Dish Network is preparing to introduce a new brand next year that will offer postpaid wireless services. The company's goal is to follow the lead of other major wireless network operators by offering a postpaid option that its existing prepaid customers can upgrade to.
The move would likely allow Dish to squeeze more money out of some of its roughly 9 million mobile customers. Prepaid offers – which require customers to pay for their service before they use it – are often sold to customers with low credit scores, and often generate narrower profits for operators. Postpaid offers – which allow customers to pay for their service after they use it – often generate more revenues and can include extras like financing plans for phone purchases.
More broadly, the plan by Dish to offer postpaid services dovetails with a major trend in the US wireless industry where large numbers of prepaid customers are signing up for postpaid services.
"There is a big transference from the prepaid category to the postpaid category," T-Mobile CFO Peter Osvaldik explained last week during the company's quarterly earnings call. "You're seeing that happen more from a macro perspective, lots and lots of people from prepaid moving into postpaid, based on the economic realities that you're seeing in the country."
Dish's postpaid offering "is going to be an innovative thing," Dish's Stephen Stokols told Light Reading. Stokols oversees the Boost Mobile business that Dish purchased from T-Mobile last year, as well as the Ting and Republic Wireless MVNOs Dish subsequently acquired. "It gives us an opportunity to take our best [prepaid] customers and move them over to it."
Stokols pointed out that AT&T, Verizon and T-Mobile are all working to encourage their prepaid customers to sign up for more profitable postpaid services. He said Dish's forthcoming postpaid brand is "a huge opportunity for us to do the same." Stokols declined to provide details on the planned brand, but suggested that Dish may also rework its Ting and Republic offerings as part of the effort.
Dish is required to offer postpaid services under its 2019 agreement with T-Mobile and the US Department of Justice, though its acquisition of postpaid provider Ting appears to satisfy that requirement.
T-Mobile dumped for AT&T
Stokols is preparing to offer a new postpaid brand amid major changes at Dish. The company last month inked a new MVNO agreement with AT&T that will allow it to move away from T-Mobile, its existing wholesale network provider. But Stokols said the company doesn't necessarily want to replace T-Mobile with AT&T.
"The intent is to straddle the two. The intent is to have two networks. That's not abnormal for an MVNO of our size," Stokols said. MVNOs like Red Pocket Mobile and TracFone manage a number of MVNO agreements that allow them to sign up customers to whichever wireless network operator is offering the best wholesale rates. Stokols said Dish would like to do the same.
However, just days after Dish signed its new MVNO deal with AT&T, T-Mobile announced a new prepaid offer that dramatically undercuts the pricing available from Dish's Boost Mobile brand.
Stokols said T-Mobile's new $25-per-month prepaid promotion highlights T-Mobile's "anticompetitive tone" and "aggressive, combative attitude" toward Dish. He also said T-Mobile's new offer comes in just below what T-Mobile charges Dish for wholesale access to the T-Mobile network.
"They're our wholesale provider. They know our pricing. Well below market and just below our wholesale rate is a very overt way to come out and demonstrate that" anti-competitive approach, he said.
Stokols described T-Mobile's promotion as an emotional reaction by T-Mobile to Dish's new relationship with AT&T. "When you get dumped, you want to take it out on your ex," he said.
He said Dish is now reconsidering using T-Mobile's network for its mobile services. "It's hard to stay on a network that literally knows your wholesale cost and comes in with retail prices below it," he said.
Stokols said Dish plans to start activating customers on AT&T's network starting in the fourth quarter. He said the company is currently offering a number of phone discounts – including a free Samsung A32 and a $20 iPhone 8 – to encourage customers to upgrade to phones that could take advantage of AT&T's network.
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