Google reportedly joins Dish in T-Mobile/Sprint fray

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Google could bring its brand and deep pockets to any transaction concocted to get the T-Mobile/Sprint deal over the finish line. (Fierce Wireless)

Hold onto your hats, folks, because this week appears to be starting with another wild ride on the rumor mill surrounding the proposed T-Mobile/Sprint combination.

One of the latest headlines has Google joining Dish in creating a fourth mobile carrier. Citing sources close to the situation, the New York Post reported that former Ford Motor chief executive and current Alphabet Board of Directors member Alan Mulally has been in talks with satellite TV provider Dish Network about a proposal to create a fourth telecom player—the idea being that Alphabet-owned Google would tie up with Dish to launch a new wireless company using assets acquired from T-Mobile.

A Google spokesman told the publication that the claims are simply false and that Google is not having any conversations with Dish about creating a wireless network.

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As reportedly has been the case for several weeks now, this week could indeed result in a more official announcement regarding the deal. Bloomberg last week reported that talks between the U.S. Department of Justice, T-Mobile, Sprint and Dish are at an advanced stage.

Despite its history of mostly hoarding spectrum, Dish apparently is being propped up at the Justice Department as a credible new competitor in the wireless market, Bloomberg reported. Under one of the scenarios discussed, T-Mobile and Sprint would let Dish use their infrastructure for six or seven years until Dish could build its own network—one that goes beyond the current NB-IoT network that it’s already building.

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New Street Research policy analysts in a note to investors today said that the “delicate dance” between T-Mobile, Dish and the Justice Department faces a deadline this week, as the states that sued to block the deal have said that if the full deal is not announced by July 12 they will seek to delay the beginning of the trial, which is set to start October 7.

“We expect some form of an announcement that allows the companies to argue to the court that the states know enough to commence the discovery necessary to prepare for the trial,” wrote the New Street analyst team led by Blair Levin. “We also expect that the announcement will arrive with a public relations battle designed to weaken the states’ motivation for bringing the case. Whether it succeeds, in our view, will depend heavily on the actual facts of the transaction.”

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William Ho, principal analyst at 556 Ventures, told FierceWireless that in a broad sense, neither Dish nor Google has a lot of wireless experience compared to the likes of Verizon, AT&T or T-Mobile. There’s a vast difference between having a retail operation for satellite TV and serving Google Fi and selling smartphones. Granted, “it’s all within the wireless industry, but it’s a far cry from actually running an organization that’s putting out services.”

Multiple reports have Dish moving forward as the key candidate, and if it were to get all it’s asking for, it still comes down to execution, Ho added. A lot of people in the industry are pessimistic that Dish will do what it needs to succeed, but Dish Chairman Charlie Ergen has been trying to get into the business for a long time, and now appears to be the best and possibly last shot.

With the satellite TV business declining, “he knows he needs to get into wireless,” Ho said. “His bread and butter is going downhill.” The writing on the wall is that satellite TV is diminishing along with regular TV, and “it’s kind of this make or break time.”

If it does happen, the big question is how Dish competes with the likes of Verizon and AT&T. A lot of it comes down to distribution in both prepaid and postpaid. If Sprint’s prepaid brand Boost moves into the Dish fold, it would have prepaid distribution and a dealer network, but Boost is in urban areas, and not so much in rural and suburban areas where a broader play needs distribution.

“They’re going to have to pony up money,” and build up postpaid distribution areas, Ho said. But it takes time to educate people, so one of the big questions the DoJ must be contemplating is when does meaningful competition happen and what are the metrics for that, he added.

BTIG analyst Walter Piecyk told the New York Post that Google is interested in the Dish deal in part to ensure that its fast-growing cloud computing business can compete with those of Amazon and Microsoft as wireless devices become increasingly ubiquitous.

“The cloud is becoming more reliant on the last-mile providers,” Piecyk told the publication. “It’s in Google’s interest to make sure the last-mile provider is inexpensive.”

Everybody wants the cloud closer to the edge, and having carrier partners could always help in that respect, so Google may not be thinking so much about the consumer market, but where the puck’s going, Ho suggested.

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