In his ruling in favor of the T-Mobile purchase of Sprint, Judge Victor Marrero seemed very impressed with a mystery partner or partners that Dish Chairman Charlie Ergen is talking with. As a result of the judge’s ruling, Dish will enter the U.S. wireless market as the fourth major nationwide facilities-based wireless operator.
Marrero mentioned the existence of “currently confidential and creative strategic partnerships that Dish is planning.” And he said these partnerships lead him to believe that Dish would compete as a disruptive “maverick,” offering low prices for innovative and high- quality services. Marrero seemed impressed with Ergen and even mentioned his reputation as a former poker player.
During the trial in Judge Marrero’s court, the topic of Dish’s strategic partners came up. According to New Street Research analyst Vivek Stalam these strategic partners were discussed confidentially with the judge. Stalam wrote in December: “Elsewhere in the testimony, this topic was broached, though never directly discussed, such as when Ergen mentioned potentially partnering with others outside the industry who may want to bundle wireless with their products.”
A Dish lawyer reportedly described the potential partners as “some of the most successful companies on the planet.”
Which companies would fit the category of “most successful companies on the planet” that would “want to bundle wireless with their products?”
In his ruling, Marrero also tossed out the name “Amazon” although it wasn’t in the same context as his comment about “strategic partners.” Marrero wrote, “Dish plans to construct a ‘virtualized network’ that relies more heavily on software and cloud-hosting services provided by potential partners like Amazon.”
Aside from Amazon, some other logical partners might include device makers such as Apple or Samsung; or other cloud providers such as Google or Microsoft.
New Street Research analyst Spencer Kurn said, “Cable is a huge potential partner for Dish.” But he added, “Realistically, Dish is having conversations with everyone who they can. The big concern among wireless investors is that Big Tech enters the wireless market through Dish”
Amazon and Google have enough resources and business diversification that they wouldn’t need to immediately concern themselves with metrics such as average revenue per unit (ARPU).
The Financial Times reported this week that Deutsche Telekom, the parent company of T-Mobile US, may want to renegotiate the terms of the Sprint purchase because Sprint’s value has deteriorated since the deal was struck two years ago.
Or perhaps DT is rethinking its concerns about unleashing Dish into the U.S. wireless ecosystem.
Last summer, CNBC first reported that DT wanted to limit the ability for a cable company to acquire Dish and then subsequently take advantage of Dish’s favorable MVNO agreement with the New T-Mobile.
In a July 2019 letter from Dish to Donald Stockdale, chief of the Wireless Telecommunications Bureau within the FCC, Dish promised not to sell its 600 MHz licenses nor its AWS-4 licenses for a period of six years unless such sale were part of Dish selling itself. Any sale would have to get approval from the FCC and DoJ. In addition Dish promised not to provide to any of the three largest wireless providers “traffic accounting for more than 35% of the network capacity on its 5G network, without prior FCC approval.”
So it looks like DT made sure Dish doesn’t immediately sell its wireless spectrum to cable companies. And it’s unlikely any cable company would want to buy all of Dish with its struggling video business.
The DoJ’s proposed Final Order in the case stipulates that Dish cannot sell or lease the assets it obtains from the T-Mobile deal, including selling wholesale wireless network capacity to any national facilities-based mobile wireless provider….except for a roaming arrangement.
So these restrictions specifically limit Dish’s dealings with the New T-Mobile, Verizon and AT&T.
“These restrictions ensure that Dish doesn’t just quickly sell or lease its key spectrum assets, rather than building a nationwide 5G network as it’s promised to do,” said New Street Research’s Kurn. “I think everybody expects Dish to lease a significant portion of their capacity to third parties.”
Perhaps the “poker player” is talking with utility companies. They own vertical infrastructure everywhere there’s electricity in the United States, which is pretty much everywhere there are people. And these companies have, over the years, expressed an interest in selling wireless services along with their own utility services. Ergen might be able to combine their infrastructure with his spectrum to more quickly deliver 5G than anyone previously imagined. And he would be looked upon very favorably by regulators (and judges) because he could bring 5G to rural areas.