Scott Moritz (Bloomberg) -- Dish Network Corp. signed an agreement making Amazon Web Services a key partner in the development of its planned 5G network, advancing the company’s efforts to compete in the wireless business with incumbents like Verizon Communications Inc. and AT&T Inc.
Under the accord announced this week, Dish will use AWS cloud software and equipment to run core elements of the 5G network now under development. The company’s first 5G service will launch sometime in the third quarter using AWS in Las Vegas, the first city in an eventual nationwide expansion. No financial terms were given.
The agreement is a crucial piece of Dish’s 5G strategy and comes nearly four years after Chairman Charlie Ergen said he was seeking a key partner that shared his vision of putting the company’s treasure trove of airwaves to use in a futuristic wireless network. Dish, a pay-TV provider with 11.3 million subscribers, is spending $10 billion to transform itself into a cloud-based wireless carrier to challenge giants like AT&T.
Shares of Dish rose as much as 4.4% to $39.61 Wednesday in New York, a 52-week high and their biggest intraday gain since December. New State Research called the deal “a ‘foot-in-the-door’ with a critical partner that provides strong validation of the opportunity ahead for Dish.”
Dish has the fourth-largest holding of wireless airwaves in the U.S., but almost none of it is in service yet. By using a so-called cloud-native network, Dish will be able to nimbly scale capacity up and down, depending on traffic, and deliver a range of applications, from heavy-data processing for businesses to simple texts to consumer phones.
“We definitely share the same vision with AWS,” said Marc Rouanne, Dish’s chief network officer.
Dish is entering the 5G race behind T-Mobile US Inc., Verizon and AT&T, which already offer the service. But there are still very few 5G users, applications or revenue, suggesting the market remains wide open. Promoters of 5G services say they will enable innovations like immersive gaming and self-driving vehicles.
AWS will serve as the core of Dish’s network, allowing the upstart 5G provider to outsource its data operations in much the same way other businesses have turned to outside IT and cloud-services providers for data management. For Englewood, Colorado-based Dish, this means that mobile traffic picked up by a tower antenna will be immediately connected to the AWS cloud.
While AWS has tinkered in wireless, including a 5G edge-computing partnership with Verizon, this move with Dish is the first attempt to replicate core elements of a telecommunications network in the cloud.
AWS, the largest seller of cloud-computing services, has worked in recent years to make its products more valuable to customers in potentially lucrative fields like telecommunications, health care and defense. The division had $45.4 billion in revenue last year.
“A cloud partner like Amazon a gives us a low starting cost,” Rouanne said. Unlike the massive hardware and network-operation expenses of traditional carrier networks, “we will connect devices in a very cost-effective manner. This will make a big difference in the market.”