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Home / Business / T-Mobile and the Sprint deal win the Justice Department OK thanks to Dish

T-Mobile and the Sprint deal win the Justice Department OK thanks to Dish


T-Mobile and Sprint become one.

Josh Miller / CNET

After more than a year of regulatory battles, T-Mobile's $ 26.5 billion acquisition of Sprint is close to happening. Justice Department's antitrust manager Makan Delrahim said on Friday that the DOJ will approve the agreement because the T-Mobile parents Deutsche Telekom signed an agreement to sell more Sprint assets to Dish Network and create a new nationwide wireless carrier. [1

9659005] Under the deal, Dish will acquire Sprint's 800Mhz wireless spectrum, Sprint's prepaid brands – Boost, Virgin Mobile and Sprint prepaid – and their total 9.3 million customers, as well as network agreements that allow Dish to use T-Mobil's seven-year network. It builds its own 5G network.

T-Mobile and Sprint will also need to provide Dish access to "at least 20,000 cell ranges" as well as "hundreds of store locations." In a joint press release, T-Mobile and Sprint say that Dish will be able to "take on lease contracts for certain cell sites and outlets closed down by New T-Mobile for five years" after the divestment is closed.

Dish will pay T-Mobile about $ 5 billion for the assets it buys: $ 1.4 billion for the prepaid businesses and $ 3.6 billion for the spectrum.

The move can transform the wireless industry and shake up where you get your wireless service. The agreement gives Dish the tools to quickly enter the wireless business by accessing T-Mobil's network. T-Mobile, meanwhile, will combine with Sprint to create a much tougher competitor for AT&T and Verizon in the US wireless market. T-Mobile has argued that the combination with Sprint will leave its 5G distribution across the country, as well as expanding its reach and scale to match Big Two: AT&T and Verizon.

At the conclusion of the agreement, which T-Mobile says it expects to be in the second half of 2019, and Sprint's prepaid businesses and customers will "immediately move to Dish, so will the more than 400 employees and nationwide Independent retail network that supports more than 7500 outlets, "Dish said in a statement.

There remains some question about Dish's legitimacy as a wireless player – one of the primary concerns of state prosecutors who have sued to block merger. But CEO John Legere offered a rare defense of an external company.

"Dishes will be a very credible disturbing fourth player," Legere said on a conversation with analysts and media on Friday.

Double Impact

Exactly when Dish will enter the market, however, it is unclear as it must wait for the completion of the T-Mobile Sprint merger before it can take on the disposed assets. However, the company says it will have a "5G broadband network that can serve 70 percent of the US population by June 2023."

T-Mobile Chief Technology Officer Neville Ray said that Dish and the other wireless dealers will be able to access the upcoming 5G network right away. A decade ago when 4G was on the rise, the carriers were protective of the then new network and prevented so-called mobile virtual network operators from using it. Similarly, the company will respect all dealership agreements that Sprint has, including an agreement with the cable provider Altice.

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Dish has long sought to enter the wireless business. It has accumulated billions of dollars worth of wireless air waves in the latest auctions in the spectrum, with a deadline in March 2020 to use it or risk losing the license. Dish said earlier that it was working on a wireless network for "internet for things" devices – such as smart thermostats, energy meters, traffic lights, and security systems – even though that network was not designed for mobile phones and tablets.

As part of the deal it did with DOJ and T-Mobile, Dish says it "has requested that their spectrum licenses be changed" to reflect the new promise to distribute a 5G network covering 70 percent of the population by June 2023.

Dishes have given many promises of a possible wireless 5G network. But through the T-Mobile agreement, it will be able to offer wireless call, text and data services on the combined T-Mobile Sprint network while building its own service.

Dish could follow in Sprint's footsteps with aggressive offers to try to prevent subscribers away from the new Big Three, but that play didn't work for Sprint in the long run. But in recent years, both Sprint and T-Mobile put pressure on AT&T and Verizon with unlimited data plans, cheaper monthly rates and packages that subscribe to services such as Netflix, Hulu, Spotify, Tidal and Amazon Prime.

Friday's "development is the fulfillment of more than two decades of work and more than $ 21 billion in spectrum investments intended to transform DISH into a connection company," Dish's co-founder and chairman Charlie Ergen said in a statement. Combined, these opportunities will set the stage for our entry as the country's fourth facility-based wireless competitor and accelerate our efforts to launch the country's first stand-alone 5G broadband network. "

Meanwhile, T-Mobile is getting the size and customer base to compete better with its larger competitors. Telecom business has relied on scale, with a larger subscriber base funding for investments in network upgrades. T-Mobile will retain Sprint's 2.5 GHz range, Sprint's radio waves already use to distribute 5G in five cities across the country, which is a valuable spectrum room as the company appears to be rolling 5G to a wider part of the country.

"With this merger and its disposal, we are expanding production significantly by ensuring that large amounts of currently unused or underused spectrum are made available to US consumers in the form of high quality 5G networks, "Delrahim said.

Price Changes?

When asked whether this agreement would To an end of an era of aggressive campaigns and cheaper plans, T-Mobile Chief Officer Mike Sievert rejected the idea.

"We come to take the improved ability and go for AT&T and Verizon as they have never seen before, "he said.

T-Mobile has agreed to lock the prices for the next three years, even though it has not spoken about Sprint's plans. Learn about the great things going forward.

"We will not waste time making it clear what this network is capable of," he said, also dismissing the notion that T-Mobile would become fat and arrogant as its rivals.

Sievert also reiterated the company's plans to eventually offer 100 megabits per second to 99% of Americans, and Ray talked about his current plans to offer nationwide 5G by next year.

The Challenges Are Still

While the DOJ decision smooths the path of the T-Mobile Sprint agreement, it is not signed, sealed and delivered yet.

Thirteen state attorneys, as well as the District of Columbia, have filed a multi-state lawsuit to block the T-Mobile Sprint agreement on the grounds that it will result in higher prices and less competition. While the new deal paves the way for Dish to replace Sprint as a fourth wireless carrier, it remains to be seen whether the states will continue to pursue their legal action.

In addition to brokering a deal between T-Mobile and Dish, DOJ also reached a settlement with five state attorneys headquarters: Nebraska, Kansas, Ohio, Oklahoma and South Dakota.

It has not yet reached an agreement with New York or California, which is leading the lawsuit against the merger. In a statement issued by New York State Attorney Letitia James, the group of 13 states, as well as the District of Columbia, reinforced their opposition to the agreement, referring to Dish's formerly broken promises and its confidence to use T-Mobil's network "For the foreseeable future."

"The promises given by Dish and T-Mobile in this agreement are the kind of promises that only strong competition can guarantee," James said in a statement . "We have serious concerns that cobbling together this new fourth mobile player, with the government choosing winners and losers, will not address the merger damage to consumers, workers and innovation."

"A marketplace with fewer active competitors is driving up costs, reducing consumer choice and preventing innovation," said California State Attorney Xavier Becerra. "We intend to be prepared to go to court to fight for a fair, competitive, and fair marketplace for consumers across the country."

The California Public Utilities Commission also needs to give its blessing to the deal, and a Wednesday report said the cable giant Charter wanted to bid on Sprint assets, but never returned from DOJ . It is unclear what possible implications news may have on T-Mobil's deals with both Sprint and Dish.

During the conversation, Legere said the priority is to work out the concerns of the state Agencies as well as the California Commission. Sievert said the companies would not proceed with the agreement without ending the trial first.

Different Technologies

It is also the wrinkle of having to integrate two networks with different technologies. T-Mobile has a mix of 5G, 4G LTE and 3G based on GSM technology. Sprint meanwhile has 5G, 4G LTE and a 3G technology called CDMA.

Working in Company Favor: Many popular 4G handsets, including newer iPhones and Galaxy phones, pack support for both carriers' networks. Google's Project Fi already switches seamlessly between T-Mobile and Sprint for its mobile service.

But we have also seen what happens when integrations are not handled properly. Sprint catastrophically tried to gather both network technologies when it merged with Nextel in 2005. T-Mobile faced a similar scenario when it purchased MetroPCS, which also used CDMA technology. But under the T-Mobile technology manager Neville Ray, T-Mobile shipped customers smoothly from the old network.

Of course, this will all happen on a much larger scale with Sprint, which has 54.5 million customers to join T-Mobile's 83.1 million.

The story was originally published at 20:30 PT.
Update, 11:50 pm. PT: To include additional comments and background from the management.

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