Dish Wireless Ambitions, And The Trump Era ‘Fix’ For T-Mobile Merger, Look Shakier Than Ever
A few years back, the Trump DOJ and FCC rubber-stamped the Sprint T-Mobile merger without heeding expert warnings that it would stifle competition, kill jobs and eventually raise rates. Working closely with T-Mobile and Dish, the FCC and DOJ “antitrust enforcers” unveiled what they claimed was a “fix” for these problems: they’d cobble together a fourth major replacement wireless carrier in Dish Network.
As we noted a few times, the proposal was never likely to succeed. One, because Dish had no track record in this space outside of a parade of empty promises. Two, because the remaining three providers (AT&T, Verizon, T-Mobile) and Wall Street want less price competition and would be incentivized at every step to ensure it fails. And three, because the FCC sucks at holding big companies accountable.
So far, things are going just about as well as you’d expect. T-Mobile has already laid off 5,000 employees, wireless industry nickel-and-diming efforts have slowly been creeping skyward, and the Dish network plan has seen repeated delays thanks in part to squabbling between T-Mobile and Dish. And while Dish’s 5G network has “launched” in limited portions of some cities, it only supports one terrible phone, and actually signing up for it is a bit of a joke.
Dish’s latest earnings report is particularly ugly, with the company losing another 257,000 net satellite TV subscribers. It also lost 55,000 Sling TV subscribers, the streaming service those users were supposed to be shifting to. And it lost 210,000 retail wireless customers, the segment it’s supposed to be pivoting into. And its revenues dropped 6% year over year. But things are looking up, Dish executives insisted:
Dish is led by president and CEO W. Erik Carlson and chairman Charlie Ergen. “We had higher than expected customer attrition following the football season, but the bottom line is we simply didn’t execute to the level we expected,” Carlson had said on the first-quarter earnings conference call, but vowed: “Our best days are certainly ahead of us.”
Indeed. Meanwhile, Wall Street stock jocks like Craig Moffett issued investor research notes making it clear that Dish isn’t actually spending the kind of money you’d need to be spending if they were actually serious about building a massive, nationwide wireless network:
We have come to this sorry pass because of Dish’s bewildering reticence in raising the money they so obviously need to fund their fledgling wireless business. For the second straight quarter, Dish’s total free cash flow was negative in Q2, notwithstanding a deceleration in spending on their network build (something we’d begun to hear from industry participants as well, as Dish perhaps understandably pulls back on their buildout pace to preserve cash while they sort out the financing question).
Now, I don’t get paid millions of dollars annually to predict industry trends, but it was always clear to me that the whole Dish Network plan was likely a head fake that served two functions. One, it gave Trump-era regulators cover for signing off on mindless consolidation. Two, it served as an elaborate, expensive way for Dish CEO Charlie Ergen to buy time for his massive spectrum holdings to appreciate before cashing out.
Dish is supposed to adhere to FCC build out guidelines on this network, but the agency is so utterly feckless, I’d wager any regulatory financial penalty, assuming one arrives at all, would be a tiny fraction of the money made from selling the spectrum. And Wall Street and the three major players don’t want this effort to succeed, they want reduced price competition and consolidation.
Within five years I could easily see Ergen riding off into retirement on billions made from offloading spectrum and whatever network has been built to Verizon, the FCC doing absolutely jack shit about it, and all of the Trump-era folks who justified this turd of a deal either pretending it never happened, or pretending it was an unavoidable casualty of COVID or inflation. Nice work if you can get it.
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August 5, 2022 at 12:09PM