America's Struggling Satellite TV Companies Once Again Propose A Terrible MegaMerger

from the when-in-doubt,-repeat-your-mistakes dept

For decades, like clockwork, somebody at Dish or DirecTV will try and float the idea that the two satellite TV companies should merge. Usually they'll do this by seeding the idea at trusted news outlets that additional consolidation is just what the U.S. media sector needs. Granted regulators have always balked at the idea of a Dish and DirecTV merger, given that it would only reduce competition in the pay TV space, leading to more layoffs, more price hikes, and even worse customer service (cable TV customer service is among the worst in any industry anywhere thanks to this "growth for growth's sake" mindset).

Like clockwork, somebody involved in the deal-making has leaked word of yet another attempt to merge the two companies to the New York Post:

"DirecTV and Dish Network are in fresh talks to merge after years of on-again, off-again wrangling and multiple clampdowns from federal antitrust officials, The Post has learned."

Both companies have been losing TV subscribers hand over fist to streaming competitors, so the argument being seeded in the press is that the merger makes sense now because both companies are flailing, and streaming competitors now exist:

"Now, however, insiders are optimistic a Dish-DirecTV deal could pass regulatory muster as concerns about the market power of the struggling companies have waned, sources said. Some executives likewise argue that a merger could give a surprise boost to the US’s troubled rollout of 5G wireless services."

The problem, of course, is that every time the telecom and cable industry proposes a deal like this, absolutely none of the promised synergies ever actually arrive, and the end result is almost uniformly more problems, more layoffs, and more price hikes. We just got done watching a megagermer clusterfuck for the ages in the $200 billion AT&T Time Warner and DirecTV mergers, which promised American consumers the sun, Earth, and sky. Instead we saw 50,000 layoffs, record TV defections, higher prices, and absolute chaos, forcing AT&T to recently spin off DirecTV.

Dish and DirecTV policy nerds are going to try and justify the deal this time by claiming it's the only way to get Dish's promised 5G network off the ground. That network, if you recall, was a half-baked Trump-era "fix" to the problems already created by the T-Mobile Sprint merger. Based on recent events that network doesn't appear destined to succeed any way you slice it. But with Dish hemorrhaging both pay TV and wireless subscribers already, it's short of cash. DirecTV's fortunes aren't looking so hot in the TikTok era either.

So instead of letting terrible companies just die at the hands of the market and shifting trends, we turn to regulators to approve terrible deals under the Charlie Brown and Lucy football type promise that this time the deal will solve everybody's problems. But it won't. A deal like this will just reduce competition, raise rates, and result in tens of thousands of additional layoffs. As such it's unlikely the Biden FCC or DOJ approves it, but given this country's severe allergy to learning from history or experience when it comes to megadeals, you can never quite be sure.

Filed Under: competition, ftc, mergers, pay tv, tv
Companies: directv, dish

California Regulators Say T-Mobile Lied To Gain Sprint Merger Approval

from the synergies dept

To gain regulatory approval for its $26 billion merger with Sprint, T-Mobile made numerous promises. One was that the deal would immediately create jobs (there've been 5,000 layoffs so far). Another was that the company would work closely with Dish Network to help them build a fourth wireless network that would replace Sprint, theoretically "fixing" the reduction in competition the deal created. As predicted, that plan isn't working out well either.

Dish and T-Mobile have been fighting like cats and dogs since the deal was finalized. Instead of helping Dish Network grow, T-Mobile has been poaching Dish customers with promotions specifically targeting Dish. T-Mobile also promised to keep its older 3G, CDMA network operational for Dish to use until 2023 (giving it time to build out its own 5G network), but Dish has been accusing T-Mobile of turning that network off on January 1, 2022, far earlier than originally promised. Dish argues that millions of its Boost Mobile branded wireless subscribers could lose access to service in the new year.

This week California regulators sided with Dish and effectively accused T-Mobile of lying to gain merger approval:

"T-Mobile's false and misleading statements under oath indicated, among other things, that T-Mobile would make its CDMA network "available to Boost customers until they were migrated to Dish Network Corporation's LTE or 5G services" and that Dish would have up to three years to complete the migration, the ruling said. The CPUC can impose penalties against T-Mobile of up to $100,000 for each offense."

In short Dish says T-Mobile simply isn't living up to its merger commitments. In turn, a T-Mobile blog post effectively accuses Dish is just making everything up, and insists Dish is simply too cheap to give its wireless users discounted 4G and 5G phones to avoid problems when T-Mobile's 3G network shuts down. California regulators, including Administrative Law Judge Karl Bemesderfer and a CPUC commissioner, appear inclined to believe Dish Network based on their review of T-Mobile's pre-merger promises:

"Their ruling said there is "a reasonable basis to conclude that T-Mobile... misrepresented material facts and misled the commission" with statements under oath. The ruling said that when the CPUC allowed the merger, it "relied on the specific false statements, omissions, and/or misleading assurances T-Mobile gave regarding its use of [Sprint's] PCS spectrum and its repeated references to a three-year customer migration period without a degraded experience... it appears that these false statements, omissions and/or misleading assurances and the related time references were intended to induce the commission to approve the merger."

Again, simply blocking this deal and finding some other way to prop up Sprint (without eliminating a direct competitor) was always the simpler, cleaner, option. Instead, the Trump DOJ and FCC constructed this elaborate and likely doomed alternative which (ironically for a party with a purportedly "hands off" and "government never works" mindset), involves having government try to nanny a cumbersome arrangement to fruition for the better part of a decade. With Dish consistently losing both wireless and TV subscribers, it's not clear Dish will even remain viable enough for that to work.

Dish is a company with no experience in wireless, with a history of being cheap and difficult to work with, that has to not only build out a world class 5G network in a few years, but has to make a network so popular with consumers it successfully leeches subscribers from AT&T, Verizon, and T-Mobile. And it has to do it without financially imploding as it continues to hemorrhage wireless and TV subscribers. And US regulators, not exactly the model of consistent oversight, would need to hold all companies involved meaningfully accountable should they miss build-out metrics.

I still tend to think the entire deal was performative theater providing flimsy justification to approval a deal experts made very clear would reduce competition, raise prices, and harm jobs. It was pushed by folks whose only real interest was reducing competition so the remaining three players could inevitably jack up prices. And while I do think Dish is making a good show of it (because they have to), I still tend to think this could end with Dish selling its trove of valuable spectrum (once deal restrictions end), making tens of billions, then throwing a few peanuts at any flimsy regulatory penalties on their way to the exit.

Filed Under: antitrust, california, competition, doj, fcc, jobs, layoffs, lies, review
Companies: dish, sprint, t-mobile

Dish, Cornerstone Of The Trump DOJ's 'Fix' For The T-Mobile Merger, Continues To Bleed Wireless, TV Subscribers

from the this-is-going-well dept

If you recall, economists repeatedly warned the $26 billion Sprint/T-Mobile merger would kill jobs, harm competition, and ultimately raise prices for consumers. To "fix" the problem, the Trump DOJ and FCC concocted an elaborate and cumbersome plan to create a replacement fourth wireless carrier out of Dish Network, despite the company's lack of experience in the sector and history of empty promises. So far none of this is going particularly well, with 5,000 and counting lost jobs, Dish and T-Mobile clearly unable to get along, and Dish... the cornerstone of the entire plan... continuing to bleed both TV and wireless subscribers.

Of all the pay TV providers dealing with "cord cutting," Dish has indisputably been hit the hardest, losing another 67,000 pay TV subscribers last quarter. It technically added 65,000 Sling TV streaming video subscribers, but it wasn't enough to offset the 132,000 customers that cancelled Dish's traditional satellite TV service. With absolutely no plans to build new satellites and users shifting increasingly to streaming, Dish knows satellite TV is a dead end.

That's where the company's wireless business is supposed to come in.

As part of the DOJ/FCC deal, Dish obtained billions in spectrum and the Boost prepaid mobile brand from Sprint. The idea is that Dish is supposed to operate a Mobile Virtual Network Operator (MVNO) as it builds out its own, full 5G wireless network.

But, there too, things aren't going particularly well. Dish lost 201,000 Boost subscribers in the last quarter. And while it added 200,000 subscribers last March by buying a small wireless company named Republic Wireless, a research note by Wall Street analyst Craig Moffett indicates the overall trajectory isn't a great one:

"Their Q2 loss of 201K wireless subscribers (about 2.3% of their Q1-ending subscriber base, or almost exactly the size of Republic Wireless) means that they have now organically lost 9.7% of their subscribers in their first year of ownership."

The Trump DOJ and FCC "fix" for the Sprint T-Mobile merger was always a bit dodgy. It was hand-crafted by a DOJ "antitrust enforcer" in Makan Delrahim who was completely disinterested in data showing the deal should be blocked. Delrahim was far more interested in working as a glorified life coach for Sprint, T-Mobile, and Dish executives looking for regulatory approval. The deal itself always felt like flimsy theatrical cover to justify rubber stamping the Sprint T-Mobile deal, instead of a real fix for any genuine problems.

Now the whole mess is in the lap of the Biden DOJ, who this week sent a letter to Dish urging Dish and T-Mobile to start getting along. The DOJ is particularly concerned about the fact that T-Mobile's shutdown of its 3G CDMA network could leave millions of Boost mobile customers stranded January 1. Dish says the shutdown was earlier than promised, violating merger guidelines. T-Mobile says Dish is simply being too cheap to give Boost users discounted 4G or 5G phones. Either way, the DOJ isn't impressed:

"After careful consideration of the Parties’ submissions and arguments, the Division is left with grave concerns about the potential for a nationwide CDMA shutdown to leave a substantial proportion of Boost’s customers without service. While it cannot reach any conclusions today regarding events that have not yet transpired, the Division believes that the Final Judgment may be violated by one or both Parties if the network shutdown strands a substantial proportion of Boost customers, particularly if either or both Parties have not taken all appropriate steps to affirmatively alleviate any such harms in the leadup to implementing the network shutdown. If that situation manifests—and we sincerely hope that it does not—the Division may act pursuant to its authority under the Final Judgment or seek relief from the Court against one or both Defendants."

But again, the real problem is this deal was always a stupid, unworkable mess from the get go. Numerous experts noted so, and they were all ignored. Largely because the deal provided useful if flimsy cover for merger approval, which is all that really mattered.

To make any of this work Dish, a company with no real experience in the sector it's trying to disrupt, needs to remain financially viable as it attempts to meet guidelines attached to its deal with the DOJ and FCC (providing wireless to 70% of the country by 2025). But Dish is a company with a long history of empty promises in wireless (just ask T-Mobile circa 2018), run by a guy (Charlie Ergen) people traditionally say is hard to work both for and with, purportedly building a new wireless network whose details remain hard to come by.

l still tend to think it seems entirely possible Dish strings feckless U.S. regulators along for years then, once the six year restriction on selling its spectrum expires, cashes out, hoovers up billions of dollars, then throws a relative pittance at any remaining legal or regulatory penalties. The U.S. wireless sector gets even more consolidated, and all the folks who pushed this dodgy fix for a bad deal (that should have been rejected outright) simply forget any of this ever happened.

Filed Under: broadband, competition, cord cutting, doj, fcc, tv, wireless
Companies: dish, sprint, t-mobile

The Government 'Fix' For The T-Mobile Merger Continues To Look Like A Convoluted Mess

from the synergies-indeed dept

Remember when the FCC rubber stamped the Sprint T-Mobile merger without even looking at impact analysis? 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?

You'll never guess how things are going.

First, T-Mobile's promise (still available on the company's website) that the deal would provide a flood of new jobs wound up being bullshit. The company has laid off 5,000 workers and counting -- likely more once they eliminate the second redundant Sprint headquarters. Deal critics estimated that the deal could result in anywhere between 10,000 to 30,000 lost jobs over a period of several years, and we're already well on our way toward that goal.

Second, the DOJ/FCC fix for the deal leaned heavily on the idea that T-Mobile would help Dish run a Mobile Virtual Network Operator (MVNO) on T-Mobile's network while Dish spent the next seven years building its own, full 5G network. But the two sides immediately proved completely incapable of getting along, with Dish running to both state and federal regulators to complain that T-Mobile had already started reneging on several of its promises (like shuttering its 3G/CDMA network, still used by Dish wireless subscribers, earlier than Dish had expected).

This week those hostilities culminated in Dish effectively giving T-Mobile a demotion and hiring AT&T as the company's primary network partner. The 10 year, $5 billion deal gives AT&T wholesale revenue, and Dish customers access to AT&T's network in more rural and hard to reach places. That in turn gives Dish more time to try to complete a viable fourth wireless network and meet the deployment obligations set out by the FCC (reaching 70% of the population by 2025).

While telecom trade mags seem content to pretend this shouldn't be a big deal, other experts continue to express meaningful doubts that Dish will ever become a meaningful fourth major competitor. Or that they'll face any meaningful penalties should they fail to reach their deployment promises:

"If T-Mobile is able to shirk this regulatory obligation with impunity, what’s to prevent future consent orders from being ignored?” Hal Singer, an economist who testified against the merger approval tells The Verge..."The decree always gave Dish an easy out,” Singer says. “The real target of the regulation was T-Mobile. And now T-Mobile is getting to slither out."

Think about it. Dish is bleeding both TV and wireless subscribers at an alarming rate. It has little real experience in wireless. The company's CEO, Charlie Ergen, is purportedly a terrible boss. The company is routinely at the heart of industry feuds, be they the spat with T-Mobile, or a steady parade of retransmission arguments. Dish also has a long history of hoovering up wireless spectrum, promising amazing things, then not really delivering (just ask T-Mobile circa 2018 or so).

Yet for any of this to succeed, Dish needs to remain financially viable, deploy a top-shelf nationwide 5G network, ensure that network is popular with consumers, keep state and federal regulators happy by meeting all of its deployment goals on time, then nab meaningful market share from a U.S. telecom sector extremely resilient to being challenged in any way by upstart competitors or disruption. It's certainly possible, and a meaningful fourth competitor would be a great outcome were it to actually work, but history and the odds simply aren't in Dish's favor.

I still tend to think this entire transaction was intended from the start to be theater aimed at justifying approval of a deal that should have been blocked outright. Dish may genuinely think it can succeed here (given the collapse of its satellite TV business, its options are either shift to wireless or die), but I doubt AT&T would invest heavily in this venture if it thought that it would ever result in Dish becoming a meaningful threat to the company's market share. There are just too many things that need to line up for this to succeed at any real scale, including the need for competent and consistent U.S. regulatory oversight and accountability (good luck with that).

This could end with Dish stringing feckless US regulators along for six years (the window in which it's prohibited from selling its spectrum), then selling its vast and valuable spectrum troves when things get too hard--using a small portion of that cash to pay off its legal bills and whatever pathetic government fine results. Or, as some on Wall Street are speculating, Charlie Ergen could make a weak show of things before ultimately selling everything to AT&T as he retires and walks off into the sunset, leaving the wireless industry more consolidated than ever.

At which point, if telecom megamerger history holds, everybody who supported this deal or was involved with it in any way (regulators, think tankers, lobbyists, executives) will take their cut of the proceeds then walk off pretending none of this ever happened. And when the impact of consolidation directly results in endless layoffs and higher prices for consumers and businesses, all of those same folks will shrug and pretend that's just a very strange coincidence.

Filed Under: antitrust, competition, mergers, mvno, telco, wireless
Companies: at&t, dish, t-mobile

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.

Filed Under: charlier ergen, competition, merger, spectrum, wireless
Companies: dish, sprint, t-mobile

Dish, Space X Battle At The Broadband Subsidy Trough

from the good-arguments,-dodgy-motivation dept

To be clear: Space X's Starlink low-orbit satellite broadband service won't revolutionize the broadband industry. The service lacks the capacity to service dense urban or suburban areas, meaning it won't pose much of a threat to traditional cable and fiber providers. With a $100 monthly price tag and $500 hardware fee, it's not exactly a miracle cure for the millions of low-income Americans struggling to afford a broadband connection, either.

That said: if you're currently one of the 42 million Americans who lacks access to any broadband at all, the service, capping out at 100 Mbps, is going to be damn-near miraculous (if you can afford it). It's also going to be a major competitive challenge to the companies that not only compete for rural broadband attention (like WISPs, cellular providers, and last-gen satellite providers), but are busy elbowing out one another at the trough to grab a slice of taxpayer subsidies. Understandably, many of these companies are trying to slow Starlink by any means necessary.

Last month, ViaSat urged the FCC to investigate Space X's very real impact on scientific research via light pollution (a genuine problem regulators have done bupkis about so far). Since the 80s, satellite systems have had a baked in exemption from the National Environmental Policy Act (NEPA), excluding their businesses from environmental review. As Amazon and Space X fling tens of thousands of low orbit satellites into space, ViaSat is suggesting that exemption be reversed. ViaSat's motivations here are entirely selfish. But at the same time this is a real problem they're not wrong about.

Dish Network is also trying to slow down Starlink a bit more creatively by telling the FCC the company's broadband plans could cause interference in the 12.2-12.7 GHz band:

"Dish told the FCC that SpaceX's plan "would adversely affect reception at DBS consumer dishes and that the system as modified would exceed the applicable power limits under International Telecommunication Union and Commission rules. In other words, SpaceX would not be able [to] use the 12 GHz band to meet its RDOF obligations if such service interferes with DBS operations."

Earlier this year we noted how Space X was awarded $885.51 million over 10 years from the FCC's Rural Digital Opportunity Fund (RDOF) auction. The problem: like many companies, critics say Space X gamed the system by being misleading about where the company plans to offer service. As such, it's not really clear that we need to be throwing nearly a billion dollars at one of the planet's richest human beings to deploy service to an extra 642,925 locations they probably would have serviced anyway without taxpayer/ratepayer aid.

As the FCC begins digging more deeply into who actually deserves subsidization under its heavily criticized RDOF auction, Dish is trying to have Starlink's designation as an Eligible Telecommunications Carrier (ETC) under the Communications Act pulled, threatening its subsidies. Starlink's response to Dish's claims is to correctly note that Dish is largely motivated by its own best interests:

"Clearly, this challenge is part of DISH’s larger campaign to cash in on its spectrum speculation in the 12 GHz band by antagonizing non-geostationary orbit satellite operators already licensed to operate in that spectrum. The Commission should decisively reject across all of those proceedings these blatant efforts to misuse Commission resources."

You might recall that Dish is supposed to be building a new 5G network as part of a dodgy plan by the Trump administration affixed to the Sprint T-Mobile merger. The plan: to build a new network over 7 years to help counter the lost competition from losing Sprint. The reality: many still tend to think Dish will spend several years stringing regulators along, only to then cash out of their massive spectrum holdings sometime down the road, with no real network to show for it. So far, the latter path seems like the most likely outcome, in part because T-Mobile, AT&T, and Verizon really don't want the added competition.

So on one hand, you have a company in Starlink offering a promising technology, but gaming the broken FCC subsidy system to obtain ratepayer money they don't really deserve. On the other, you have a company in Dish that may or may not ever develop a major working commercial wireless network, eager to derail Starlink just in case it someday has to compete with it. Layer on top the fact that countless billions in subsidies never seem to fix US broadband woes because we generally do a terrible job mapping broadband coverage or tracking how those subsidies are spent, and you can start to see why US broadband (and policy) is a bit of a dysfunctional mess.

Filed Under: broadband, competition, subsidies, subsidy
Companies: dish, space x