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Dish's new 5G strategy: MVNO aggregator

Prior to inking its 2019 MVNO agreement with T-Mobile and the US Department of Justice, Dish Network's main 5G strategy centered on the Internet of Things and devices beyond smartphones.

Here in 2021, things are much, much different.

Dish announced Monday it will acquire MVNO Republic Wireless – which operates on the T-Mobile network – and its 200,000 phone customers. It's Dish's third such acquisition, following its purchases of Boost Mobile and Ting, in roughly nine months.

"As we continue to grow our retail wireless business, Republic broadens our existing customer base and positions us to deliver even more value to the market, expanding our portfolio of mobile solutions to meet a variety of customer needs," explained Dish's John Swieringa in a release.

Republic was founded in 2011 with a Wi-Fi-first sales pitch to customers interested in reducing their monthly cell phone bill by shifting their cellular data traffic nearby Wi-Fi networks. Others have undertaken similar strategies, including Comcast, Charter, Google Fi, TextNow and Scratch Wireless.

For its part, Republic Wireless spun out from parent company Bandwidth in 2016 with a $30 million cash infusion. In 2018 it boasted of annual revenues of nearly $100 million while launching a Relay-branded device business initially focused on phones for children. That effort has since shifted to a variety of sectors including hospitality, facilities management, manufacturing, healthcare and education.

In acquiring Republic, Dish said the MVNO's Relay operation will continue to operate as a standalone company and will eventually become a wholesale customer on Dish's planned 5G network. Rob Currie, Dish's senior vice president of Ting and MVNO platforms, will lead the company's Republic Wireless business, and Dish expects the transaction to close in the second quarter. Financial terms of the deal were not disclosed.

Dish builds MVNO empire

Dish's pivot from the IoT space to the MVNO space started in 2019 when it agreed to purchase spectrum, customers and seven years of MVNO access from T-Mobile for $5 billion. Dish followed through on two of those three items in 2020 when it completed its $1.4 billion acquisition of Boost Mobile and the MVNO's 9 million customers.

While most expected that to be the end of Dish's MVNO adventures, the company surprised just a few months later with the purchase of roughly 154,000 more mobile subscribers from T-Mobile MVNO Ting, owned by Internet technology and service provider Tucows. That transaction also includes a Mobile Services Enabler (MSE) component that will eventually involve Dish moving its entire MVNO operation onto Tucows's mobile platform.

Now, it appears Dish is keen to suss out even more opportunities among a variety of MVNO brands, from Boost to Ting to Republic. Indeed, Boost Mobile just last week announced its new "Privacy Premium" service for customers that costs an extra $5.99 per month.

Dish's ultimate MVNO goal is to shift its phone customers from T-Mobile's network and onto the 5G network it is beginning to construct around the country. However, that effort appears to have hit a stumbling block after T-Mobile alerted Dish it would discontinue 3G service to Dish's Boost customers by the end of this year.

Verizon chases MVNOs too

Importantly, Dish joins Verizon as an MVNO aggregator. Verizon last year announced a blockbuster $7 billion agreement to purchase the biggest MVNO in the US, America Movil's TracFone. TracFone's MVNO brands stretched from Straight Talk to Simple Mobile to Page Plus.

However, as noted by Bloomberg Law, there is growing noise around the still-pending Verizon-TracFone deal. For example, more than a dozen Democratic state attorneys general and some consumer groups have asked the FCC to impose conditions on the transaction. They're urging the agency to prevent Verizon from potentially raising prices or from pulling TracFone out of Lifeline, the FCC program designed to provide telecom discounts to low-income households. The FCC hasn't yet issued a ruling on the topic, but ominously said recently it extended its review of the deal because it "raises issues of extraordinary complexity."

The financial analysts at New Street Research, however, believe Verizon's purchase of TracFone will ultimately go through.

"We continue to believe the FCC leadership will impose some conditions that commit Verizon to continuing the service and avoiding disruptions but we are skeptical that it will compel divestitures," they wrote in a note to investors over the weekend. "Nonetheless, in the context of T-Mobile potentially causing disruptions to consumers in the same market, the process bears watching."

After all, there are plenty of prior examples of network operators snapping up MVNOs. They do so in part to gain customers but also to operate separate brands on their networks that can target different demographics with different prices, all without affecting the operator's primary brand. That's what drove AT&T's acquisition of prepaid provider Cricket Wireless in 2013 and T-Mobile's acquisitions of prepaid provider MetroPCS in 2013.

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

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