wheels tower, near the DISH Riverfront Call Center in Littleton on July 30, 2019. Both Stepp and Bren are mobile tower deployers for Dish. These mobile towers made by DISH are used for testing and engineering purposes.
A lot of details need to be hashed out, and Dish officials couldn’t provide a figure on the number of jobs the new wireless arm might create in the state. Of the company’s 16,000 current employees, 4,800 are based in Colorado, primarily in metro Denver.
Sprint has about 30,000 employees and T-Mobile has about 51,000. But Dish expects to run much leaner than the incumbents, which it counts as part of its competitive advantage.
Ergen said Dish plans to use existing providers wherever feasible and to funnel tasks like customer service and maintenance through its existing workforce. It will virtualize or use software instead of hardware when it can, which should generate substantial savings.
Assuming Dish can run its wireless operations at build-out with 15,000 people, half of what Sprint deployed, that could still bring 4,500 jobs to metro Denver if the company keeps a similar ratio of local workers to total workers as it does with its television subscription business.
The rollout of 5G wireless services, both mobile and fixed, has generated a tremendous amount of buzz and is expected to transform the economy in unexpected ways. And while it remains in early days, network upgrades are already having an impact.
Installers and repairers of radio, cellular and tower equipment represented the fastest-growing single job category in the state, going from 70 positions in 2009 to 570 last year, according to a study from CommercialCafé.
Dish already was retraining service technicians who installed satellite dishes to handle wireless equipment. The company was also planning to spend up to $1 billion by 2020 on a narrow-band network that would allow commercial users to connect multiple devices and sensors.
The Front Range was part of that initial build-out, meaning the region could have a head start when it comes to the areas that receive Dish 5G services. Dish isn’t saying where it will deploy first.
Ergen said the new architecture the network will be built on offers a tremendous amount of capacity. If Dish matches Verizon Wireless with 120 million retail customers, that would take up only 30 percent of the capacity available, Ergen said.
Helen H. Richardson, The Denver PostDish team members Director of Engineering Monty Groff, right, Rick Sanders, middle and Brandon Stepp, right, both mobile tower deployers, set up a COW, or Cell On Wheels tower, near the DISH Riverfront Call Center in Littleton on July 30, 2019.
Dish could lease another 35 percent out for 5G applications like precision agriculture, health care, robotics, smart cities, smart grid, blockchain, artificial intelligence and driverless vehicles, he said.
After years of failed attempts to acquire wireless spectrum, Dish started winning in 2008. That initially excited investors, who drove up the company’s market value.
But as the years passed with that spectrum not deployed and with the government’s use-it-or-lose deadline around the corner, concerned mounted.
“If you don’t have a viable business around (spectrum), it doesn’t have a lot of value,” said Matthew Harrigan, a telecom and entertainment analyst with Benchmark.
But the right opportunity finally came along, and Ergen’s patience and planning paid off.
“Without the existing spectrum, Dish wouldn’t have been a credible carrier from the vantage point of the FCC or the DOJ,” Harrigan said.
Dish still faces a herculean task. It will need to put up or lease capacity on 15,000 cellular towers to reach 70 percent of the U.S. population by June 2023. It will need to win over customers from well-entrenched rivals like Verizon and AT&T.
And while T-Mobile will initially be an ally, it is expected to up its game once it absorbs Sprint.
Attorneys general in 13 states, including Colorado’s Phil Weiser, have sued to block the combination on grounds it will result in higher wireless bills and harm low-income consumers. They also question whether Dish will be a serious competitor for retail customers.
“My gut feeling is this goes through,” Harrigan said.