Slow Voice Over New Radio Debut an Unexpected 5G 'Negative’: Ergen
The “competitive environment’s good” for Dish Network’s wireless 5G network rollout, said Chairman Charlie Ergen on a Q2 earnings call Wednesday. The “big picture” amid historically high inflation is that everyone's wireless connection “is a necessity,” he said. “After food and water and shelter, it’s just about next in line.”
As the “fourth biggest player” in wireless, “we’re the ones that have the room to grow,” said Ergen. “We like that part of the business.” Dish has “many things we have to do” to reach its wireless targets, “but we’ve done a lot of them already,” he said. One of Dish’s biggest “problems” is its lack of devices with Band 70 that’s “unique to Dish,” he said. “Those devices start to show up in the third quarter, and every quarter we get more devices, which helps us be more competitive there.”
Until Dish signed a new master network services agreement (MNSA) with T-Mobile in May, “we had an unhealthy relationship” with the carrier, said Ergen. “We obviously had a big controversy with the CDMA shutoff, which was a big negative for Dish,” he said. “It was a bigger negative than the market probably appreciated. We certainly did our best to warn people about that and try to lessen the effect of that, but we were fairly unsuccessful.”
With the MNSA, “we’re through that now, and we were able to solidify our relationship with T-Mobile,” said Ergen. “As people on this call know, they universally are claimed to have the best 5G network in the United States,” he said. “But the reality of it is” that AT&T, with which Dish has a separate network services agreement, “has more coverage than does T-Mobile,” he said. “So in a funny sort of way, we have the best of both worlds to use both our partners in different ways,” with different economics and business models, he said.
The Dish 5G network build “is going real well,” said Dave Mayo, executive vice president-network deployment. Having met its FCC obligation June 14 to serve 20% of the population with 5G, “we’re marching on toward the milestone” of reaching 70% of the U.S. next June, he said. Dish has about 5,000 sites “deployed and on air,” he said. It’s on a “pace” to add about 1,000 sites a month, “and we’ll continue on that rate for the balance of the year and into next year,” he said.
In quality terms, “we’re pretty happy with the data experience” of the 5G rollout, said Mayo. “We continue to have work to do on the VoNR experience, as does the rest of the industry,” he said, referring to 5G voice over new radio. “We’re not unique in that respect.” Dish’s target is to have a VoNR network “that is stand-alone” from data and will “operate well,” he said. “We’ll launch VoNR when we have that capability fully optimized and available and working really well for our customers.”
Commercializing VoNR services has been “an unexpected negative in the sense that that has taken longer” than previously anticipated, said Ergen. “Many people in the industry expected to have VoNR in their systems by the beginning of this year,” he said. “T-Mobile and Dish are the farthest along.” But the available VoNR services are “not good enough, in my opinion, for the customer experience that you have to have in voice,” he said. “It’s hampering our ability to put users on our network unless they’re data users.”
The current VoNR user experience is “a little bit clunky,” said Ergen. “Our vendors are helping us with VoNR,” he said. Adding Samsung as a Dish 5G vendor in May “was a huge positive for us that was probably not appreciated” on Wall Street, he said. It gave Dish a second supplier of radios, so “we weren’t single-sourced through Fujitsu,” he said. Samsung, as “a large device manufacturer,” is “very attuned to VoNR and Band 70, and that helps us with probably the two biggest negatives we have,” he said. “You’ve got a real technology leader” in Samsung “that’s taken some of the system integration off our shoulders,” he said.
Dish doesn’t want to say too much about its ambitions to launch a Boost Infinite postpaid service it teased about at a recent investor day conference, said Stephen Stokols, executive vice president-retail wireless. “More will come out later in the year, but it is exciting,” he said. “It’s a more aggressive expansion into postpaid for us. Obviously, it’s an opportunity to come in fresh and do things in a slightly different way.” But Boost Infinite also would be “on our own platform,” he said, “unlike what we’ve been doing with Boost,” which is tied to a T-Mobile platform “with limited capabilities.”
The postpaid business would give Dish “materially” better economics than in prepaid, said Ergen. “We haven’t been able to play in the red zone part of the field to score touchdowns,” he said. “In prepaid, you’re lucky to kick a field goal once in a while. I think we’re going to be able to start scoring touchdowns.”