EchoStar Looking For Vertical Boost Following FCC Win
EchoStar announced last week that the FCC has approved its 5G network buildout framework. EchoStar claims this will help its Boost Mobile (formerly DISH Wireless) network achieve 80% coverage of the U.S. population by the end of the year, which equates to an additional 30 million more Americans than its 2023 obligation to cover 70% of the population. Whether the troubled North American service provider survives until then remains to be seen. Indeed, its most recent quarterly returns revealed continuing subscriber losses which, combined with its heavy debt load and dwindling cash reserves, has seen its share price fall, leading to growing fears amongst the investor community of an impending bankruptcy.
Despite this, EchoStar will now accelerate and expand its final buildout milestones in more than 500 licensed areas as it seeks to reverse its downward trend. It claims it can achieve this thanks to the FCC’s adoption of targeted extensions. These provide a construction timeline that more closely aligns with the deployment of EchoStar’s 3.45 GHz spectrum licences by reducing the resources necessary to install infrastructure twice at each cell site. In addition, EchoStar will seek to monetise its spectrum assets through leasing agreements with small wireless carriers and Tribal nations in areas where the company has not yet deployed. Returning to profitability however will take more than simply growing its subscriber numbers. Indeed, monetising 5G investments has proven to be a challenge for operators in many regions, leading to a global downturn in CAPEX spending.
With that in mind, a new partnership, also announced last week, could provide EchoStar with better chances of survival. Tata Elxsi, a division of the Tata Group, announced the inauguration of its xG-Force Lab. The state-of-the-art facility, to be hosted in Bengaluru, India, aims to accelerate 5G innovation by providing ready-to-use infrastructure, cutting-edge tools, and an integrated partner ecosystem for diverse applications across transportation, healthcare, Industry 4.0, media and communication sectors. Its first partner is Boost Mobile.
The newly launched lab boasts some impressive cost saving metrics which will clearly be attractive to the cash strapped operator. According to its press release, Tata Elxsi projects its lab will cut deployment costs and operational expenses (OPEX) by approximately 40% and reduce time-to-market by nearly 60%. All this while providing a portfolio of ready-to-deploy vertical applications across industries with both solutions and a global partner ecosystem.
Boost will use the xG-Force Lab to develop and integrate 5G applications with Tata Elxsi as the Systems Integrator. The latter will leverage its existing products which include Neuron for autonomous networks, TETHER for connected vehicles, TEngage for digital health, and TEDAx for big data engineering. Some of the key service opportunities the partnership will target include streaming media, private 5G networks, connected and electric vehicles, network charging stations, digital health, aerospace and Industry 4.0 solutions for smart factories. It will also help in minimising risks in critical areas such as transportation safety and healthcare data security, while delivering the ultra-low latency crucial for the future of interactive entertainment.
America’s first Open RAN operator has already found some success beyond its traditional consumer markets: it currently has an indefinite delivery, indefinite quantity (IDIQ) contract with the US Navy as well as providing a Private ORAN Network for the US Department of Defense. The DoD’s issuance of guidance on Open RAN to support 5G could yield more results in this space, although given the nature of these contracts, it would be a mistake to view them as anything other than a complementary strategy to growth rather than the primary avenue for turning around the company’s fortunes.
In a recent research note posted to LinkedIn, analyst Luke Kehoe highlighted how those markets that have bucked the trend have seen operators monetise 5G by investing heavily on innovation in tariff pricing. Kehoe notes this has been achieved by providing specialised offerings for specific customer profiles such as gaming and live streaming. The message seems simple: while these developments are encouraging, the company’s leadership must focus on developing clear, revenue-generating strategies that resonate with consumers and enterprise clients alike. Without a solid monetisation plan and more decisive actions in the commercial space, EchoStar’s future remains uncertain.
