The Department of Justice is worried that Boost Mobile users could lose wireless service in the new year if Dish Network and T-Mobile don’t stop bickering. According to a DOJ letter included in a Dish SEC filing, the agency has “grave concerns" that the looming nationwide shutdown of T-Mobile’s 3G network will leave millions of Boost customers without service” starting January 1.
When Sprint and T-Mobile were pushing for approval for their $26 billion merger, experts warned the deal would ultimately eliminate jobs, reduce competition, and raise prices. To “fix” the problem Trump regulators at the DOJ and FCC concocted an elaborate workaround: create a replacement fourth wireless carrier out of satellite TV provider Dish Network.
The plan involved giving Dish Network some T-Mobile spectrum and Sprint’s Boost Mobile pre-paid wireless brand. Dish would then run a Mobile Virtual Network Operator (MVNO) on T-Mobile infrastructure—while it built out its own wireless network over seven years.
But the relationship was rocky from the start. Earlier this year Dish accused T-Mobile of reneging on merger promises after it announced it would be shutting down its CDMA 3G network earlier than Dish had expected.
“Once they got their merger done, they look like every other big company,” Dish CEO Charlie Ergen complained on a conference call last April. “They’ve become the Grinch,” he added.
In its letter to Dish, the DOJ stated that both companies risk violating their merger agreement if the shutdown “strands a substantial proportion of Boost customers, particularly if either or both parties have not taken all appropriate steps to affirmatively alleviate any such harms.” Dish insists millions of Boost subscribers could be impacted.
In a blog post, T-Mobile effectively accused Dish of making everything up.
“This is a manufactured crisis, orchestrated by Dish, and it is about money, not customers,” T-Mobile CEO Mike Sievert said. “If Dish was really concerned for customers, they would simply take real action and get their customers new phones on time, before the network upgrade happens.”
In short Dish is accusing T-Mobile of not adhering to merger agreements, while T-Mobile is accusing Dish of being too cheap to offer Boost users discounted 4G or 5G phones so they’re not left stranded when the 3G network shutdown occurs.
The standoff and resulting mess never had to happen in the first place. Experts told Motherboard back in 2019 that the merger fix wasn’t much of one, and a much cheaper, easier solution would have been to block the T-Mobile Sprint merger outright, then find some other way to prop up Sprint that didn’t involve eliminating one of four U.S. wireless competitors.
“It certainly won’t lead to a viable fourth competitor any time soon, if ever,” former FCC lawyer Gigi Sohn told Motherboard at the time. “A new mobile wireless entrant that starts with zero postpaid subscribers and that must rely on its much bigger rival, the new T-Mobile, just to operate is not a competitor.”
Other aspects of the deal haven’t worked out as planned, either. As it was wooing regulators T-Mobile promised the deal would be “jobs-positive from day one and every day thereafter.” Instead, more than 5,000 employees have lost their jobs so far.
Under its agreement with the FCC, Dish needs to build out a wireless 5G network that reaches 70 percent of the public by 2023. But the company not only can’t get along with its primary network partner T-Mobile, it continues to hemorrhage both wireless and TV subscribers.
Dish’s latest earnings report indicates the company lost another 67,000 TV and 201,000 Boost Mobile subscribers last quarter, and has lost 362,000 wireless subscribers so far this year. Meanwhile, T-Mobile has been running promotions specifically targeting Dish wireless subscribers, something it promised regulators it wouldn’t do.
In short the DOJ’s “fix” for the T-Mobile merger requires that Dish Network, a company with no experience in wireless and a history of empty promises, build a massive nationwide 5G network while remaining financially viable and fending off competitors, including T-Mobile. It’s a steep uphill climb, and could still end with Dish simply selling all of its valuable spectrum.
It’s a ridiculous mess experts warned could have been avoided by simply blocking the T-Mobile merger outright. Should the Dish gambit fail, those same experts have warned that the resulting consolidation will, sooner later, result in higher wireless prices for everybody.