The Dish 'Fix' For The T-Mobile Merger Is Looking More And More Like A Ridiculous Mess
from the do-not-pass-go,-do-not-collect-$200 dept
Remember when the FCC rubber stamped the Sprint T-Mobile merger without looking at the facts? Remember when a long line of economists and experts noted the merger would likely erode competition, raise rates, and kill jobs -- and both U.S. regulators and the court system completely ignored them? And remember when the FCC and DOJ both cobbled together a "fix" to this problem by trying to throw some spectrum at Dish Network, a proposal we noted was likely to fail?
Well guess what. Not only has the merger resulted in 5,000 layoffs and counting (something T-Mobile repeatedly promised regulators would never happen), the Dish "fix" proposed by the DOJ and FCC is looking more and more like a hot mess. Dish has increasingly been complaining that before the ink on the agreement was even dry, T-Mobile was behaving a lot like AT&T and Verizon. The issue is that T-Mobile is shuttering its older and slower CDMA network, which Dish hoped to lean on as it got its full, broader 5G network up and running:
"This is the same company that goes on Twitter and talks about dumb and dumber and how they’re for everybody, they love everybody and they’re for the consumer. They went to the Public Utility Commission in California under oath and said that it would be three years before they turned CDMA off. They forgot about that. Once they got their merger done, they look like every other big company,” Ergen said.
“They’ve become the Grinch,” he said. As the Dr. Seuss story goes, the Grinch had a tiny heart and stole all the kids’ toys. In Ergen’s analogy, T-Mobile is sort of stealing phones out of consumers’ hands since they won’t work anymore.
Sounds like the strong foundation for a lasting relationship, yeah?
Ideally, the agreement offloaded T-Mobile's Boost prepaid brand and some spectrum to Dish Network in the hopes it would cobble together a replacement fourth wireless carrier over a period of seven years. But there were always ample problems with that idea that suggested it was more regulatory theater than practical solution for the market problems created by the merger.
One, even by T-Mobile's admission Dish has a long history of hoarding wireless spectrum and making empty promises in wireless. Two, Verizon, AT&T, and T-Mobile had absolutely every incentive in the world to prevent the creation of a viable, fourth wireless competitor. Three, regulators who take great pride in being "hands off" were never going to have the competency and willingness to nanny such a convoluted deal toward completion.
Dish continues to bleed satellite TV subscribers at an alarming rate, so it surely wants a shift to wireless to work out. But it's just not clear that the company has the competence to pull it off, especially when the consolation prize for failing is likely just a wrist slap by the FCC and a huge cash pay out should it sell off its mammoth spectrum hoard. Meanwhile, as we've seen in Canada, Ireland, and Germany, the reduction of competitors from four to three will inevitably result in higher mobile data prices for U.S. consumers, something the remaining three U.S. carriers will lobby for heavily to ensure never changes.
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Filed Under: charlier ergen, competition, merger, spectrum, wireless
Companies: dish, sprint, t-mobile
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surprised pikachu.
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everyone with even halff a brain kneww tthis was going to be a gigantic screw up and only done because it could be, not because it was needed or was gonna be helpful!
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Subject To Review
Perhaps someday there could be a merger review system. It seems that many mergers involve companies making promises as a condition for approval. A review process is needed to revisit the merger, and determine whether what was said during the merger was all a bunch of hocus. And if so, then the merger is retroactively rejected.
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Re: Subject To Review
I'll admit that at first thought this would be a good idea. However, I imagine it would be incredibly difficult to separate two merged companies. Maybe it could be done more easily if the merged companies silo'ed each other through the "probation".
I'm sure we can trust these corporations to be nice and do that, right? </sarcasm>
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Re: Re: Subject To Review
I think the financial disaster of failing a probationary period in a merger is exactly the consequences needed to ensure promises aren't made that won't be kept. Ruin the CEOs, ruin the companies, and let their smoking ruin be a warning to investors that a merger doesn't mean explosive profits.
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Oh look, my shocked face.
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I assume you mean
I assume what you mean by 'looking more and more like a ridiculous mess' is 'looking more and more exactly like how the telcos wanted this to turn out...well played telcos, well played...'
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Re: Subject To Review
Your main problem there is easy to spot - how do you restore umpty-squat thousands of worker positions? First, those that deserve to be returned to their jobs are already working somewhere else - what are they supposed to do?
Second, even in just two or three years of probation, the field changes fast, almost to a new level of operating procedure, thanks to technological advances if nothing else. Those people that need to be brought back? They're going to need retraining, most of them, so that's will affect both the cost and the time needed to get the restoration fully implemented. Better would be the silo option mentioned by kallethen, but even then, problems great and small will still keep things a'hoppin, you can be sure of that.
My solution would be that a 5 year probation period be required, and that if any conditions are contravened, then all of the principles of the "deal" lose all of their earnings, whether such be cash, stock options, benefits, any and all such emoluments. The same would go for any regulator(s) who approved the deal, their earnings would be docked a proportionate amount (compared to the above-mentioned executives).
The best way to enforce that would be to put those "earnings" into a trust account - the trust beneficiary could receive the interest earned, but would not be able to touch the principle. That way, when a person is properly dunned for disobeying a condition, we don't suddenly hear "Sorry, but I spent all the money, there's nothing left to give back". Seems draconian, but it would work to keep merged companies (alia "the new company") on the straight and narrow.
BTW, Koby, I need to be fair with you - this is the first post by you that I honestly can't label as a troll effort. Nice going, and keep it up - you'll grab that brass ring yet! :)
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Re: Re: Subject To Review
..... and James B. brings up my other point - what to do about the stock market.
News of an impeding merger is generally good for the investors - news of an impending breakup is generally bad. But the straight-up problem is this - how does the government order that the stock for the new company be re-organized to return the two previous companies to where they were at, pre-merger? IOW, how does the government prevent investors from losing money - they may have had a vote in approving the merger, but for the gov't to order them to lose money, or to take money from them, that beggars the imagination.
Thorny problems, I'm sure you'll agree. My proposition above about leaving the new company intact, simply fining the bejeezus out of the offending executives, that should leave the investors with little to worry about, long term.
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Weird how they didn't give their CDMA network to Dish during the deal. I'm shocked. And stunned.
Boost, especially, was marketed toward lower-income folks, and their old tv ads were totally marketed toward Black people.
Now were just going to kill your phone network. Buy a new phone i guess and a more expensive plan. (While noble Dish here was planning on jumping straight into the 5G consumer boondoggle, which is super cool for customers also.)
p.s. Boost's site and service, which had already gone downhill, are now an utter abortion. Been curious how much of that is Dish's incompetence vs sabotage by T-Sprint while handing it over.
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Dish: wastebasket?
Perhaps what we are looking at here is a wastebasket. One in which you dump scarce resources and unwanted customers. Give it a fresh coat of paint and show iti off as a bright new compeititor -- all the while snickering into your fist because you know it is just a wastebasket.
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Screwed up Ting too
The merger was the beginning of tech difficulties with the popular MVNO, Ting. My family had been loyal Ting customers for years with no problems until they switched us to a Dish APN.
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"The issue is that T-Mobile is shuttering its older and slower CDMA network, which Dish hoped to lean on..."
Huh? I thought T-Mobile and AT&T went GSM for their 2G deployment, while Sprint and Verizon were in their incompatible 2G CDMA world. (Likewise, for Canada, Rogers/Fido was GSM while Bell/Telus were CDMA and have now taken 2G dark.)
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Re: Subject To Review
"Perhaps someday there could be a merger review system."
Most countries in the world already have one of those. Even the US. Go google the Federal Trade Commission.
"It seems that many mergers involve companies making promises as a condition for approval."
Only when the merger is one subject to antitrust concerns. At which point the "promises" are, in fact, legal stipulations.
In this case the issue of concern is layoffs as result of optimization and an emergent organization which can not perform as advertised. And the "promises" so much bullshit meant to calm the waters with no legal weight.
Which is bad for the people employed but...even speaking from the thoroughly socialized perspective of a scandinavian my first question would be why the people laid off were working in an industry which was proclaimed as dying years ago. If you know the writing on the wall ten or more years in advance that's ample time to look for another job no matter how harsh the market is.
As with so many other topics lately this really is one I as a european shouldn't know better than many americans.
"And if so, then the merger is retroactively rejected."
Not possible. You can prevent the egg from falling off the shelf but once it's in the pan you don't get the option of putting it back into the shell. It's one thing for government to regulate industries and prevent them from acting unethically or unlawfully. Quite another for government to walk into a bad merger and start declaring 5000 people re-hired, every salary and bonus recalculated by the numbers of three years ago, and impound the salaries of people who themselves have not committed crimes én másse.
This gets even more ridiculous if some stakeholders are from outside of the US in which case the US government would have to exercise eminent domain on the soil and banks of other countries.
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Re: Re: Subject To Review
"My solution would be that a 5 year probation period be required..."
5 year plans have not historically worked out that well. I mean sure, you can make a law demanding any merger has one. I'm for real sure though, that it will take exactly no time at all for that law to become a weaponized way of forcing companies into chapter 11.
"Seems draconian, but it would work to keep merged companies (alia "the new company") on the straight and narrow."
More like "guaranteed to be subject to stock worth crashing". I mean, I can see the reason as to why you would want corporations under sensible regulation. But under a free market such attempts usually mean the death of all companies involved as soon as you lock their business model to a single year, as the shareholders start abandoning what they see as a sinking ship. You can barely swing locking the business to more than a quarter at a time.
I can see a point of view where we all ask ourselves WHY society as a whole is so beholden to exponential growth and the stock market but the fact is that we ARE. And until we manage back ourselves out of a paradigm where the primary engine of prosperity is greed we're going to have to live in the world we have, not the one we'd like to see.
"...this is the first post by you that I honestly can't label as a troll effort."
Yeah, but you can still see where he's coming from - demanding, essentially, that the means of production be seized by the state unless the wealthy are held to laws which don't apply to the middle class. This I have a problem with. If a law can't apply equally to everyone then that law is worthless.
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Re:
You see, the networks Sprint owned, yes? are now owned by the post-merger T-Mobile.
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I still don’t understand what T-mobile got out of it worth tarnishing their name both by now being associated with that yellow company, and the inevitable assault over carrier consolidation.
I’m still debating my continuing service with a company I was with before they became T-mobile. I’m one of the millions of one-time NexTel users who despise the company for illicit contract extensions when they took the company over.
But why does everyone forget the 4th national brand? xFinity Mobile.
Which is consistently growing? The merger was the first time I looked at switching mobile completely.
Unfortunately xFinity doesn’t offer true unlimited data at any level.
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