With rumors that Dish Network is a leading contender to acquire Boost Mobile as a spin-off from the Sprint-T-Mobile Merger, there are growing worries that the American consumer may not be well served. The entire process can be confusing, and has many layers to it, but the merger between Sprint and T-Mobile is what initially sparked the interest in a potential sale of Boost Mobile. Since announcing their proposed merger, Sprint and T-Mobile have been under intense scrutiny from the DOJ, FCC, and state regulators. In a nutshell, the regulators would like there to be four nationwide wireless carriers to maintain competition in the crucial wireless services market. To satisfy antitrust regulators, T-Mobile has decided to divest the Boost Mobile asset in an effort to create a fourth large wireless competitor. News stories suggest that DISH is the leading contender to buy the Boost Mobile brand.
This approach is a bridge not far enough. Chief among those concerns is that even with Boost Mobile DISH will not have the ability or the incentive to act as a competitive check on the other wireless carriers. Boost Mobile is a non-facilities based reseller of Sprint’s service and what is being proposed is that DISH would acquire Boost Mobile, have a reseller arrangement with T-Mobile/Sprint and, as a result, DISH would act as a competitive check on the combined T-Mobile as well as AT&T and Verizon. This is fallacious reasoning. As the DOJ and the FCC found in connection with the failed 2011 attempt by AT&T to acquire T-Mobile, non-facilities based resellers, like Boost Mobile, do not act a competitive check on the other nationwide wireless carriers. This is because resellers are beholden to the underlying wireless carrier for the wireless service they provide. The only solution is for the DOJ to insist that T-Mobile/Sprint divest not only Boost Mobile but also sufficient other assets, such as towers, stores, and spectrum, so the new company will have the ability and the incentive to fully compete with the remaining carriers. Without a true fourth nationwide carrier, the T-Mobile/Sprint merger could harm the country’s consumers by higher rates & limiting the public’s access to a broader choice. Further, DOJ has previously found that only structural remedies (e.g., sale of enough assets to make the new company completely separate from the combining company) are adequate remedies to solve the competitive problems arising from merging companies. Here, since DISH would continue to be a reseller of T-Mobile/Sprint, it would not have the ability nor the incentive to fully compete with the combined T-Mobile/Sprint.
It is also not clear that DISH is the best company to provide this competition. First, DISH already has a significant amount of spectrum already but after 4 years has failed to build a network. Indeed, DISH when questioned recently by the FCC has only committed to building a network which would be useful for IoT devices – and would not be capable of providing the full range of services to compete with the other nationwide carriers. Second, DISH has no experience in the wireless business. While DISH owns quite a lot of wireless spectrum, it does not even resell for other carriers today. It is not clear how a company that has no wireless experience will provide the necessary check on the combined T-Mobile/Sprint. Finally, DISH is already heavily leveraged and is experiencing continued decline in its core satellite services. Given that an acquisition is rumored to cost $6B or more, this additional debt will prevent DISH from being a maverick and fully competing with the other carriers. Most importantly, what assurance does the public have that DISH will go forth with providing a viable product that brings healthy competition into the market? Having never attempted it in the past, it has many wondering, why now? And if its fail to produce, the consumer will be left with limited choice.
Name: John Kenwood
Email: Send Email
Organization: Leader Bulletin
Address: Huntington Beach, CA