If you recall, economists repeatedly warned the $26 billion Sprint/T-Mobile merger would kill jobs, harm competition, and ultimately raise prices for consumers. To "fix" the problem, the Trump DOJ and FCC concocted an elaborate and cumbersome plan to create a replacement fourth wireless carrier out of Dish Network, despite the company's lack of experience in the sector and history of empty promises. So far none of this is going particularly well, with 5,000 and counting lost jobs, Dish and T-Mobile clearly unable to get along, and Dish... the cornerstone of the entire plan... continuing to bleed both TV and wireless subscribers.
Of all the pay TV providers dealing with "cord cutting," Dish has indisputably been hit the hardest, losing another 67,000 pay TV subscribers last quarter. It technically added 65,000 Sling TV streaming video subscribers, but it wasn't enough to offset the 132,000 customers that cancelled Dish's traditional satellite TV service. With absolutely no plans to build new satellites and users shifting increasingly to streaming, Dish knows satellite TV is a dead end.
That's where the company's wireless business is supposed to come in.
As part of the DOJ/FCC deal, Dish obtained billions in spectrum and the Boost prepaid mobile brand from Sprint. The idea is that Dish is supposed to operate a Mobile Virtual Network Operator (MVNO) as it builds out its own, full 5G wireless network.
But, there too, things aren't going particularly well. Dish lost 201,000 Boost subscribers in the last quarter. And while it added 200,000 subscribers last March by buying a small wireless company named Republic Wireless, a research note by Wall Street analyst Craig Moffett indicates the overall trajectory isn't a great one:
"Their Q2 loss of 201K wireless subscribers (about 2.3% of their Q1-ending subscriber base, or almost exactly the size of Republic Wireless) means that they have now organically lost 9.7% of their subscribers in their first year of ownership."
The Trump DOJ and FCC "fix" for the Sprint T-Mobile merger was always a bit dodgy. It was hand-crafted by a DOJ "antitrust enforcer" in Makan Delrahim who was completely disinterested in data showing the deal should be blocked. Delrahim was far more interested in working as a glorified life coach for Sprint, T-Mobile, and Dish executives looking for regulatory approval. The deal itself always felt like flimsy theatrical cover to justify rubber stamping the Sprint T-Mobile deal, instead of a real fix for any genuine problems.
Now the whole mess is in the lap of the Biden DOJ, who this week sent a letter to Dish urging Dish and T-Mobile to start getting along. The DOJ is particularly concerned about the fact that T-Mobile's shutdown of its 3G CDMA network could leave millions of Boost mobile customers stranded January 1. Dish says the shutdown was earlier than promised, violating merger guidelines. T-Mobile says Dish is simply being too cheap to give Boost users discounted 4G or 5G phones. Either way, the DOJ isn't impressed:
"After careful consideration of the Parties’ submissions and arguments, the Division is left with grave concerns about the potential for a nationwide CDMA shutdown to leave a substantial proportion of Boost’s customers without service. While it cannot reach any conclusions today regarding events that have not yet transpired, the Division believes that the Final Judgment may be violated by one or both Parties if the network 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 in the leadup to implementing the network shutdown. If that situation manifests—and we sincerely hope that it does not—the Division may act pursuant to its authority under the Final Judgment or seek relief from the Court against one or both Defendants."
But again, the real problem is this deal was always a stupid, unworkable mess from the get go. Numerous experts noted so, and they were all ignored. Largely because the deal provided useful if flimsy cover for merger approval, which is all that really mattered.
To make any of this work Dish, a company with no real experience in the sector it's trying to disrupt, needs to remain financially viable as it attempts to meet guidelines attached to its deal with the DOJ and FCC (providing wireless to 70% of the country by 2025). But Dish is a company with a long history of empty promises in wireless (just ask T-Mobile circa 2018), run by a guy (Charlie Ergen) people traditionally say is hard to work both for and with, purportedly building a new wireless network whose details remain hard to come by.
l still tend to think it seems entirely possible Dish strings feckless U.S. regulators along for years then, once the six year restriction on selling its spectrum expires, cashes out, hoovers up billions of dollars, then throws a relative pittance at any remaining legal or regulatory penalties. The U.S. wireless sector gets even more consolidated, and all the folks who pushed this dodgy fix for a bad deal (that should have been rejected outright) simply forget any of this ever happened.
