The dispute between Dish Network and T-Mobile triggered images of the “magenta Grinch” for Dish Chairman Charlie Ergen and it’s creating a nightmare of sorts for Boost Mobile management – in addition to headaches for T-Mobile’s senior management.
Boost customers always have been at the center of the controversy, and now the U.S. Department of Justice (DoJ) says it holds “grave concerns about the potential for a nationwide CDMA shutdown to leave a substantial proportion of Boost’s customers without service.”
The problems started when T-Mobile informed Dish that it will be shutting down Sprint’s CMDA network in January 2022. Dish complained that it wasn’t given enough time to transition Boost Mobile customers who still use CDMA devices. T-Mobile countered that it did give Dish plenty of notice and suggested that Dish basically squandered the time.
Dish contacted regulators, including the DoJ, asking for assistance. The DoJ asked both Dish and T-Mobile to present their respective positions, after which, the DoJ expressed concerns in a July 9 letter.
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The letter was included as part of a Dish 10-Q filing discussed in Dish’s earnings call on Monday and mentioned in a blog post by T-Mobile President and CEO Mike Sievert the same day.
The back story here is T-Mobile’s merger with Sprint happened thanks in large part to Dish. The federal government made the merger conditional on Dish buying Sprint’s Boost Mobile prepaid business and getting a headstart, of sorts, in setting itself up as a fourth national carrier. Dish is on the hook to build out a 5G network to cover 70% of the U.S. population by 2023.
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While Dish builds out its own 5G network, it was set up to use T-Mobile’s network under an MVNO arrangement to serve Boost customers for up to seven years. After the dispute over the CDMA shutdown, Dish struck a new MVNO agreement with AT&T, and while it has access to both networks to some degree or another, Dish's Ergen made it clear on Monday’s earnings conference call that AT&T is the preferred MVNO partner going forward.
T-Mobile: Dish ‘orchestrated’ this crisis
T-Mobile’s Sievert has downplayed Dish’s concerns in the past, and in the blog post on Monday, he talked about how sunsetting old 2G and 3G technology – like CDMA – is making room for 4G and 5G capacity and coverage to support all those customers it promised to serve after merging with Sprint.
“As you may have heard, in a recent letter from the DOJ addressed to both DISH and T-Mobile, retiring outdated CDMA technology in a manner that ensures no customer is left behind is also important to policymakers,” Sievert wrote. “We could not agree more — and we are fully committed to moving to the latest technology and bringing all customers along to superior service at a great price. For the CDMA customers who have not experienced faster 4G/5G service, being on that antiquated network is equivalent to being on dial-up internet access years ago. Frankly, it’s unacceptable.”
T-Mobile has been working to transition its own Sprint CDMA customers for months and is executing on a plan to upgrade customers to new 5G phones for free and by offering equivalent (or better) service plans at the same or lower prices, Sievert said.
By contrast, “our friends at Dish have been dragging their feet in getting their customers upgraded to the superior 4G/5G world. As we prepare to sunset the legacy Sprint CDMA network next year and move customers onto a network that will provide dramatically better connectivity and 911 services (and a variety of other customer benefits), Dish has not done nearly enough to upgrade its Boost CDMA customers. I find this both disappointing and unacceptable, and frankly so should Boost customers. Dish needs to set aside its own short-term financial self-interests and live up to its own commentary by investing in helping its customers make the move to a current technology.”
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What Dish needs to do is offer Boost customers free 4G/5G handsets and make sure the offers are clearly communicated to customers when they make their monthly payments, according to T-Mobile.
“This is a manufactured crisis, orchestrated by Dish, and it is about money, not customers,” Sievert wrote. “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. It’s that simple… We’ve given Dish plenty of runway and significant assistance to help get its CDMA customers upgraded. We’ve even provided Dish with a detailed action plan based on our own experience with the Metro PCS CDMA transition, which if followed by them, will ensure a fast and smooth transition.”
Ergen: ‘Sore winners’ at T-Mobile
Ergen previously called T-Mobile’s moves anti-competitive and suggested on Monday that his belief was reinforced by T-Mobile’s latest prepaid offer aimed at Boost and Cricket customers. “I think they’re kind of smoked out now,” Ergen said. “They have an extraordinary offer in the marketplace for a free upgrade to a 5G phone and 50% off service for two years, extraordinary offer. That’s obviously aimed at customers to upgrade to their network.”
“The bottom line is, they’re what I call ‘sore winners,’” Ergen said. “It’s hard to be a good winner sometimes. They’ve got $70 billion in synergies that the government allowed them to have. Now they want $71 billion by getting some customers that we already pay them for. You’ve all met that guy in grade school who won and bragged about himself and bragged about how good he was and spiked the ball in front of you. Sometimes it takes a bit of maturity to be a good winner. And they’re a sore winner.”
On the other hand, “the fact that a consumer can upgrade - that may not be good for Boost, but our main objective at Dish and Boost is to make sure customers don’t lose their service. To the extent that the customer upgrades and doesn’t lose their service, I’d much rather have that than the customer lose their service.”
Asked how many Boost customers are affected, he said the majority are affected, and “we are taking all reasonable efforts to migrate customers, and we’ve made good progress on that so that people don’t suffer from a premature shutdown,” he said. “I think the number (of CDMA customers) is now smaller, but our projections show a material amount of customers on January 1 will still have CDMA phones and will lose their service. This is the most economically challenged group in America. These aren’t the customers that have bank accounts and high-paying jobs. These are people that are economically challenged, so I think it’s even more important that these people don’t lose their service.”
The DoJ said that while it hasn’t reached any conclusions about who’s at fault in the dispute, it expects everyone to take all available steps to move Boost customers off the CDMA network prior to the shutdown. If it finds that the situation gets worse, it may go to court against one or both of the parties.