DOJ Raises Red Flags About Impending CDMA Network Shutdown
DOJ has “grave concerns” about T-Mobile's impending shuttering of its CDMA network and what that means for Dish Network's many Boost customers left in the lurch, said a July letter to Dish and T-Mobile from DOJ antitrust acting Assistant Attorney General Richard Powers that Dish filed Monday with the SEC. Justice said it might “pursue all remedies available” if the CDMA network shutdown means either T-Mobile or Dish not taking necessary steps to ensure Boost customers aren't left stranded without a functioning network. Many think the FCC is unlikely to act on Dish's CDMA complaint (see 2105060024).
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Dish Chairman Charlie Ergen, in a call Monday with analysts while announcing Dish's Q2 results, called T-Mobile's Jan. 1 deadline for shutting down the CDMA network “a false, artificial deadline” and anti-competitive. He said it's a means of T-Mobile trying to swipe Boost subscribers. “They are really sore winners,” having already benefited substantially from the purchase of Sprint, he said. Dish is “taking all reasonable efforts” to migrate customers off the CDMA network and “made good progress,” but “a material amount of customers” will still have CDMA phones and lose service Jan. 1, he said. Asked about any subsequent discussions with DOJ since the letter, Ergen didn't comment.
“This is a manufactured crisis, orchestrated by DISH, and it is about money, not customers,” T-Mobile CEO Mike Sievert blogged. “We are fully committed to moving to the latest technology and bringing all customers along to superior service at a great price.” He said T-Mobile has been transitioning Sprint CDMA customers for months to its 4G/5G network and is upgrading customers to 5G phones for free. “Our friends at DISH have been dragging their feet in getting their customers upgraded to the superior 4G/5G world,” he said. “That they continue to refuse to do more to upgrade their customers, denying a great many customers the benefit of more advanced networks at this critical time for connectivity in our society, is indefensible.”
Sinclair warned of an impending blackout of 108 of its stations in 35 states on Dish. It said Monday a renewed carriage agreement with Dish before the Aug. 16 expiration of the current one is “unlikely.” Ergen in the call said negotiations often “come down to the wire.” He said the loss of local channels on Dish “used to be devastating,” but as viewership declines, while “still pretty bad ... it's not the same.”
Dish said it ended Q2 with 11 million pay-TV subscribers -- 8.6 million Dish subscribers and 2.4 million Sling TV subs -- meaning year over year losses of 400,000 Dish subs, while it picked up 150,000 Sling subs. It said it ended the quarter with 8.9 million retail wireless subs, with the 200,000 it lost in the quarter offset by the 200,000 it gained with its Republic Wireless acquisition. Dish had revenue of $4.5 billion for the quarter, up from $1.3 billion year over year.
“We are witnessing the long, slow goodbye of satellite TV,” MoffettNathanson's Craig Moffett wrote investors Monday, citing the aging satellite fleets of Dish and DirecTV. For Dish, what matters is the 5G open radio access networks business it's building, and many unknowns remain such as whether it will be a retail or wholesale business or operate regionally or nationally, Moffett said. Dish's Boost retail wireless business is also shrinking, and the path forward “remains unclear,” he said. Dish's forthcoming postpaid wireless brand to be launched in coming months could mean big startup losses, he said.
Dish's 10-year network service agreement with AT&T (see 2107190003) could mean some spectrum partnering, since both have some 700 MHz spectrum “that could be useful,” Ergen said. Both companies are interested in the 12 GHz band, he said, noting Dish has some spectrum that won't be used immediately for its planned 5G network “and probably could be put to use sooner rather than later by AT&T.” At the same time, Dish and AT&T “will remain frenemies” and compete, he said. He said the CDMA shutdown was a big driver of Dish's AT&T agreement. Dish said the AT&T deal won’t affect its meeting its FCC milestone deadlines or help it in the CDMA switchover.
Dish said it expects its 5G network to be largely complete in Las Vegas within the next 60 days, and then would spend Q4 beta testing. It said it signed most of the tower leases it needs to meet its requirement to cover 20% of the U.S. population by next June.
Asked about the likelihood of a direct broadcast satellite transaction now that DirecTV has spun off from AT&T, Ergen said a deal is “inevitable” though it's unclear whether TPG's buying a minority stake in New DirecTV helps or hinders that.