Is the relationship between Dish Network and T-Mobile starting to sour?

Based on a new filing with the FCC, that certainly appears to be the case. In the filing, Dish complained that T-Mobile inappropriately used Dish's spectrum as a marketing ploy during COVID-19 lockdowns.

"Since T-Mobile gained temporary access to Dish's 600MHz spectrum on March 15, the company has publicized the capacity benefits of this spectrum in press statements, tweets and advertisements in an apparent effort to acquire new subscribers. This includes television commercials highlighting the doubling of their 600 MHz capacity," a Dish executive complained to a T-Mobile executive in an email included in the filing. "The purpose of Dish's initial [spectrum] grant was to help T-Mobile increase capacity during the crisis to serve customers, not to use Dish's spectrum as part of a commercial marketing effort."

To be clear, T-Mobile and Dish appear to be moving forward in other areas of their wide-ranging partnership, despite this recent bickering. But the issue is noteworthy considering Dish is expected to purchase roughly 10 million prepaid customers from T-Mobile in the coming weeks, a transaction that will position Dish to be a T-Mobile MVNO for the next seven years as it works to build its own 5G network.

As any spouse knows, petty bickering today can plant the seeds for deeper troubles in the future.

Loaning spectrum
At issue in the filing is the unprecedented agreement announced between T-Mobile and Dish in March, in the early days of pandemic lockdown orders in the US. Under the agreement, Dish said it would let T-Mobile borrow its unused 600MHz spectrum for 60 days so T-Mobile could use it to reinforce its wireless network. T-Mobile feared that stuck-at-home Americans surfing the Internet could overwhelm its wireless operations.

However, that didn't really happen. While there were huge traffic spikes on fiber and cable networks due to the COVID-19 quarantine, traffic on wireless networks stayed largely the same, mainly because most smartphones default to customers' home Wi-Fi networks. Nonetheless, T-Mobile boasted in advertisements in March that it had "doubled capacity" on its network thanks to spectrum loans from Dish and others.

Those advertisements appear to have raised Dish's ire, based on the Dish's correspondence with T-Mobile.

Dish's email to T-Mobile was contained in a filing that T-Mobile made to the FCC requesting that the agency extend the term of the spectrum loan from Dish through June. T-Mobile also used the filing as an opportunity to respond to Dish's complaints: "T-Mobile's communications to customers and others provided the assurances that consumers want that T-Mobile's network will be able to continue to deliver T-Mobile's industry-leading service during this pandemic," T-Mobile wrote, disputing Dish's claim that its ads represented an attempt to acquire new subscribers. T-Mobile said the spectrum helped it navigate a 57% increase in hotspot tethering on its network.

Supply and demand
Importantly, the dust-up between T-Mobile and Dish could have significant financial consequences. As part of their initial agreement last year, T-Mobile and Dish said they would discuss the possibility of T-Mobile leasing Dish's 600MHz spectrum. The Wall Street analysts at New Street Research estimated that Dish could make up to $373 million per year loaning its 600MHz holdings to T-Mobile.

However, in its new filing, T-Mobile asked the FCC for permission to use just 56 of the 486 spectrum licenses owned by Dish. So instead of making up to $373 million annually, a long-term leasing agreement covering those 56 licenses would amount to just $135 million annually, according to the analysts.

T-Mobile's interest in a lease for Dish's spectrum holdings likely faded after T-Mobile reached an agreement with Columbia Capital to lease that company's 600MHz spectrum for three years.

This isn't the first time T-Mobile and Dish have clashed over spectrum. In 2018, prior to their agreement with the Department of Justice last year, T-Mobile accused Dish of a "cynical effort to hoard valuable spectrum assets."

Under the complex agreement reached between Dish and T-Mobile in 2019, the companies essentially agreed to position Dish to replace Sprint as the nation's fourth nationwide wireless network operator. The DoJ signed off on the agreement, ultimately paving the way for T-Mobile to finally close its merger with Sprint.

— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano