Dish confirms that it will become a major US mobile carrier

By | July 28, 2019

In step with today’s Justice Department approval of the T-Mobile and Sprint merger, Dish has confirmed that it intends to pursue a new path beyond satellite television: it’s going to replace Sprint as the fourth major US carrier. The company has agreed to what it calls a “transformative transaction” with the DOJ, T-Mobile, and Sprint that will see it acquire Sprint’s prepaid businesses (and customers), acquire a portion of Sprint’s 800MHz spectrum, and gain complete access to the “new” T-Mobile’s network for seven years.

Dish already possesses a valuable pool of spectrum that it has done very little with up to this point, but that all changes now, according to CEO Charlie Ergen. He’d have you believe that the T-Mobile and Sprint merger — and the divestitures that Dish was able to take from it — is just what his company has been waiting for. The Justice Department directly acknowledged today that it would have tried to kill the $26 billion merger if this deal hadn’t been reached.

“These developments are the fulfillment of more than two decades’ worth of work and more than $21 billion in spectrum investments intended to transform Dish into a connectivity company,” Ergen said in a press release. “Taken together, these opportunities will set the stage for our entry as the nation’s fourth facilities-based wireless competitor and accelerate our work to launch the country’s first standalone 5G broadband network.”

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Dish CEO Charlie Ergen.
 Photo by Kim Kulish / Getty Images

About that 5G network: Dish is committing to “deploy a facilities-based 5G broadband network capable of serving 70 percent of the U.S. population by June 2023.” It has asked the Federal Communications Commission to modify its spectrum licenses in accordance with this plan. Before today’s news, the company was fast approaching deadlines where it risked losing some licenses if it didn’t actually start doing anything with its vast spectrum holdings.

Dish says:

The 800 MHz nationwide spectrum adds to Dish’s existing 600 MHz and 700 MHz low-band holdings. The low-band portfolio, well suited for wide geographic coverage and in-building penetration, complements Dish’s AWS-4 and AWS H Block mid-band offerings, which promise high data capacity potential with narrower operating range.

Dish has committed to new buildout schedules associated with the company’s 600 MHz, AWS-4, 700 MHz E Block and AWS H Block licenses. In addition, DISH has committed to deploy 5G Broadband Service utilizing those licenses.

Building a network takes enormous time and investment, so in the interim, Dish’s customers will all be riding on the combined T-Mobile and Sprint network. The agreement will allow them to move “seamlessly between T-Mobile’s nationwide network and Dish’s new independent 5G broadband network” whenever the latter is up and running.

If the T-Mobile and Sprint merger overcomes a challenge from state AGs and successfully closes, Dish will immediately take over Sprint’s various prepaid businesses and instantly gain “9.3 million customers in all 50 states and Puerto Rico.” Four hundred employees will also transfer over to Dish, “as will the more than 400 employees and nationwide independent retail network that supports more than 7,500 retail outlets.” Dish also gets the option of taking over any cell towers, network equipment, and retail assets that are set to be decommissioned due to the merger process.

None of this comes free, naturally. Dish is paying $1.4 billion for Sprint’s prepaid operation and $3.6 billion for the chunk of spectrum it’s getting. (T-Mobile also secured itself an option to lease some of Dish’s own 600MHz spectrum.) It’s interesting that the company is focused on a standalone 5G network; it’s obviously counting on a reasonably fast buildout since it’ll lose the fallback of T-Mobile’s LTE in seven years.

We still know nothing about Dish’s plans for pricing or how it might bundle its satellite and mobile services. And there’s always the prospect that Dish might just end up selling its mobile business to another huge company a few years down the road. But with traditional pay TV in decline, this new path could end up being critical to Dish’s future.

Either way, this merger is dramatically reshaping the US wireless industry. If all goes according to plan, the “big four” carriers will eventually be Verizon, the New T-Mobile, AT&T, and Dish Network. Should Dish’s lofty goals fail to materialize, the Justice Department’s feared outcome of reduced consumer choice could still come true. To that end, Dish says: “if Dish fails to meet its 5G deployment deadlines, Dish will make voluntary contributions to the US Treasury of up to $2.2 billion.”