Dish Network on Wednesday officially entered the US wireless industry with the $1.4 billion purchase of roughly 9 million Boost Mobile-branded prepaid customers from T-Mobile. The move makes Dish an MVNO of T-Mobile, whereby its Boost service will essentially piggyback on T-Mobile's wireless network.
However, Dish's new Boost prepaid pricing plans are nothing to get excited about.
"Dish is entering in a measured way. Rather than come in like an elephant in a China shop, it's getting a feel for it," explained Recon Analytics analyst Roger Entner. He said Dish's relatively uninspiring pricing plans indicate Dish views the wireless industry "as a marathon, not a sprint – pun intended."
Sprint owned the Boost brand until T-Mobile acquired Sprint in April.
Dish said its Boost prepaid brand – which sports a new logo but no other major changes – will sell wireless services starting at $35 per month for 10 gibabytes of data alongside unlimited talking and texting. Boost will also offer a $45 per month plan that will provide 15GB of data, but that price will drop by $5 after three months of on-time payments and by another $5 after six months. A Dish representative said customers on Boost's 15GB plan who travel over their monthly data allotments will have their connection throttled to 2G speeds, but they will have the option to purchase additional 1GB allotments for $5 each. However, the representative said that customers on Boost's 10GB plan are capped and will not have any data access after they surpass that initial allotment.
John Swieringa, the Dish executive in charge of Boost, noted in the company's press release that Dish is reviving the "$hrink-It" customer loyalty program that Boost introduced in 2010 but discontinued in 2014. "The longer you stay, the less you pay," he explained.
Interestingly, Verizon just last week introduced a very similar program that reduces the monthly cost of its prepaid customers' plans over time.
Dish's new Boost plans are slightly lower than what other prepaid providers charge for data. For example, AT&T's Cricket prepaid brand offers 5GB of high-speed data for $40 per month. Dish's Charlie Ergen promised last year Dish would be "very competitive" in the phone business.
Importantly, Dish will continue to offer unlimited data options starting at $50 per month, as it did prior to the Dish purchase. That's noteworthy considering a growing number of wireless customers subscribe to unlimited data plans.
Recon Analytics' Entner explained that Dish's initial goal with its new pricing plans is likely to encourage existing customers to stay. He said Boost's churn – the customers who cancel service – is around 5.5%, which is far higher than the 1% reported by most postpaid providers like AT&T and Verizon.
"They can dial up or dial down the intensity of the promotions," Entner said of Dish's Boost. "They're just getting on the bicycle, so they're getting on with training wheels."
Analyst Mark Lowenstein with Mobile Ecosystem explained that Dish's prepaid pricing "shows the challenges of not being the master of your own domain." He said that companies like T-Mobile, which own their wireless network outright, can be more aggressive with their service pricing. MVNOs, meanwhile, are at the mercy of their network partners.
Dish is "being cautious in pricing," Lowenstein explained. "They don't want to lose money."
Dish doesn't plan to be a T-Mobile MVNO indefinitely. As part of the agreement Dish and T-Mobile made with the Department of Justice last year, Dish agreed to build a nationwide 5G network with its vast spectrum holdings. The company's plan is to eventually transition its Boost customers from T-Mobile's network to its own network over the course of its seven-year MVNO contract with T-Mobile.