The remedies following the T-Mobile/Sprint merger were poorly thought out, and could fail to create the fourth MNO the DoJ wanted
A merger subject to several remedies: When the DoJ cleared the T-Mobile/Sprint merger in July 2019, one of the conditions for approval was to divest Boost Mobile, Virgin Mobile, and Sprint Prepaid to Dish (which would also gain some of Sprint’s spectrum and become a fourth MNO). T-Mobile also committed to provide wholesale access to Dish as an MVNO for seven years. However, conflict arose between the two operators in late 2020 when T-Mobile announced the phase-out of its 3G network from 1 January 2022. About half of the 9m Boost Mobile customers are low-income customers in rural parts of the US, and still heavily rely on 3G. Dish planned to keep these customers on T-Mobile’s 3G network at least until July 2023, while it builds its own 5G network.
The DoJ will intervene in the dispute: The relationship between the two operators turned sour during 2021, with Dish accusing T-Mobile of anti-competitive behaviour and T-Mobile criticising Dish for not doing enough to migrate its customers to new technologies. Despite its right to access T-Mobile’s network, in July Dish struck a $5bn deal with AT&T for the next 10 years to use its 4G and 5G networks. On 9 August the DoJ sent a letter to both companies, saying it has “grave concerns” that a substantial portion of Dish customers will remain without service, though it concedes that Dish will have to make all reasonable efforts to move its customers off the 3G network.
Was the DoJ wrong to maintain a four player market?: The likely outcome of the dispute is unclear. T-Mobile gave considerably longer than the six months’ notice period (the minimum required by the DoJ) for the 3G phase-out. However, the fact that such a dispute has arisen, and that Dish has had to spend $5bn on an agreement with AT&T, show that the deal was built on shaky foundations. US operators have generally given significantly longer notice to their customers for other 2G and 3G phase-outs. There is now a risk that Dish (which has lost both pay TV and mobile subscribers for the last three quarters) may not remain financially viable and as such fail to meet its coverage obligations for 2023. Should that happen, the DoJ’s plan to maintain a four player market in the US would appear to have been ill-judged.
