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DISH to spend up to $1B on wireless network build through 2020

DISH Network Corp. said Feb. 21 that it remains on track to complete the first phase of its planned wireless network deployment by March 2020 in accordance with regulators' build-out requirements.

In a Form 10-K filing, DISH said it expects to spend between $500 million and $1.0 billion on its wireless projects through 2020. During a Feb. 21 earnings conference call, DISH Executive Vice President of Corporate Development Thomas Cullen said the estimate includes both capital and operating expenditures and will begin to be recorded in 2018, though "the bulk of it" will be seen in 2019. Some of these expenditures will also occur in 2020, he said.

Since 2008, DISH has directly or indirectly spent more than $21 billion on wireless spectrum licenses and investments. DISH plans to utilize this spectrum through a two-phase network build-out plan. The first phase involves a narrowband network specialized for low power machine-to-machine communications. This network will be designed to support the internet of things. The second phase will be to layer in next-generation 5G connectivity as the technology advances and hardware becomes available.

Many of DISH's spectrum licenses are subject to various build-out requirements from the Federal Communications Commission. For example, the 700 MHz E Block licenses DISH purchased in 2008 and the AWS-4 licenses acquired in 2012 require the satellite company to build out a network that covers at least 70% of the population in each license area by March 2020.

"The plan is to provide terrestrial signal coverage to 70% of the population in each of the 176 license areas. So it's not on a U.S. population basis," Cullen said of the requirement.

He noted that while DISH is initially focused on meeting the deadlines imposed by regulators, it is also planning for the second phase of deployment, which contemplates "a broader use of the spectrum beyond IoT."

DISH Chairman Charlie Ergen, who stepped down as CEO of the company in December 2017 to focus on the wireless business, agreed, saying the narrowband network will be "just a small part of where we'll go with that network," connecting "people and sensors and microprocessors" that have constant, low-power bandwidth requirements.

Regarding the second phase of the build-out, Cullen said there continues to be "a few practical gating factors," including the international standard setting process. Initial standards for 5G, he said, have focused on "the non-stand-alone network," which has been pushed by incumbent wireless players and relies on having a 4G core on which to roll back.

"Since we're a new entrant, we would be waiting for the stand-alone 5G standard, which is expected to be ratified later this year," Cullen said.

Another issue in terms of timing is the availability of the 600 MHz spectrum DISH purchased through the broadcast incentive auction. Some portion of that spectrum will not be clear and available for wireless use until the FCC completes the 39-month repacking process, moving the TV stations currently occupying the spectrum to lower bands. "That clearance of all those licenses probably won't occur until early 2020," Cullen said.