Dish Network, which is constructing a 5G wireless communications network of its own, has signed a long-term strategic network services agreement with AT&T that makes AT&T its primary network partner for its mobile virtual network operator customers. Dish disclosed the agreement this morning, and the price of shares in AT&T fell more than 2 percent on the news, with Dish losing 1.5 percent.
“Through this agreement, Dish will provide current and future customers of its retail wireless brands, including Boost Mobile, Ting Mobile and Republic Wireless, access to best-in-class coverage and connectivity on AT&T’s wireless network, in addition to the new Dish 5G network,” a statement from Dish reads. “The agreement accelerates Dish’s expansion of retail wireless distribution to rural markets where Dish provides satellite TV services. AT&T is also providing transport and roaming services as part of the agreement, to support Dish’s 5G network.”
Dish is committed to providing competition in the wireless market as the nation’s fourth facilities-based carrier, according to the statement, which said that the company will continue to build out the nation’s first cloud-native, OpenRAN-based 5G network reaching over 70 percent of the population by 2023.
“Teaming with AT&T on this long-term partnership will allow us to better compete in the retail wireless market and quickly respond to changes in our customers’ evolving connectivity needs as we build our own first-of-its kind 5G network,” said John Swieringa, Dish chief operating officer and group president of retail wireless. “The agreement provides enhanced coverage and service for our Boost, Ting and Republic customers, giving them access to the best connectivity on the market today via voice, messaging, data and nationwide roaming on AT&T’s vast network, as well as Dish’s 5G network.”
According to Dish, AT&T has been recognized as the Nation’s Best Wireless Network two years in a row, according to America’s biggest test. Dish cited AT&T 4G LTE as receiving the best network designation from GWS OneScore 2020. GWS conducts drive tests for AT&T and uses the data in its OneScore analysis, according to Dish.
“Fast, reliable and secure, AT&T 5G is available to 250 million people across the country over sub-6-GHz spectrum and millimeter-wave spectrum (AT&T 5G+), which is available in parts of 38 cities and at more than 20 venues, including high-traffic places like stadiums, arenas, airports and campuses,” the Dish statement reads. “AT&T plans to cover 200 million people across the country with C-band (mid-band) 5G by the end of 2023.”
Dish said that for many years, AT&T has been a leader in connectivity. Between 2016 and the end of the first quarter 2021, AT&T has invested more than $140 billion into its wireless and wireline networks, including capital investments and acquisitions of wireless spectrum and operations, to support market demand for communications, Dish said. The agreement allows AT&T the opportunity to use a portion of Dish’s spectrum in various markets to help support Dish customers on AT&T’s network, the statement from Dish added.
“Teaming with Dish on this agreement is not only a testament to the strength of our network, but it further validates the investments we’ve made in our fiber and wireless infrastructure,” said Thaddeus Arroyo, CEO of AT&T Consumer. “We welcome Dish wireless and its customers to the nation’s largest and best wireless network for all of their streaming, data and roaming needs.”
A senior analyst at data and analytics company GlobalData, Tammy Parker, said that the deal would be highly beneficial to AT&T, because the company not only would gain at least $5 billion in revenue from new mobile virtual network subscribers during the term of the 10-year agreement, it also would have access to Dish’s spectrum holdings to support Dish customers on the AT&T network. The network services agreement is not exclusive for either party, so both can go out and find new dance partners, as she put it; however, given the depth and breadth of this agreement, that would appear both unlikely and unnecessary.
“Both companies are poised to ride the U.S. wireless industry’s ongoing growth wave,” Parker said. “This is increasingly driven by the rollout of 5G, which enables faster network speeds, lower latency and new use cases, including internet-of-things services, that will result in many users having multiple wireless subscriptions. According to GlobalData’s latest forecasts, the number of unique mobile users in the United States will increase by 5 percent over the next five years. Furthermore, total mobile subscriptions in the United States will expand by more than 30 percent during that time, and there will be nearly 692.6 million U.S. mobile subscriptions by year-end 2026.
Parker said that a fascinating part of this new arrangement is that it provides a glimpse into AT&T’s concerns regarding the possibility that Dish could sell out to another entity, perhaps even Amazon or Google. Rumors have abounded, even before Dish agreed to build its 5G network on Amazon Web Services’ (AWS) cloud platform, about possible negotiations between Amazon and Dish regarding the former’s potential use of Dish’s forthcoming 5G network to offer new services, Parker said.
“Although there is nothing new to report there, this network services agreement stipulates that AT&T will be allowed to terminate the agreement in the event of a qualifying change of control of Dish,” Parker said. “This could include a rival wireless provider, U.S. cable company or ‘certain large technology companies’ taking over 50 percent more of the voting power or economic value of Dish. AT&T would still have to support Dish’s mobile virtual network operator customers for up to two years after such a termination.”
T-Mobile, with its Sprint network, is the primary mobile virtual network operator partner for Boost and Republic, Parker explained. Ting operates on every nationwide network except AT&T, she said; however, although Dish’s involvement saved T-Mobile’s acquisition of Sprint, the relationship between Dish and T-Mobile appears to have been fraught from the start.
“T-Mobile’s plans to shutter its 3G network by January 2022, leaving many of Dish’s customers without network service, has created an especially contentious standoff between the two companies, which likely helped pave the way for Dish’s new agreement with AT&T,” Parker said.
Craig Moffett and Nick Del Deo of MoffettNathanson Research published a blog post in which they expressed their analysis of the agreement between Dish and AT&T.
“AT&T has all but assured Dish’s survival, and as a much more disruptive and dangerous competitor than would otherwise have been the case,” the post reads. “AT&T has been signaling recently that they want more wholesale business when they can get it, so perhaps we shouldn’t be surprised. They clearly decided that the short-term gain of additional wholesale revenue was worth that risk. But they’d be well advised to be careful what they wish for. We see their decision to extend this deal to Dish as a catastrophically bad one. Dish and its investors should thank their lucky stars for AT&T’s strategic blunder.”
About Dish Network
Background information supplied by Dish describes the company as a connectivity company. “Since 1980, it has served as a disruptive force, driving innovation and value on behalf of consumers,” the information reads. “Through its subsidiaries, the company provides television entertainment and award-winning technology to millions of customers with its satellite Dish TV and streaming Sling TV services. In 2020, the company became a nationwide U.S. wireless carrier through the acquisition of Boost Mobile. Dish continues to innovate in wireless, building the nation’s first virtualized, O-RAN 5G broadband network.”