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Dish, T-Mobile 3G Fight Has Democrats Refereeing Deal They Opposed

May 10, 2021, 9:00 AM

A fight between T-Mobile US Inc. and Dish Network Corp. over the future of Sprint’s legacy 3G network is an early test of how the Biden administration’s telecommunications and antitrust regulators will steer wireless competition.

The dispute centers on Dish’s claim that T-Mobile is undercutting a deal it made with the Justice Department to run its 3G network for three years as a condition of winning approval of its merger with Sprint Corp.

Dish, which purchased Sprint’s prepaid brand Boost Mobile as part of that merger condition, says T-Mobile’s plan to turn off the 3G network as soon as January 2022 would leave millions of Boost subscribers who have older cell phones without mobile service. T-Mobile says it never committed to operating the 3G network for another three years.

The disagreement leaves Democrats now in charge of the Federal Communications Commission and Justice Department in the curious role of having to police conditions for a merger they virulently opposed when regulators approved it during the Trump administration.

It’s unclear how, or even whether, Democrats will act to mediate the matter, as has been called for by a handful of public interest groups, including Public Knowledge and New America’s Open Technology Institute, both nonprofits that advocate for accessible communications.

It’s unlikely Democrats will simply stand by as potentially millions of Boost customers lose wireless service during a global health crisis, Blair Levin, who served as chief of staff to former Democratic FCC Chairman Reed Hundt from 1993-97 and oversaw the development of the Obama-era FCC’s national broadband plan, said.

“The current leadership at the DOJ and the FCC are going to be loath to enable a situation in which low-income consumers risk losing network access,” Levin, now an analyst at New Street Research, said. “That will likely affect their interpretation of any ambiguity in the precise terms of the merger agreement.”

FCC and Justice Department spokespersons declined to comment on the dispute.

Outlook for Action

Acting FCC Chair Jessica Rosenworcel, a Democrat who opposed the merger during the Trump administration, warned then that “T-Mobile has no real incentive to help a competitor and will have opportunities to routinely handicap Dish’s competitive impact.”

For now, though, it’s unclear if the FCC will act to settle the dispute or otherwise ensure continuity of service for Boost Mobile customers.

A coalition whose members include Public Knowledge, the Open Technology Institute, and the Rural Wireless Association, a trade group for rural carriers, has urged Rosenworcel to force T-Mobile and Dish to negotiate a “reasonable transition schedule.”

“The Commission can, and should, require the licensees to come together to negotiate a schedule that reflects the realities faced by both network operators and the real world constraints imposed by the pandemic and pandemic-related equipment and labor shortages,” the coalition said in a May 3 letter to Rosenworcel.

If the FCC doesn’t mediate, it has the authority, the groups say, under Section II of the Communications Act to stop Boost subscribers from having service disruptions.

“The Commission is not powerless here, or dependent on whether or not the Commission’s previous merger order addressed this contingency,” the groups wrote.

The Justice Department could seek an order of contempt from the U.S. District Court for the District of Columbia to enforce the merger conditions if it were to determine that T-Mobile or Dish is violating the settlement.

War of Words

When T-Mobile merged with Sprint, the DOJ set conditions aimed at maintaining competition in the wireless industry by setting up Dish as a new, fourth national carrier.

As part of that, T-Mobile was required to sell Boost Mobile, which serves mostly low-income customers, to Dish and to keep letting Boost customers use T-Mobile’s network until Dish built out its own.

Dish and T-Mobile dispute basic facts over when T-Mobile is allowed to shut off the 3G network.

Dish claims that T-Mobile committed to the California Public Utilities Commission and, in a July 2019 U.S. Securities and Exchange Commission filing, to phasing out Sprint’s 3G network over three years. That time frame would give Boost customers until July 2023 to upgrade to 4G- and 5G-compatible phones.

“T-Mobile should not turn its back on millions of customers simply to exercise its newly-obtained market power by shutting off service two years earlier than it promised to regulators under oath,” Stephen Stokols, executive vice president of Boost Mobile, said in a statement.

T-Mobile argues that it is only required under the merger conditions to give Dish six-months notice before turning off the legacy network. T-Mobile informed Dish last October that it plans to shut down the network by January 2022, giving Dish 14-months notice.

Cutting off the network by next year, Dish says, would leave 4 to 5 million of Boost’s 9 million subscribers without wireless service unless they upgrade their phones before the shutdown. Dish notes that Verizon Communications Inc. in March moved back the shutoff date for its 3G network from the end of 2021 to the end of 2022, in order to give customers who still use 3G phones more time to upgrade.

T-Mobile counters that the earlier shutdown would affect under 1-million Boost customers, and that Dish is responsible, under the terms of the deal, for migrating its 3G customers to phones compatible with its superior 4G and 5G networks.

“It’s pretty clear by the agreement, who is supposed to do what,” former Democratic FCC Commissioner Mignon Clyburn, who consults for T-Mobile, said.

The companies also dispute who should pay for the affected customers’ phone upgrades.

“We are confident that DISH will ultimately adhere to the contractual agreements they made with us a year and a half ago,” T-Mobile said in a statement. “That means taking great care of their customers and ensuring their seamless transition from old, outdated” 3G technology.

To contact the reporter on this story: Jon Reid in Washington at jreid@bloomberglaw.com

To contact the editors responsible for this story: Melissa B. Robinson at mrobinson@bloomberglaw.com, Keith Perine at kperine@bloomberglaw.com

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