5 thoughts on “Justice Dept approves the “New T-Mobile” via Sprint merger; Dish Network becomes 4th U.S. wireless carrier with focus on 5G”

1. Washington Post comments:

   There’s irony in the fact that amid all the chest-thumping about U.S. technological dominance, the biggest beneficiary of the DOJ’s decision is a billionaire from Japan named Masayoshi Son. His company, SoftBank Group Corp., controls the downtrodden Overland Park, Kansas-based Sprint, which has largely been a disappointing investment for Son. Sprint, strained by debt and a run-down brand, now gets to join a superior operator on healthier footing – and Son gets a piece of it. SoftBank is retaining 27% economic ownership of the combined entity, while T-Mobile’s German parent, Deutsche Telekom AG, will own 42%. Shares of their rivals, Verizon and AT&T, extended gains after the DOJ announcement.

   It’s not a done deal yet. Attorneys general from 13 states and the District of Columbia have sued to block the merger; should they proceed, they may have a strong case. However, Delrahim is reportedly trying to negotiate with state officials.

   Still, the DOJ appears to be contradicting itself. Just three days ago, Delrahim’s antitrust division announced a broad review of the U.S. technology giants, such as Facebook Inc. and Google, to look into whether they possess too much power and cause consumer harm. Backing a deal that similarly has the potential to hurt consumers is inconsistent with his concerns about tech overreach. The appearance of a double standard doesn’t help to suppress speculation that political forces may be at play.

   Questions have been raised about White House interference, just as they were during last year’s trial over AT&T’s takeover of Time Warner, in which the DOJ failed in its effort to block the deal. While some 2020 Democratic presidential hopefuls have come out against the Sprint takeover, arguing it would hurt lower-income consumers and Americans in rural areas, President Donald Trump has signaled support by emphasizing the need to be globally competitive in 5G and facilitate such investments:

   The FCC also became fiercely divided along party lines. Pai, a Republican, broke with tradition by voicing his support for the transaction in May, before his own agency colleagues and counterparts at the DOJ had the chance to complete their analyses. Commissioner Jessica Rosenworcel, a Democrat, expressed her displeasure with how this was handled, saying it “looks like some backroom dealing.”

   The country’s 5G push isn’t based on fantasy or a ruse, but it’s not clear how enabling T-Mobile and Sprint to combine their 5G capabilities abates the antitrust issues. On the one hand, T-Mobile will gain Sprint’s desirable mid-band spectrum, which can carry data at fast speeds and still travel long distances and through buildings. That makes it practical for connecting rural areas, as the companies promise to help close the country’s digital divide. After all, there’s a connection between income inequality and a lack of affordable access to wireless connectivity, which has become part of our social fabric.

   But while addressing that problem is certainly a mission to support, skepticism is warranted when any megamerger promises better service and better prices as a result. Just look at the airline industry: Consolidation has left the carriers with little incentive to compete on price or labor, improve the experience for customers or try to earn their trust (and in the case of wireless companies, part of that trust is with our personal data, and it’s been broken before).

   https://www.washingtonpost.com/business/t-mobile-and-sprint-are-almost-one-hooray/2019/07/26/

2. Bloomberg: Dish Faces ‘Difficult’ Path to Becoming a Wireless Powerhouse, By Olga Kharif and Nabila Ahmed
   July 26, 2019, 9:00 PM PDT

   Dish Network Corp., the hard-bargaining satellite-television company, is embarking on a second act as a major wireless carrier. But even with a cache of prized assets, it faces long-shot odds of pulling it off.

   The Justice Department opened the door for Dish on Friday when it cleared the $26.5 billion merger of T-Mobile US Inc. and Sprint Corp. In doing so, it forced those companies to divest assets that will potentially transform the pay-TV provider into a major competitor. But Dish, controlled by Chairman Charlie Ergen, will still need to spend $20 billion over the next few years to build a nationwide wireless network and make use of the spectrum it owns, according to Roger Entner, a telecom analyst and founder of Recon Analytics LLC. Additional billions will be needed to run the network, set up stores and buy advertising, he said.

   “If you are spending less than the others, you are usually not closing the gap,” Entner said. “The others are not going to stand by and let Charlie Ergen take away their lunch. So difficult!”

   Becoming a wireless carrier would be a dramatic makeover for Dish, a company whose very name is synonymous with satellite equipment. Still, others have pulled off similar feats. Apple Inc. was a nobody in the mobile-phone market before 2007. Nintendo Co. was a 19th century maker of playing cards.

   Ergen, a longtime card player, likes to gamble. In an interview on Friday, he said that anyone betting against Dish is making a foolish wager. “I’ve been in plenty of card games with guys across from me betting wrong,” he said. But he faces pressures that will make the overhaul challenging. With $14.4 billion in long-term debt at the end of the first quarter, Dish already is highly leveraged and may have trouble raising funds at affordable rates, Entner said.

   Dish’s existing satellite-TV business, meanwhile, has hemorrhaged subscribers in recent years.

   Even if Ergen is able to raise the money, competing with giants Verizon Communications Inc., AT&T Inc. and the new T-Mobile-Sprint will be tough, Entner said. In most countries, only three wireless companies are able to make a profit. In the U.S., No. 4 Sprint has been a financial train wreck, racking up billions of dollars in debt and losses.

   Dish said on Friday that it won’t need additional funds for at least the next year or so. And it’s already getting offers from prospective financing partners, said Tom Cullen, Dish’s executive vice president overseeing its wireless push.

   Consumer groups have doubts about the endeavor. Public Citizen labeled the Justice Department deal a disaster on Friday, and called out Englewood, Colorado-based Dish in particular for failing to deliver on a long-promised network. Even before the agreement with T-Mobile and Sprint, the satellite company had vowed to turn its wireless airwaves into a network.

   “Dish is never going to build out a wireless network,” Alex Harman, competition policy advocate for Public Citizen’s Congress Watch Division, said in a statement. “It has been promising the Federal Communications Commission and the Congress for nearly a decade that it would enter the wireless market but has never done so.”

   What’s more likely is that Dish will ultimately sell its wireless assets to a top-three wireless carrier, analyst Chetan Sharma said in an interview. And that would leave U.S. consumers in the exact situation that the Justice Department sought to avoid: picking among just three options.

   As part of the Justice Department (DoJ) agreement, Dish agreed not to sell some of its spectrum for six years without prior regulatory consent. The company also can’t lease more than 35% its capacity to the top-three providers for six years without regulatory approval.

   Dish is committed to rolling out a nationwide 5G network that reaches 70% of U.S. population by June of 2023. If the company fails, it owes the government as much as $2.2 billion.

   “As we enter the wireless business, we will again serve customers by disrupting incumbents and their legacy networks, this time with the nation’s first stand-alone 5G broadband network,” Ergen said in a statement.

   Underlying that pledge is $5 billion in assets that T-Mobile and Sprint agreed to sell to Dish as a condition of Justice Department approval of their merger.

   Under the accord, Dish is buying spectrum, as well as Sprint’s Boost and Virgin prepaid businesses. T-Mobile is also required to provide access to its mobile network for seven years while Dish builds its own 5G network, according to a Justice Department statement.

   The spectrum purchase is expected to be completed three years after the closing of the acquisition of the prepaid business, Dish said.

   “The remedies set up Dish as a disruptive force in wireless,” Makan Delrahim, the head of the Justice Department’s antitrust division, said in a briefing with reporters.

   While Dish may struggle to build a network on its own, it could fare better if it secures a partner, such as a large technology company, said Tim Farrar, principal at TMF Associates. The terms of the deal with the Justice Department bar an outright change in control.

   “The key question is whether a new entrant can disrupt the wireless market,” Farrar said. “On its own the answer is no, but if Dish secures a major partner like Amazon, then it becomes more plausible.”

   https://www.bloomberg.com/news/articles/2019-07-27/dish-faces-difficult-path-to-becoming-a-wireless-powerhouse

   1. Saturday WSJ: By Drew FitzGerald July 27, 2019 12:00 am ET
      Charlie Ergen, the poker-playing billionaire who co-founded Dish Network, has been hoarding airwaves for years. Now the U.S. government is handing him the cards he needs to make his play
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      Charlie Ergen has long tried to muscle his way into the U.S. wireless business. When his rivals had no other choice, the billionaire behind Dish Network Corp. finally got his way.

      John Legere, the chief executive of T-Mobile US Inc., called Mr. Ergen in late May after it became clear T-Mobile’s proposed takeover of Sprint Corp. was in trouble.

      Mr. Ergen had been the most outspoken corporate critic of the proposed $26 billion deal—a merger that would leave the U.S. with three giant cellular companies. But the Colorado maverick also ran one of the few firms with the airwaves and know-how to create a new wireless provider that would satisfy the Justice Department’s antitrust concerns.

      Two serious attempts to combine T-Mobile and Sprint in the last five years had already failed. Its third try was already a year old.

      Mr. Legere, a foul-mouthed executive known for tweets poking fun at his rivals, was all business on the phone. “Justice has said that we need a fourth carrier. We should talk if you are interested,” Mr. Ergen recalled.

      For years, Mr. Ergen had irked telecom rivals and federal regulators by spending more than $20 billion amassing wireless licenses but never using them. Time and again Mr. Ergen had explored various deals, including buying Sprint himself, only to frustrate the other side. Now, he was the only buyer that could build a credible fourth nationwide cellphone operator.

      “With four, there’s always somebody that will be a rabble rouser,” Mr. Ergen said in an interview this week in his office south of Denver. “Somebody will say I don’t have enough market share. I’ve only got 9 million subs and want 10 million. That person is going to be more aggressive. The guy who’s got 100 million, he’s just going to hope he holds onto them.”

      Whether Dish can become a formidable force in the mature U.S. cellphone market will be a key test of the landmark antitrust agreement unveiled Friday between the Justice Department and the companies. The carefully crafted deal gives Dish 9 million of Sprint’s prepaid customers—its Boost Mobile business and then some—plus the right to buy licenses to more airwaves that can blanket rural areas. It will let Dish operate on T-Mobile’s existing network for seven years while Dish builds its own nationwide service.

      A former professional poker player and card-counting blackjack whiz who was banned by some Las Vegas casinos, Mr. Ergen co-founded Dish in 1980 after starting his career as an analyst at Frito Lay where he calculated how many Doritos should fill a bag. He and his partners bet their savings, pooling together $60,000 on selling 10-foot-wide satellite dishes from a Denver storefront.

      He has said his experience gambling helped hone his business acumen—knowing how to “win with bad hands.” More than once, Mr. Ergen has compared his business plans to an “Indiana Jones” movie in which the hero narrowly dodges a never ending string of lethal threats.

      He switched to hubcap-size dishes and took on cable-TV monopolies by slashing prices. His service now has 12 million customers across the country and his controlling stake in Dish is worth about $9 billion. (He is also the chairman and biggest shareholder in sister company EchoStar Corp. , which operates satellites.)

      The 66-year-old tends to play by his own rules. He has made executives share hotel rooms on company trips and has done market research with what he called the “Waffle House poll,” visiting outlets around the country and asking customers how they used their phones and watched television.

      His famously frugal ethos—he still drives to Dish’s Englewood, Colo., headquarters with lunch in a brown paper bag—isn’t always evident these days. The billionaire often flies in a private jet and has stopped making employees share hotel rooms on business trips, according to people familiar with the company.

      Mr. Ergen, whose core satellite-TV service has been losing customers, admits he is starting from behind in the cellphone game. But he argues that gives him an advantage. “Their legacy is mishmash. Their networks are plaid,” Mr. Ergen said, pointing to his green-checked dress shirt. “We will be a solid color.”

      Dish’s new network will be dwarfed by the incumbents. Verizon Communications Inc. has nearly 120 million cellphone customers. AT&T Inc. and the enlarged T-Mobile will each have more than 90 million. They are among the biggest advertisers in the country. They are holding onto their subscribers by offering unlimited data and bundling in free subscriptions to services like HBO and Netflix. All three are already rolling out faster 5G services.

      “How is a company with no track record, no wireless customers and unused spectrum a more viable competitor?,” said Matt Wood, general counsel at advocacy group Free Press, which publicly opposed the T-Mobile and Sprint deal.

      AT&T, Verizon and T-Mobile have built nationwide networks in pieces over decades as they acquired rivals or new airwaves licenses. T-Mobile itself will now spend years integrating Sprint’s network and customers. The incumbents updated the equipment hanging on cellular towers and the software behind their services as they moved from 3G connections to faster 4G technology, and now 5G.

      Dish plans to lean on T-Mobile while it builds a brand-new, 5G-only network that it can roll out quickly and operate differently. For example, Mr. Ergen said, Dish would be able to offer on-demand pricing, such as charging less in the middle of the night. He also plans to target businesses, such as automakers, looking for 5G connections.

      “We’ll get someplace in three years that will take the other guys 10 years,” he said.

      The agreement to use T-Mobile’s stronger network will allow Dish to attract customers beyond the cities where Sprint mostly marketed its Boost service, he said. It also lets Dish build its own network first in urban areas with many customers and use the T-Mobile network to reach rural areas that have fewer customers.

      Dish will need to add towers in all those less-populated and less-profitable areas under the deal it reached with the Federal Communications Commission and the Justice Department. Mr. Ergen estimates it will cost about $10 billion. But he will be able to compete for customers and generate cash from his nascent cellular business before he has to do that.

      Mr. Ergen also argues wireless pricing is broken. He says U.S. carriers have many customers paying for unlimited data plans they don’t need, much as cable companies long forced subscribers to pay for big bundles of TV channels.

      “This is deja vu all over again for us,” said Mr. Ergen. In wireless, he sees an opportunity for Dish to woo customers that use less data with lower monthly prices and those that are heavy data users with plans that don’t slow their connections.

      AT&T CEO Randall Stephenson said this week he wasn’t concerned about the prospect of Dish jumping into the wireless market. “Our strategy is pretty well baked,” he told analysts on Wednesday. “The strategy is resilient as it relates to changes in industry structure.”

      Mr. Ergen has often played the role of disrupter. In 2012, Dish introduced a DVR that let consumers easily skip commercials, sparking a legal challenge from broadcasters.

      He has often brawled over programming fees with channel owners, causing blackouts on Dish’s service. The company said Friday it stopped carrying 22 regional sports networks owned by the Walt Disney Co. over a contract dispute.

      Dish has also gone without HBO since November, missing the final season of “Game of Thrones.” Mr. Ergen said HBO’s proposal was unaffordable, calling it “payback” for his company’s 2018 opposition to AT&T’s purchase of Time Warner. An HBO spokesman said the terms it offered Dish were consistent with those in place for large distributors.

      Dish launched one of the first live-TV streaming services, Sling TV, in early 2015. With a small package of channels and lower price, it made it easy for millions of people to cut their TV bill – even many of Dish’s own satellite customers.

      But with cellular service, he has vexed federal authorities and business partners with what some called broken promises. Critics said Mr. Ergen was simply hoarding the government-issued licenses while he waited for a deep-pocketed partner to buy him out. In 2015 he angered FCC officials when he won a large chunk of wireless licenses at government auction; his bid benefitted from a $3.3 billion discount designed to bring smaller players into the wireless industry. The FCC later rejected the discount, a decision that is contested. Last year, FCC officials wrote a letter that threatened to claw back some Dish licenses if it failed to launch a cellular service by March 2020.

      Mr. Ergen bristles at the notion he has been squatting on valuable airwaves. He said he simply was outbid by Japan’s SoftBank Group Corp. in 2013 when he tried to buy Sprint. He has been waiting for a catalyst that would allow him to compete with entrenched players. The rollout of new 5G networks is just the technology shift that makes it possible.

      “Hoarding is actually a positive for our shareholders and a positive strategic move because you needed to accumulate spectrum to go and compete with these guys,’’ he said. “It didn’t make any sense to build a 4G network and tear it all down the next year.”

      By early 2019, Dish still had no wireless customers to quell the government’s concerns. The forecast was also darkening for T-Mobile and Sprint. Their merger effort hit a snag in April, when staff lawyers at the Justice Department told the companies the deal was unlikely to earn their approval as it was structured.

      The Justice Department pressed the companies to shed enough pieces of their business to create a new fourth cellphone carrier that could step into the void left by Sprint, which had been shedding customers and struggling to turn a profit.

      The department met with representatives from potential partners including Dish and cable operators Altice USA Inc., Charter Communications Inc. and Comcast Corp. , according to people familiar with the talks. Dish emerged as an early favorite.

      Mr. Ergen said his existing airwaves licenses made his pitch to build a new cellphone carrier more credible. He said he reached a broad agreement with Mr. Legere and Sprint Chairman Marcelo Claure in just four weeks of discussions in June.

      But the discussions continued for three more weeks as the Justice Department pressed the merger partners for better terms. Government lawyers insisted the settlement include no restrictions on Dish’s ability to sell assets, other than to pure competitors, or find a deep-pocketed partner after the deal.

      The Justice Department’s antitrust chief, Makan Delharim, was under the gun as government officials publicly split on the deal. FCC head Ajit Pai, a fellow Trump administration appointee, had already endorsed the T-Mobile and Sprint deal while a consortium of Democratic state attorneys general had filed a lawsuit seeking to block it, saying it would hurt consumers.

      The Justice Department wanted to make sure the final agreement would stand up in court if challenged by the states. The companies have agreed to wait to close the deal under a federal court hears the case later this year.

      Mr. Ergen will have to pay $1.4 billion for the Sprint customers and $3.6 billion in three years for the extra airwaves. T-Mobile will get the bulk of Sprint’s customers and airwaves and also have the right to buy some Dish spectrum. Sprint’s owner SoftBank gets to cash out after failing to disrupt the U.S. cellular market. The Justice Department gets to keep a fourth competitor.

      “I think three years from now, this transaction will look better than it does this week,” Mr. Ergen said. “They are gonna have real competition.”

      https://www.wsj.com/articles/a-tv-maverick-is-going-all-in-on-a-new-wireless-bet-11564200000

3. As DISH prepares to build the first standalone 5G broadband network in the U.S., it announced it will release a Request for Proposal (RFP) for end-to-end deployment services vendors, the third in a series of RFPs for different elements of the national network.

   The Deployment Services RFP, set to be released the week of October 28, will include requests for strategies and experience in the following areas:
   1. Real Estate / Pre-Construction
   a. Site acquisition services to include site identification, leasing, zoning, and permitting
   b. Architecture and engineering services to include structural analyses, zoning, drawings, construction drawings, etc.
   c. Utility coordination to facilitate the timely delivery of electrical services and/or transport fronthaul/backhaul services and associated easements
   d. Regulatory and compliance services associated with the construction of wireless communications facilities
   2. Construction
   a. End-to-end construction services including equipment/material procurement, preconstruction staging, quality and safety management, as well as documentation throughout

   b. Civil/electrical work to prepare sites for 5G equipment and delivery, install and
   connect equipment to electrical and transport utilities
   c. RF installation services to deploy 5G antennas, remote radio units, hybrid cables, etc.

   Additionally, DISH has entered into a series of agreements and arrangements with the United States government, T-Mobile and Sprint that materially impact our deployment plans and will facilitate and accelerate our entry into the wireless market as a nationwide facilities-based carrier.

   Among other things:
   (1) Following the merger of T-Mobile and Sprint, New T-Mobile will sell to DISH certain assets associated with the Boost Mobile, Virgin Mobile and Sprint-branded prepaid mobile service businesses (the “Prepaid Business”), which will provide DISH with millions of wireless subscribers nationwide.
   (2) Pursuant to a Master Network Services Agreement, DISH will gain access to New TMobile’s network for up to 7 years to enable DISH to provide wireless communications services to end users (including those acquired as part of the Prepaid Business) and to allow DISH to evolve such business into a free- standing, fully independent wireless network operator business.
   (3) DISH has committed to the FCC that, by June 14, 2022, it will have deployed a core network and will offer 5G Broadband Service1 to at least 20% of the U.S. population2 using DISH’s AWS-4, Lower 700 MHz E Block and H Block licenses.
   ………………………………………………………………………………………………………
   DISH Executive Vice President of Wireless Operations, Jeff McSchooler stated:

   “We’re building a first-of-its kind standalone 5G network and want to employ a diversity of expertise from partners large and small. We’ll build upon the existing relationships we have with deployment vendors from our NB-IoT buildout, while seeking local, regional and national vendors that can apply their strengths to increase the speed and efficiency of our 5G network deployment.”

   DISH previously entered into numerous master services agreements with national deployment vendors when it initiated the buildout of an NB-IoT network in 2018. As announced in July, DISH has committed to build a standalone 5G broadband network available to at least 70 percent of the U.S. population by June 2023.

   The Deployment Services RFP is the third such document DISH has issued since the announcement in July. DISH issued a 5G Network RFI/P in July, seeking input from vendors for the network elements. In September, DISH issued a System RFP, seeking responses from vendors to provide a software solution for project management, workflows, reporting and other utilities that aid in deploying the national network.

   Vendors interested in receiving the Deployment Services RFP when it is released can contact DISH Wireless at [email protected] before Oct. 28, 2019.

   About DISH
   DISH Network Corporation is a connectivity company. Since 1980, it has served as a disruptive force, driving innovation and value on behalf of consumers. Through its subsidiaries, the company provides television entertainment and award-winning technology to millions of customers with its satellite DISH TV and streaming Sling TV services. Through its strategic spectrum portfolio and other assets, DISH is poised to enter the wireless market as a facilities-based provider of wireless services with a nationwide consumer offering and development of the first standalone 5G broadband network in the U.S. DISH’s OnTech Smart Services brand offers in-home installation of connected home devices and entertainment solutions. DISH Media serves as the company’s advertising sales group delivering targeted advertising solutions. DISH Network Corporation (NASDAQ: DISH) is a Fortune 250 company.

   For company information, visit about.dish.com
   Subscribe to DISH email alerts: http://about.dish.com/alerts
   Follow @DISHNews on Twitter: http://www.twitter.com/DISHNews

   SOURCE DISH Network Corporation
   https://www.prnewswire.com/news-releases/dish-to-release-deployment-services-rfp-for-standalone-5g-network-buildout-300941757.html

4. As DISH prepares to build the first virtualized, standalone 5G broadband network in the U.S., the company announced it will release a Request for Information and Request for Proposal (RFI/RFP) for Telecom Transport Services in the coming weeks.

   The Telecom Transport Services RFI/RFP, the fifth in a series of RFPs for different elements of the national network, will include requests for telecom transport service companies to facilitate lit and dark fiber connectivity to cell towers, buildings and data centers.

   DISH Executive Vice President of Wireless Operations, Jeff McSchooler stated:

   “We’re building a 5G network from the ground up, with the opportunity to apply fresh ideas and new partners. We’re seeking input from local and regional telecom transport partners, as well as the national providers that have supported our existing video business for decades. We see an opportunity to learn from nontraditional partners as well, like utilities and municipalities that may be deploying fiber in their communities. We are exploring varying transport infrastructures to support our aggressive buildout.”

   DISH has committed to building a standalone 5G broadband network available to at least 70 percent of the U.S. population by June 2023.

   The Telecom Transport Services RFI/RFP is the fifth such document DISH has issued as it pursues its 5G buildout. The RFPs issued to date include:

   — July 2019: 5G Network RFI/RFP seeking input for the network elements

   — September 2019: System RFP seeking responses from vendors to provide a
   software solution for project management, workflows, reporting and other
   utilities that aid in deploying the national network

   — October 2019: Deployment Services RFP seeking input for end-to-end
   deployment services including pre-construction and construction services

   — January 2020: 5G Component RFP seeking input from vendors regarding
   physical assets of the network such as mounts, cabinets and hybrid cables

   — January 2020: Telecom Transport Services RFI/RFP

   Vendors interested in receiving the Telecom Transport Services RFP can contact DISH Wireless at [email protected] prior to January 30, 2020.
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   About DISH

   DISH Network Corporation is a connectivity company. Since 1980, it has served as a disruptive force, driving innovation and value on behalf of consumers. Through its subsidiaries, the company provides television entertainment and award-winning technology to millions of customers with its satellite DISH TV and streaming Sling TV services. Through its strategic spectrum portfolio and other assets, DISH is poised to enter the wireless market as a facilities-based provider of wireless services with a nationwide consumer offering and development of the first standalone 5G broadband network in the U.S. DISH’s OnTech Smart Services brand offers in-home installation of connected home devices and entertainment solutions. DISH Media serves as the company’s advertising sales group delivering targeted advertising solutions. DISH Network Corporation (NASDAQ: DISH) is a Fortune 250 company.

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