T-Mobile plans to shut down its CDMA network on January 1, 2022. That action will affect either 900,000 Dish Network customers, according to T-Mobile, or 4 million by Dish's count.
How can the math employed by these two publicly traded companies which presumably employ at least a few accountants each differ by more than 3 million?
According to a source familiar with Dish Network, the discrepancy is due to the fact that T-Mobile is lying because it doesn't know. The source indicated that Dish's Boost Mobile operation was independently run inside of Sprint prior to T-Mobile's acquisition of Sprint almost exactly a year ago. That "firewall" remained in place until T-Mobile sold Boost to Dish in July 2020 for $1.4 billion.
But that's not important, according to a different source who is familiar with T-Mobile. That source indicated the company believes Dish is counting all CDMA phones, not just the phones that need to be replaced. Specifically, there are CDMA phones among Boost's customers that can also work on T-Mobile's LTE network those customers simply need to install a new SIM card into those phones in order to switch over to T-Mobile's LTE network. Indeed, T-Mobile is employing that SIM-swap strategy to shift some of its own Sprint customers off its CDMA network and onto its LTE network.
T-Mobile said this week that it has already moved 20% of its Sprint customers and 50% of overall Sprint network traffic onto its own T-Mobile network.
War of words
But those seemingly critical details appear to be lost in the very public spat between Dish Network's Charlie Ergen and T-Mobile's Mike Sievert.
"Of the 9 million customers Boost has give or take by the end of this year almost 90% of them will already have a handset that's totally compatible with T-Mobile's network," Sievert told Fox Business in March.
But Ergen doesn't seem to want to discuss that figure (which would be 900,000 for those non-accountants out there).
"As wireless carriers roll out 5G services, many Americans still utilize 2G and 3G technology for their mobile needs," Ergen told a group of US Senators in a letter this week. "In fact, over 4 million prepaid Boost customers are among those reliant on 3G technology today. This is because they hold devices that are currently only compatible on the legacy Sprint 3G CDMA network."
Importantly, the financial analysts at Sanford C. Bernstein & Co. seem to lean far closer to Sievert's math than Ergen's. The firm recently estimated T-Mobile's plan to shutter its CDMA network will only affect around 400,000 of the roughly 9 million Boost Mobile customers Dish purchased last year.
Dish plans to eventually move its Boost customers onto its own 5G network, but in the meantime it will manage them on T-Mobile's network as a T-Mobile MVNO. The company recently reported that its wireless retail subscriber base composed mostly of Boost customers decreased by 161,000 in the first quarter, leaving the company with 8.89 million retail wireless subscribers.
Regulators as adjudicators
The financial analysts at New Street Research wrote this week that regulators at the FCC, California Public Utilities Commission (CPUC) and US Department of Justice (DoJ) may consider the issue, but that they expect the DoJ to ultimately be the one to potentially render some kind of decision. And in that case, they consider T-Mobile to have the upper hand considering the companies' 2019 deal with the DoJ states that "Dish is solely responsible for the migration of legacy network subscribers."
However, they noted that it's unclear whether the FCC or CPUC might step in to prevent low-income customers from being disconnected.
"In the meantime, we think there is another front where Dish is clearly doing well: the PR front. The episode allows Dish to paint T-Mobile as losing the mantle of the 'uncarrier' and to portray itself as the successor to the entity that cares most about customers," they noted, pointing to Ergen's recent statement that T-Mobile's Sievert is the "magenta grinch."
"Regardless of the outcome of the legal dispute, Dish is laying a foundation to blame any problems with the CDMA shutdown on T-Mobile," the New Street analysts continued. "We don't know that it will be successful but we don't see any downside for Dish in its efforts."
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