Dish adds another cut to the possibility of the contracting industry’s ‘death by a thousand cuts’

In Featured News by Wireless Estimator

Dish Disses

DUMBFOUNDED WHY DISH is sending invoices to fix a Crown Castle compound design that was installed according to plans; contractors are balking at paying to retrofit a base station whose cabinet door extends approximately 20 inches over Dish’s leased 5′ x 7′ area.

In a recent legal battle, Dish Wireless Inc. emerged victorious against Crown Castle USA Inc., with a Denver jury ruling on April 11, 2024, that Dish did not violate the 30-year master lease agreement between the two companies. The dispute centered around Dish’s use of an additional three feet of space on cell tower sites, which Crown Castle claimed should have resulted in approximately $8 million in additional rent per year. Crown Castle argued that Dish’s cabinet doors extended at least 20 inches beyond their leased 5′ x 7′ space when opened for maintenance or repair on 3,339 sites.

The verdict was a rare piece of good news for the financially embattled EchoStar/Dish Network. It potentially saved them $325 million in additional rent over the duration of the lease. This decision temporarily relieved its dim financial outlook, allowing Dish to avoid significant additional costs and focus on other aspects of its business.

Controversial invoices to contractors

However, this legal triumph has been overshadowed by Dish’s subsequent and controversial decision. A month after the verdict, Dish sent invoices to some contractors who installed the disputed sites, demanding $5,000 per site for those constructed in Crown Castle’s compounds. Due upon receipt, the chargeback invoices included details such as the number of sites, site identifiers, and the item description: “Project Overhang Crown lease area remediation.”

Contractor reactions and allegations

Contractors were quick to voice their outrage. Two contractors informed Wireless Estimator that they were allegedly pressured to pay the full invoice to address the overhang dispute. They were told the amount would be deducted from any outstanding receivables if they refused to pay.

One contractor, who also preferred to remain anonymous, expressed frustration: “This is absurd. We were already paid for these sites after providing all of the closeout docs, and we completed them according to the plans that we were provided.”

All contractors reported receiving mixed messages and facing difficulties getting clear answers from area management, similar to what a spokesperson from Englewood, Colorado, related to Wireless Estimator regarding the questionable back charges.

“We are pleased with the recent jury decision with regard to the Crown Castle Master Lease Agreement. For other unrelated operational topics, DISH will not comment on specifics, apart from saying that we partner with hundreds of construction companies across the country and highly value our relationships with them,” the spokesperson said.

Dish’s actions continue the death-cut scenario

Dish’s reimbursement request, in addition to asking contractors to take another cut in project pricing, reflects the idiom “death by a thousand cuts,” a gradual reduction or weakening of something over time due to a series of small, often unnoticed, actions or events that eventually cause a business to fail.

Dish does not have exclusivity with cuts and is overshadowed by AT&T. Last December, the carrier, driven by the need to reduce its OpEx, informed 29 mid-sized contractors that it would not renew their maintenance contracts and would instead provide them to two larger contractors.

Following the announcement, a maintenance contractor in Houston, Texas, elected to close its doors. Another cut the contractor cited was “a reduction of CapEx by the carriers, making it impossible to operate efficiently.”

Although manageable but cumulatively devastating, other cuts affecting contractors are increased time and expenses attributed to compliance company Avetta, escalating vehicle insurance and fuel costs, lending interest rates, payment terms, and seldomly approved change orders.

The ‘Race to 5 G’ workforce hype has halted

A STRATEGY THAT HAS HALTED THE BUILD RACE: “We’re not abandoning the goal of widespread 5G coverage,” said a telecom executive at the Connect X conference last month. “But we need to be strategic about how we get there. It’s about making smart investments that ensure we can continue to operate and innovate in the long term.”

Despite the initial aggressive rhetoric that if America didn’t beat China in the Race to 5G, the United States would immeasurably suffer, financial realities have led to a more measured approach. The focus has shifted from rapid deployment to sustainable and strategic expansion of 5G networks.

Unfortunately, that is crippling many contractors.

Wireless contractors thrived during the early stages of 5G deployment and are now facing a downturn. With fewer projects available and increased pressure to reduce costs, many contractors struggle to stay afloat. Layoffs and business closures are becoming more common, highlighting the fragility of contracting business models in the current climate.

For many years, industry associations have claimed that to win the 5G race, at least 20,000 tower technicians and infrastructure professionals had to be added to the workforce. They passed the baton off to community colleges and other career institutes, including a prison outreach program, to train workers for a “better future” with assistance from Pell Grants and other funding.

However, graduates find hiring difficult since the workforce has dropped considerably and skilled long-time workers are unemployed.

At May’s Connect X conference in Atlanta, one contractor informed Wireless Estimator that his company was ready to notify over 40 tower technicians that they would be temporarily laid off. However, he readily admitted that it could be permanent.

Additional contractors said they, too, were reducing their workforce with the common cut being reduced untenable pricing and the lack of work.

The most accurate indicator of a shrinking workforce is Wireless Estimator’s Help Wanted portal. As in previous years, pre-COVID-19 daily help wanted offerings averaged 500; today, there are 85 open positions.

A financial analyst contacted Wireless Estimator earlier this month to inquire whether the monthly graphing of employment positions was accurate. Unfortunately, it is.