Dish and AWS are partnering to create the first cloud-based 5G network, a move that’s likely to shake up the telecom industry. Through the use of Open Radio Access Network (O-RAN) technology, Dish plans to launch its first stand-alone cloud-based network in Las Vegas later this year. The partnership puts Dish on track to become the fourth major 5G provider in the US, and would mark the first significant attempt to replicate core elements of a telecommunications network in the cloud, per Bloomberg.

Using O-RAN will grant Dish more flexibility with its limited spectrum and reduces the need for physical equipment. O-RAN is a disaggregated approach to mobile connectivity that uses software to deploy mobile networks over cloud infrastructure. That approach is crucial for Dish, which lacks the physical infrastructure built up by competitors like Verizon and AT&T. A cloud-based network will also enable Dish to flexibly scale capacity up or down according to traffic volume and deliver a variety of data-intensive 5G applications.

Despite its late arrival, Dish’s cloud-native approach could give it a competitive edge just as US 5G adoption begins to take off. Between 2021 and 2023, we predict the percentage of the US population with 5G mobile phone subscriptions will increase from 12.3% to 37.5%. Dish will arrive on the 5G scene far later than competitors—which represents a major challenge—but the low starting cost of its approach could still give it an advantage by helping to undercut other telecoms on price. Although Dish currently has the fourth-largest spectrum holding of US wireless carriers, the clock is ticking: If Dish doesn’t start deploying 5G before mid-2023, it risks losing some of its wireless spectrum licenses, per CNBC.

The Dish-AWS partnership is mutually beneficial, but Amazon could see a greater benefit. Though Microsoft is reportedly interested in 5G cloud networks and AWS has explored 5G edge computing with Verizon in the past, the Dish deal marks the first true attempt to replicate the physical infrastructure of a telecom network in the cloud. If it works, AWS could take this model and apply it to other telecoms. Dave Brown, VP of AWS’ core Elastic Compute Cloud service, hinted to CNBC that AWS may partner with other telecoms to build their own cloud-based 5G networks down the line. This could open the doors to a significant new growth area for AWS' future business.