T-Mobile's CEO, the US Department of Justice, and Dish are embroiled in a messy fight over Sprint's 16-year-old 3G network, with millions of Boost Mobile customers trapped in the middle.
On Monday, Dish and T-Mobile laid out their positions—Dish in an earnings call, and T-Mobile CEO Mike Sievert in a blog post.
T-Mobile intends to turn off the old Sprint 3G network "on or around January 1, 2022." As part of its deal to merge with Sprint, the company sold off its Boost Mobile prepaid business to Dish. Dish says "millions" of Boost subscribers are still on 3G-only phones, though it didn't specify an exact number.
From T-Mobile's perspective, 5G is a far more efficient way to use its airwaves than 3G. (That's true.) The company has been giving free 5G phones to MetroPCS subscribers, and sees the problem as Dish not wanting to invest in giving its customers new phones for the new network.
"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, just as T-Mobile is doing for affected Sprint customers," Sievert says.
Dish may not want to upgrade Boost customers to T-Mobile 5G-compatible phones. The company is building its own, slightly incompatible 5G network and has also made a deal with AT&T to provide service, and those choices demand different devices. From Dish's position, it would be easier for those 3G customers to stay on 3G, ideally until Dish has its own 5G network, at which point they could get upgraded.
Boost's subscriber base has been in free fall since the Dish purchase. According to Dish's most recent earnings call, the company has lost 362,000 subscribers so far this year. Dish acquired more than 9 million Boost subscribers from T-Mobile, the company's 10-Q says, and even with more than 400,000 new Republic and Ting subscribers, it has less than 9 million total now.
'All Reasonable Efforts'
This whole mess goes back to former DOJ antitrust head Makan Delrahim's Rube Goldberg solution for making the T-Mobile/Sprint merger, which he desperately wanted to happen, happen.
To prevent the merger from appearing to reduce competition, he set up this house-of-cards remedy in Dish, propping up the company as a Potemkin fourth national carrier so it wouldn't look like we were going down to three networks.
Part of the deal was that T-Mobile give Dish access to its network for seven years, and give Dish at least six months' notice before shutting down Sprint's 3G in any market. In a letter released Monday (via Reuters), current Acting Assistant Attorney General for Antitrust Richard Powers said the merger agreement may be violated "if the network shutdown strands a substantial proportion of Boost customers."
"If Dish undertakes all reasonable efforts to transition its customers off the CDMA network and a substantial portion are still remaining at the end of the period, that fact may very well suggest that notice had not been sufficient," the letter says.
So there we get to the heart of the matter: Is Dish undertaking "all reasonable efforts," or dragging its feet because it doesn't want to have to buy Boost subscribers new phones? T-Mobile and Dish, obviously, have different views on this issue.
As an analyst who has followed the industry for decades, I am extremely skeptical of Dish here. The company has a bad track record in terms of following through; it's been promising to build a mobile network since December 2012 with exactly zero to show for any of it so far. Dish now says it will launch its first city, Las Vegas, by the end of September, CNET reports.
Dish is supposedly on the hook to cover 70% of the US population with its own network by 2023. We'll see.