'We’re in crazy town right now’: Boost founder Adderton

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According to the founder of Boost, competition in the prepaid market is getting lost in the latest talks around the proposed T-Mobile/Sprint combination. (Pixabay)

With the barrage of headlines swirling around the current status of the proposed T-Mobile/Sprint merger, it’s easy to sum it up as a “crazy town” atmosphere, and more than one observer has pointed that out. To Peter Adderton, the founder of Boost Mobile and a staunch MVNO advocate, the situation revolves around the original intent of the proposed divestiture of Boost: ensuring competition in the prepaid market.

Reports surfaced this week that Dish Networks is in talks to pay at least $6 billion for assets that T-Mobile and Sprint are said to be unloading to get regulatory approval for their $26.5 billion merger. Those assets could include wireless spectrum and Sprint’s Boost Mobile prepaid brand. Charter Communications and Altice USA were also said to be on a short list of potential bidders.

“We’re in crazy town right now. This defies all logic,” Adderton told FierceWireless. Adderton has made no secret of that fact that he wants to compete in the bidding process for Boost Mobile. The divestiture of Boost is one of the conditions included in Federal Communications Commission Chairman Ajit Pai’s signing off on the deal, which still hasn’t been voted on by the full commission.

RELATED: Dish could pay $6B for T-Mobile/Sprint assets - report

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Meanwhile, the U.S. Department of Justice is more concerned about the market moving from four to three carriers if the deal were allowed to go through, and it’s said to be looking for a way to create what would amount to a fourth operator. Whether a deal involving Dish could satisfy that criteria is unknown.

Peter Adderton
Peter Adderton 

Adderton said the “fourth network argument” that’s taken over the headlines is moving the focus away from the reason for the Boost divestiture in the first place. “What we need to do is refocus back on that,” he said.

The prepaid market was one of the concerns that states cited when they announced their antitrust suit in an attempt to block the deal. Sprint and T-Mobile have been the most aggressive in terms of striking MVNO agreements, and eliminating one of them would bring that market essentially from two to one, according to the reasoning.

RELATED: States’ lawsuit to block T-Mobile/Sprint deal draws cheers

Reuters reported today that four more states— Hawaii, Massachusetts, Minnesota and Nevada—have joined the effort by state attorneys general to block the merger. Lawyers for the states and the companies proposed an Oct. 7 start date for a trial, which could last two to three weeks.  

Dish, which has been talking a lot lately about its progress in building out a NB-IoT network, developed a reputation over the years as spectrum acquirer with aspirations to sell it to a Tier 1 carrier. The New York Post reported that it could be weeks or months before Dish Chairman Charlie Ergen finalizes a deal to acquire the assets related to the T-Mobile/Sprint merger.

Adderton has met with the DoJ about a process that he said would involve multiple bids from interested parties for the Boost assets, with Goldman Sachs running the process. That process would be pro-competitive versus Dish somehow ending up with the assets without a formal bidding war.

MVNOs as competition?

The MVNO model gets a bad rap in the U.S., but outside the USA, different models have led to some very successful businesses, according to Adderton. The main thing is any deal should be non-exclusive, meaning the MVNO can negotiate with T-Mobile about using its network as well as using other operators’ networks.

“What you’ve got to do is give leverage back to the MVNOs,” he said. “The reason why MVNOs have no success is they have zero leverage. But, that non-exclusive gives them leverage,” and that also forces the New T-Mobile to offer more favorable terms to the new Boost.

Advances in technology, including eSIM, are making things better for MVNOs. With eSIM, you put the power back into the hands of the MVNO and ultimately the consumer, he said, and the consumer then could decide which network he or she wants to use without replacing a handset. “There are technologies out there that provide real flexibility,” he said, noting that cloud platforms provide another level of flexibility.

One knock against MVNOs has been the fact that they by nature are not facilities-based, but Adderton said with the right economic model, MVNOs can be represent a competitive channel. He argues that the Tier 1 carriers, which have domestic and international roaming agreements, are the biggest MVNOs of anyone. They have the scale that enables them to negotiate with big carriers in other countries.

“This concept that you need to be a facility-based carrier, these carriers are facility-based in one country,” he said, adding that Uber and Airbnb have “pretty much proven” that you don’t need to own the car or the hotel in order to sell the service. “You just have to have access to the network.”

Adderton suggested the latest drama is like watching the Kardashians of the wireless industry. Every day seems to bring a new headline that sounds more explosive than the last. But, he said it “defies logic” to think the cable companies are now going to be prepaid saviors when they haven’t played in the prepaid space, and have been focused on their own businesses.

Adderton said he was excited to see who turns up to buy Boost, whether it’s Amazon, a foreign-owned carrier, a cable company or others. But, he said money isn’t going to be the issue. The issue will be who has the talent and management skills to run it successfully.

Of course, having been the founder of Boost in Australia and later the U.S., he said he’s the one with the most passion to see it through and ensure competition remains in prepaid.

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