T-Mobile's Legere Calls Dish a Spectrum Hoarder

Mike Dano
2/6/2019
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Dish Network is hoarding spectrum and should have it taken away, according to T-Mobile CEO John Legere.

"Next on 'Hoarders': @dish. They've warehoused $11B of spectrum for years and missed every build deadline. NOW they finally started to deploy with one tower so the spectrum doesn't get taken away #UseItOrLoseIt!," Legere tweeted in response to a new video from Dish showing the construction of its first NB-IoT tower in Windsor, Colo. which is roughly 80 miles north of Dish's headquarters in southern Denver.

As noted by Pocketnow, the video by Dish was posted to the company's DishCareers YouTube channel and appears intended to get prospective employees excited about Dish's wireless network buildout plans.

Dish Network LLC (Nasdaq: DISH) has aspirations to eventually build a nationwide 5G network, and has committed to spending between $500 million and $1 billion by next year on the construction of a NB-IoT network for Internet of Things applications. That, according to Dish chairman Charlie Ergen, represents the first phase of the company's wireless network buildout; phase two could involve spending up to $10 billion constructing a full-blown, nationwide, stand-alone 5G network. (See Is Dish Really Ready to Be a 5G Player?)

Although Dish executives maintain the company is serious in its network-buildout intentions, critics such as T-Mobile US Inc. 's Legere have argued the company is simply working to meet the Federal Communications Commission (FCC) 's spectrum license buildout requirements with a relatively inexpensive NB-IoT network as Dish continues to work to find a buyer for its massive trove of spectrum holdings. (See Dish's Window to Sell Spectrum Has Closed, Analyst Says and Dish: We Can Meet Wireless Buildout Schedule.)

In response to those kinds of attacks by T-Mobile, Dish told Light Reading it remains focused on its wireless network buildout plans.

"It's ironic that T-Mobile, which has built its brand on innovation and disruption, is doing everything in its power to suppress a new wireless entrant. Even more notable, this opposition comes at a time when T-Mobile is attempting to further thwart competition by merging with Sprint, a merger that, as Dish and dozens of others have pointed out, would harm consumers," the company wrote in a statement. "Dish remains committed to meeting the obligations of our FCC licenses, and we continue to make progress on our Phase 1 NB-IoT buildout. We are excited to deploy the nation’s first stand-alone 5G network in Phase 2, a network that will not be burdened by current legacy architecture. Not only will the Dish 5G network leverage the power of the new wireless standards, it will serve as a springboard for the coming generation of technologies that will transform our digital economy."

Dish's statement was in response to a letter T-Mobile wrote to the FCC on January 29 reiterating its argument that the Commission potentially strip Dish of its spectrum licenses. "T-Mobile USA Inc. reiterates its request that you notify Dish that its planned build out will not meet the company’s obligations under the Commission's rules and that the Commission should take swift action to recover and relicense the spectrum if Dish follows its announced plans."

Continued T-Mobile: "Dish's announced plans for a narrowband Internet of Things ("NB-IoT") network do not make sufficient use of the valuable spectrum for which it is licensed and are not intended to result in the provision of meaningful commercial service. Dish is merely attempting to forestall the Commission’s recapture of its licenses. Dish's purported future plans to upgrade its NB-IoT network to a Fifth Generation ("5G") wireless mobile broadband network after July 2020 do not excuse its failure to satisfy upcoming performance requirements -- performance requirements for these bands that it has already missed once. These misses are part of a clear pattern of Dish's lack of commitment to use its wireless spectrum. The Commission should not permit that behavior to continue."

In its letter, T-Mobile also works to find cracks in Dish's plans -- pointing out, for example, that Dish will need to erect a large number of 2,000-foot-tall towers to build NB-IoT base stations to accomplish Dish's coverage radius of 62 miles per tower. T-Mobile also contended Dish's NB-IoT network will likely only use a tiny portion of its vast spectrum holdings.


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However, BTIG Research analyst Walter Piecyk wrote that T-Mobile's arguments against Dish mostly fall flat: "T-Mobile claims Dish is not using enough spectrum for the buildout plan. However, spectrum utilization/loading is not specified in any buildout requirements that we have seen. T-Mobile did not meet their own buildout requirements with 100% use of spectrum," Piecyk wrote, adding that T-Mobile's concerns about Dish's towers and coverage area will likely be validated by Dish's own vendor for the network, Ericsson AB (Nasdaq: ERIC) -- which is also a vendor for T-Mobile's network. (See T-Mobile Quietly Confirms 5G Network in 30 Cities.)

"It's hard not to speculate that T-Mobile's comments are a reaction to Dish's opposition to T-Mobile’s proposed acquisition of Sprint," Piecyk concluded, warning that BTIG continues to believe that there is only a 40% chance that officials at the US Department of Justice and FCC will approve the merger between Sprint and T-Mobile.

"Spectrum is important to T-Mobile's growth plans," he explained. "However, it's clear that Dish's spectrum would take on an even greater importance to T-Mobile's growth plans if the Sprint acquisition was blocked. Dish's Band 66, which we value at $20 billion, would be particularly attractive to T-Mobile."

Indeed, T-Mobile has in the past few weeks worked to supercharge its merger push with regulators via several actions:

  • Announcing plans to build five new call centers each creating an average of 1,000 new jobs.
  • Pledging to the FCC that "New T-Mobile will make available the same or better rate plans for our services as those offered today by T-Mobile or Sprint."
  • Hiring the FCC's most recently departed Commissioner, Mignon Clyburn, as an advisor.

So is T-Mobile getting desperate in its attempts to get approval for its merger with Sprint? At least one analyst believes that may well be the case.

"Generally when it comes to mergers, the first side to offer concessions is likely to be the side that is losing. That is not always the case but implicitly conceding that market forces alone are not sufficient to constrain prices is not a sign that the economic arguments at the DoJ about the impact of the deal on competition are working," wrote Blair Levin, a former chief of staff for former FCC Chairman Reed Hundt, in a report from Wall Street firm New Street Research. "We would expect that if such a commitment [of no pricing changes] carried with it an implicit or explicit counter from a government authority of support, it would occur near the end of the process. As the DoJ, as of a week ago, was still taking depositions, we do not think we are anywhere close to the end of the process. That T-Mobile feels it needs to reinforce the no price increase message now and in this way suggests to us that it was not part of the final handshake on getting the deal approved."

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

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