DISH Network Corp. said June 15 that it met the deadline set by the Federal Communications Commission requiring the company to offer 5G broadband service to at least 20% of the U.S. population by June 14, 2022.
The company was required by the FCC to meet this 20% build-out goal as a condition for T-Mobile US Inc.'s acquisition of Sprint and DISH's related purchase of Sprint's Boost Mobile prepaid business. By June 14 of 2023, DISH needs to cover 70% of the population and will be required to cover 75% of the population in each Partial Economic Area by mid-2025.
The news was largely expected, as DISH said in a May SEC filing that the volume of construction activities had begun shifting from markets that would light up before June 14, 2022, to market areas that will light up before June 14, 2023, in conjunction with the 70% population coverage requirement.
Had DISH failed to meet the requirement across the three bands of spectrum in question, the maximum penalty it would have faced was $200 million.
In May, DISH's Smart 5G network commercially launched through Project Genesis, offering DISH wireless service in Las Vegas. Since then, DISH has expanded service to more than 120 cities across the country.
The 2023 requirement is significant, according to New Street Research analyst Jonathan Chaplin.
"We estimate that this will require 17,000 cell sites covering 375k square miles," Chaplin said of the 70% build-out requirement. "That is a material increase from the 4k cell sites covering 125k square miles that we estimate they needed to meet the 20% deadline."
Chaplin noted that DISH has been "consistently confident" about meeting the 70% deadline in 2023.
"In the event that they miss the June 2023 deadline, the penalties become significant, as DISH could owe up to $2 [billion]," he said, adding that DISH would also risk losing key spectrum licenses.
Samsung Electronics Co. Ltd.'s Galaxy S22 and NETGEAR Inc.'s 5G hotspot are currently offered to Project Genesis subscribers. DISH also offers the Motorola Edge+ for purchase in Las Vegas. Additional compatible devices will become available throughout the year.
Galaxy S22 users are simultaneously connected to DISH's Smart 5G network and a partner network, switching between both to offer voice and data services from multiple networks at any location and at any point in time. This solution takes advantage of eSIM and dual SIM technologies.
Embedded subscriber identity module cards, also known as eSIM cards, differ from traditional, provider-locked SIM cards in that they are built into the phone's board and cannot be physically removed. DISH has said eSIMs would help the company's nascent wireless business take share from incumbents to reach 40 million subscribers by 2040, up from 8.2 million retail wireless subscribers at the end of the first quarter of 2022.
DISH shares were up 3% in midday trading June 15.