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Dish Nears Deal to Acquire Boost Mobile, Clearing Path for T-Mobile/Sprint Merger

Dish Network Corporation is in the final stages of talks to acquire assets that include valuable wireless spectrum and Sprint’s Boost Mobile brand for an estimated $6 billion, according to a report quoting anonymous sources published by Bloomberg News, clearing the way for the Department of Justice to approve the merger of T-Mobile and Sprint.

Dish could announce a deal as soon as this week, but sources caution the talks are still ongoing and a deal might still fall apart. A spinoff of Boost is reportedly essential for the Antitrust Division at the DoJ to approve the merger, because the regulator reportedly wants to preserve four national wireless carriers to protect wireless competition in the United States.

Dish has already warehoused extensive wireless spectrum, much of it potentially valuable for the future deployment of 5G wireless networks, but Dish has historically held its spectrum without launching any significant wireless operations. If Dish does acquire Boost, the deal will come with a pre-existing contract allowing the prepaid Mobile Virtual Network Operator (MVNO) to continue to use Sprint’s network to service its customers. Dish would also receive a portion of spectrum held by T-Mobile and/or Sprint with which it could build its own wireless network, but that would require billions in new investments from a satellite TV provider already under financial stress from the impact of cord-cutting.

At worst, the transaction could allow Dish to increase its spectrum holdings while running Boost’s existing prepaid wireless operation as-is, dependent entirely on Sprint for connectivity. If the merger is successful, T-Mobile plans to mothball a significant portion of Sprint’s CDMA wireless network, which could eventually force Boost to find a new host for its wireless services.

Wall Street analyst MoffettNathanson remains skeptical about the T-Mobile/Sprint merger and is even more puzzled by Dish’s reported involvement. The analyst firm released a research note to its clients warning the future of Boost may be bleak:

We’re not sure why that deal is sensible for anyone involved. Dish, remember, already has more spectrum than they know what to do with; what they lack is money and ground facilities, and the deal described on Friday wouldn’t deliver either one. Instead, it would make both problems worse. And while Boost would help provide a baseline revenue stream in return for an upfront purchase price, the fit between Boost and Dish is, at best, superficial. Yes Boost serves a budget conscious consumer, as does Dish Network’s satellite business, but Boost is a mostly urban brand and Dish’s satellite business is an increasingly rural one.

And, more urgently, Boost’s distribution poses a huge problem. Historically, Boost was heavily dependent on Walmart for retail gross additions, but they’ve since lost that distribution channel. They would also, presumably, lose distribution through Sprint-branded stores (and even if, as a condition of the deal, they didn’t, does anyone think that Sprint/T-Mobile store employees would direct any volume to a spun off Boost brand?) That would leave Dish with the brand that has a churn rate as high as 5% per month to be spun off with an inadequate distribution front end, and with no realistic path to replace that front end before the subscriber base was, well, gone.

BTIG’s Walter Piecyk appeared on CNBC Monday to warn investors they are being too optimistic about the T-Mobile/Sprint merger’s chances of being approved. He puts those chances at “less than 50-50.” (5:38)

In contrast, Dade Hayes, contributing editor at Deadline, believes the deal will ultimately win approval from the Department of Justice. He talks to Cheddar about what T-Mobile and Sprint are doing to win over regulators. (8:14)

N.Y. and California Head 10-State Lawsuit to Block T-Mobile/Sprint Merger

 James

New York Attorney General Letitia James and California Attorney General Xavier Becerra today filed an unusual multi-state lawsuit, along with eight other State Attorneys General to halt the proposed merger of telecom giants T-Mobile and Sprint, deciding not to wait for a decision from the Department of Justice, which is also reviewing the merger. The complaint, filed in the federal Southern District of New York court in coordination with Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia, and Wisconsin alleges that the merger of two of the four largest national mobile network operators would deprive consumers of the benefits of competition and drive up prices for cellphone services.

“When it comes to corporate power, bigger isn’t always better,” said Attorney General Letitia James. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country. That’s why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”

“Although T-Mobile and Sprint may be promising faster, better, and cheaper service with this merger, the evidence weighs against it,” said Attorney General Xavier Becerra. “This merger would hurt the most vulnerable Californians and result in a compressed market with fewer choices and higher prices. Today, along with New York and eight other partner states, we’ve filed a lawsuit to block this merger and protect the residents of our state.”

The states departed from traditional courtesies in the case, deciding to launch a pre-emptive legal challenge to the transaction without providing Justice Department officials advance notice of their decision to sue. That decision may have come after FCC Chairman Ajit Pai gave his full support for the merger, with indications the Republican majority on the FCC would also vote in favor of approving the deal. Staffers in the Antitrust Division of the Justice Department object to the merger, and are recommending it be rejected. But the Justice Department’s unpredictability, and its poor track record trying to block the AT&T-Time Warner (Entertainment) merger in court may have pushed the state attorneys general to also act on their own.

T-Mobile USA and Sprint are the third and fourth largest mobile wireless networks in the U.S., and are the lower-cost carriers among the “Big Four” — with market leaders Verizon Wireless and AT&T controlling the larest share of the wireless market. Intense competition, spurred in particular by T-Mobile and Sprint, has delivered declining prices, increased coverage, and better quality for all mobile phone subscribers. According to the Labor Department, the average cost of mobile service has fallen by roughly 28 percent over the last decade, while mobile data consumption has grown rapidly. The merger, however, would put an end to that fierce competition, argue the attorneys general, which has delivered a great number of benefits to consumers.

States with large urban poor communities are particularly sensitive to the merger, because both T-Mobile and Sprint focus their coverage on urban areas. With the average U.S. household spending $1,100 annually on wireless phone service, even small rate increases can dramatically increase service suspensions or disconnections due to late or non-payment.

“Low-and moderate-income (LMI) New Yorkers put a greater share of their household income toward their phone bill, and when you are looking at a budget that is already stretched thin, every dollar counts,” said Mae Grote, CEO of the Financial Clinic. “Cellphones now not only give us the ability to communicate with friends and family, here and abroad, but are increasingly the way we engage with many critical services. Our customers use cellphone apps to access public information, send and receive money, manage their SNAP benefits, look for a job, and even communicate with their doctors, and maintaining competition in the market for this critical service ensures LMI consumers have the same access to quality, affordable service as the more financially secure. The Clinic is proud to advocate on behalf of the communities we serve to protect their inclusion in the modern economy.”

The attorneys general investigation laid bare many of the alleged merger benefits offered by T-Mobile and Sprint to win approval of the merger. The group found many of the claimed benefits were completely unverifiable and were likely to be delivered years into the future, if ever. But within weeks of approving such a merger, the companies would have an immediate incentive to raise prices and reduce service quality. Sprint’s network, in particular, was scheduled to be largely mothballed as a result of the merger, even though Sprint provides coverage in some areas that T-Mobile does not. Although the two companies could identify several self-serving deal efficiencies that would reduce their costs and staffing needs, there is no evidence the merger would deliver consumers lower prices and were outweighed by the merger’s immediate harm to competition and consumers.

Additionally, the merger would harm thousands of hard-working mobile wireless independent dealers in New York and across the nation. The ten states are concerned that further consolidation at the carrier level would lead to a substantial loss of retail jobs, as well as lower pay for these workers in the near future.

Becerra

“CWA applauds the Attorneys General and especially General Letitia James’ leadership in taking decisive action today to prevent T-Mobile and Sprint from gaining anti-competitive power at the expense of workers, customers, and communities,” added Chris Shelton, president of the Communications Workers of America (CWA). “Reducing the number of national wireless carriers from four to three would mean higher prices for consumers, job loss for retail wireless workers, and downward pressure on all wireless workers’ wages. The states’ action today is a welcome development for American workers and consumers, and a reminder that regulators must take labor market concerns seriously when evaluating mergers.”

Before filing suit, the states gave significant consideration to T-Mobile and Sprint’s claims of increased coverage in rural areas. However, T-Mobile has yet to provide plans to build any new cell sites in areas that would not otherwise be served by either T-Mobile or Sprint. As stated in the complaint, the U.S. previously won the “race to LTE” as a direct result of vigorous competition among wireless carriers. Finally, continued competition, not concentration, is most likely to spur rapid development of a nationwide 5G network and other innovations.

“This merger is bad for competition, and it is bad for consumers, especially those living in or traveling through rural areas, who will experience fewer choices, price increases, and substandard service,” stated Carri Bennet, general counsel for the Rural Wireless Association. “We are pleased that the New York Attorney General, along with nine states have filed their lawsuit to block the merger. The process at the FCC has not been transparent and the FCC appears to be blindly accepting New T-Mobile’s words as truth.”

The complaint was filed under seal, because it contains unredacted confidential information, in United States District Court for the Southern District of New York.  A redacted copy of the lawsuit is likely to be made available later.

T-Mobile currently has more than 79 million subscribers, and is a majority-owned subsidiary of Germany’s Deutsche Telekom AG. Sprint Corp. currently has more than 54 million subscribers, and is a majority-owned subsidiary of Japan’s SoftBank Group Corp.

AT&T Warning Tower Owners to Cut Prices or They Will Relocate

AT&T claims it is willing to play hardball to force cell tower owners to reduce the cost of leasing space for AT&T’s wireless services. If tower owners won’t lower their prices, AT&T is threatening to find someone else willing to build a new, cheaper tower nearby.

AT&T is closely coordinating its tower strategy with its biggest competitor, Verizon Wireless. Together, the two companies are looking to force costs down by seeking opportunities with newer tower companies Tillman, CitySwitch, and Uniti Towers that are willing to build new towers next to old ones, while offering “much cheaper” pricing than industry leaders American Tower, Crown Castle, and SBA Communications.

Light Reading notes AT&T would like to pay roughly half the current rent for its wireless infrastructure. But it is running into a roadblock because 65% of American cell towers have no competition within a half-mile radius. Getting zoning approval to construct new towers, especially in suburban and residential areas, can be difficult and costly. But the three upstart tower companies AT&T and Verizon are working with claim they will commit to tower construction when there are signed contracts in hand. AT&T is using this fact to leverage existing companies to lower prices or lose AT&T’s business.

But Wall Street analysts suggest AT&T is bluffing. Research of FCC public records between January 2017 and April 2019 found 1,000 new tower applications, but only 500 had been built. Only 40% of those applications were to build new towers near existing ones. When one considers there are about 110,000 cell towers in the U.S., fewer than 0.5% of cell sites are likely to face competition based on the applications already filed.

The wireless industry prefers to co-locate infrastructure on existing towers, which means Verizon Wireless, AT&T, T-Mobile and Sprint could all theoretically be leasing space on the same tower. This was originally both a cost-saving measure and a bow to reality because new tower applications often take years to approve and often face local opposition. Most wireless companies sign 10-year contracts with tower companies, so any organized effort to force competition will probably take years.

AT&T complains it is the victim of a lack of competition and is fed up with the “vicious model” of monopoly tower companies charging excessively high prices and raising fees anytime AT&T changes their contract. Many of their customers can relate.

Take It Or Leave It Pricing: No, You May Not Have a Better Deal!

GIVE us more money and TAKE what we offer you.

Bloomberg News is reporting what many of you already know — it is getting tougher to get a better deal from your cable or phone company.

As Stop the Cap! has documented since the completion of the Time Warner Cable/Bright House/Charter Spectrum merger in 2016, companies are pulling back on promotions, taking advantage of a lack of competition and offering best pricing only to new customers.

Charter Spectrum and Cable One (soon to be Sparklight) are the most notorious for implementing “take it or leave it” pricing. In fact, one of Charter CEO Thomas Rutledge’s chief complaints about Time Warner Cable was its “Turkish Bazaar” mentality about pricing. Rutledge claimed Time Warner Cable had as many as 90,000 different promotions running at the same time, typically targeted on what other companies were theoretically providing service and how serious the representative felt you were about canceling service. Time Warner Cable had basic retention plans available for regular representatives to offer, better plans for retention specialists to pitch, and the best plans of all to customers complaining on the “executive customer service” line or after filing complaints with the Better Business Bureau. There were plans for complaining over the phone and different plans for complaining at the cable store. Rutledge was horrified, because customers were now well-trained on how to extract a better deal every year when promotions ran out.

Last month, Rutledge said he was indifferent about cash-strapped consumers that cannot afford a runaway cable TV bill on a retired/fixed income or the urban poor who can’t imagine paying $65 a month for basic broadband service. To those customers, pointing to the exit is now perfectly acceptable. In fact, companies make more profit than ever when you drop cable television service and upgrade your broadband connection to a faster speed. That is because there is up to a 90% margin on internet service — provisioned over a network paid off decades ago and designed for much less space efficient analog television. Charging you $20 more for faster internet service is nearly 100% profit and costs most companies next to nothing to offer, and Time Warner Cable executives once laughed off the financial impact of so-called “heavy users,” calling data transport costs mere “rounding errors.” 

Even with a much tougher attitude about discounting service, Charter and Comcast are still adding new broadband customers every month, usually at the expense of phone companies still peddling DSL. So if you cancel, there are probably two new customers ready to replace you, at least for now.

Cable One redefines rapacious pricing. The company specializes in markets where the incumbent phone company is likely to offer low-speed DSL, if anything at all. As a result, they have a comfortable monopoly in many areas and price their service accordingly. Cable One’s basic 200 Mbps plan, with a 600 GB data cap, costs $65 a month, not including the $10.50/mo modem fee, and $2.75 monthly internet service surcharge. To ditch the cap, you will pay another $40 a month — $118.25 total for unlimited internet.

In fact, Cable One charges so much money for internet, they even have Wall Street concerned they are overcharging!

When Joshua May tried calling Spectrum to deal with the 29% more it wanted (around $40 a month) after his promotion expired, the customer service representative told him to go pound salt.

“I expected they’d at least offer free HBO or Showtime,” May, 34, of Springfield, Ohio, told Bloomberg News. “They did nothing.”

He did something. He cut the cord. The representative could have cared less.

The product mix cable and phone companies offer has not really changed, but the era of shoving a triple play bundle of internet, TV, and phone service sure has. Charter and Comcast now treat cable television as a nice extra, not the start of a bundle offer. Broadband is the key item, and the most profitable element, of today’s cable package. Beleaguered phone service gets no respect either. Time Warner Cable used to sell its triple play bundle including a phone line for less money than their double play bundle that omitted it. Today, it’s a simple $9.99/mo extra, given as much attention as a menu offering premium movie channels.

Comcast differs from Charter by offering a plethora of options to their customers. If you don’t want to spend a lot for high speed internet, spend a little less for low speed internet. Their television packages also vary in price and channel selection, often maddeningly including a “must-have” channel in a higher-priced package. Like Spectrum, their phone line is now an afterthought.

AT&T and Verizon have their own approaches to deal with reluctant customers. Verizon FiOS customers face steep price hikes when their promotions expire, but the opportunity to score a better deal is still there, if Verizon is in the mood that quarter. Verizon remains sensitive about their subscriber numbers and growth, so when a quarter looks like it will be difficult, the promotions turn up. AT&T prefers to play a shell game with their customers. Most recently, the company has given a cold shoulder to its U-verse product, treating it like yesterday’s news and best forgotten. AT&T literally markets its own customers to abandon U-verse in favor of AT&T Fiber. Verizon and AT&T treat their DSL customers like they are doing them a favor just by offering any service. All the best deals go to their fiber customers.

AT&T Randall Stephenson is a recent convert to the “who cares about video customers” movement. Services like DirecTV Now were originally channel-rich bargains, but now they are a place for rate hikes and channel deletions. Over a half-million streaming customers have already canceled after the most recent price hikes, but Stephenson claims he does not mind, because those bargain-chasers are low-quality customers worthy of purging. AT&T’s dream customer is one who appreciates whatever AT&T gives them and does not mind a parade of rate hikes.

Comcast’s chief financial officer Mike Cavanagh said it more succinctly: seeking subscribers that “really value video and our bundle despite the increases in prices,” and has “the wallet for a fuller video experience.”

Customers who decide to take their business to a streaming competitor are already learning the industry still has the last laugh. As package prices head north of $50/month, that is not too far off from the pricing offered by cable and phone companies for base video packages. In fact, Spectrum has begun undercutting most streaming providers, offering $15-25 packages of local and/or popular cable channels with a Cloud DVR option for around $5 more a month.

Spectrum Starts Selling Discounted $19.99/Mo “Lifestyle” TV Package With 50+ Channels

Phillip Dampier June 3, 2019 Charter Spectrum, Competition, Consumer News No Comments

Spectrum customers in some highly competitive service areas are being offered more discounted services than ever before, including a $20 Lifestyle TV package with 50+ cable networks and local channels can be bundled with up to 200 Mbps internet access for $59.98 a month for 12 months (not including the $11.99/mo Broadcast TV Fee).

Spectrum Lifestyle TV ($19.99/mo) includes all local TV channels, plus:

  • AMC
  • MSNBC
  • Arts & Entertainment
  • Cartoon Network
  • CNN
  • SyFy
  • Discovery Channel
  • EWTN
  • E!
  • Inspiration
  • Food Network
  • ION
  • Freeform
  • TBN
  • FX
  • WGN America
  • Hallmark
  • BET
  • Hallmark Movies & Mysteries
  • TV Land
  • HGTV
  • VH-1
  • Lifetime Channel
  • OWN TV
  • Oxygen
  • BET Jams
  • Spectrum News
  • BET Soul
  • TBS
  • Nicktoons
  • TLC
  • TV One
  • TNT
  • BET Her
  • USA Network
  • Aspire
  • Lifetime Movie Network
  • Revolt
  • History Channel
  • The Africa Channel
  • Animal Planet
  • The Impact Network
  • Spike TV
  • Nick Jr.
  • Comedy Central
  • Teen Nick
  • Bravo
  • The CW
  • Disney Channel
  • StarzEncore Black
  • Travel Channel

Customers can use their own equipment, such as Roku, Apple TV, desktop, or apps for iOS and Android, or rent traditional Spectrum set-top boxes for $7.50/mo each (add $4.99/mo to enable DVR service for one box or $9.99/mo for two or more boxes).

Spectrum’s traditional bundle promotion consists of up to 200 Mbps internet and Spectrum TV Select (125+ channels) for $89.98 a month, not including the $11.99/mo Broadcast TV Fee, so the stripped down Lifestyle TV bundle offers about $30 a month in savings.

Spectrum TV Stream is offered to cord-cutter/internet-only customers, but Lifestyle TV me be a more compelling deal.

If you want the Lifestyle TV package but want more channels, you can still save with this promotion by upgrading to the TV Silver package (175+ channels and HBO, Showtime, and the NFL Network) for $20 a month more, which is $25 less a month than what the traditional Double Play TV Silver and internet bundle costs.

Package Comparison (both offers include the same channel lineup and internet package)

  • Lifestyle TV Promo: $19.99 Lifestyle TV + $39.99 internet + $20 TV Silver Upgrade + $11.99 BTV Fee = $91.97
  • Traditional Double Play Promo: $44.99 Standard TV + $44.99 internet + $20 TV Silver Upgrade + $11.99 BTV Fee = $121.97

Stop the Cap! has confirmed this promotion is running in some AT&T service areas in the southern United States, especially Texas. You can confirm eligibility by visiting Spectrum.com and entering your street address, request to get pricing for new service, and selecting an internet-only package. The Lifestyle TV promotion will appear on the order page as a bundle option if you are qualified for the offer. Spectrum may offer you its other TV add-on packages, notably TV Stream ($24.99/mo), which is a less compelling streaming option with fewer channels at a higher price.

These offers and pricing are for “new customers only.” If you are a current customer, you can return your equipment at a Spectrum Cable Store location to cancel service without dealing with customer retentions, and then sign up as a new customer through the Spectrum website under the name of another family member or friend. Select self-install/pickup equipment in-store and you can get service under a new account on the same day. Otherwise, you must disconnect service for 30 days before qualifying again as a new customer. Depending on how much competition exists in your area, pricing and promotions can vary. Customers may find promotional pricing locked in for 12, 24, or 36 months depending on how much Spectrum is fighting to win customers in each area. Be sure to look out for free upgrades, particularly to 400 Mbps internet service, which is being offered in some areas.

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