- AT&T's deal to buy EchoStar's spectrum means Boost will no longer be a fourth facilities-based carrier
- But Boost's struggles mean it was hardly a true competitor in recent years, despite the government's desire for it to become one
- Analysts are split on whether the change will really matter for consumers
First UScellular fell. And now, so has EchoStar/Dish with the sale of key spectrum licenses to AT&T. Does that mean wireless competition in the U.S. is dead? Was it ever really alive?
It really depends on who you ask.
For some context, UScellular was the largest regional operator before selling its wireless assets – spectrum, retail stores and customer roster – to T-Mobile earlier this year. EchoStar’s Boost Mobile, meanwhile, was intended to become a fourth facilities-based operator capable of competing with the likes of AT&T, Verizon and T-Mobile in the wake of the latter’s Sprint acquisition.
Though EchoStar did build out a network, its success as a wireless competitor is debatable given it has lost well over 1.5 million customers since taking over the Boost Mobile brand in 2020. Now that it is selling its spectrum to AT&T, EchoStar said Boost will operate as a “hybrid MNO” using its own core network and AT&T’s cell sites.
But where does this all leave the state of competition the market?
Consumer choice
Michael Calabrese, director of the Wireless Future Project at the Open Technology Institute, believes AT&T/EchoStar deal is a blow to consumer choice.
“The elimination of EchoStar as a facilities-based competitor is a very bad day for consumers,” he told Fierce. “As the head of DOJ’s Antitrust Division warned last month, the consolidation of mobile market share and spectrum ownership among the Big 3 mobile carriers will further diminish effective competition.”
Wave7 Research’s Jeff Moore similarly observed that the deal will effectively “freeze” the number of facilities-based operators in the country at three. Even so, he argued not much will change for consumers.
Why? Well, according to Moore, Boost’s subscriber figures and retail footprint weren’t substantial enough to make it a true competitor to the big three. Cable MVNOs, he said, are the real fourth player in more than 75% of markets.
“Fundamentally, this change will not affect the state of postpaid competition, as nearly every market of size has four competitors – Verizon, AT&T, T-Mobile and the cable company,” Moore told Fierce. “I do think that the MVNO model continues to be a factor in ensuring healthy competition.”
Recon Analytics Founder Roger Entner made the same point, stating the average American consumer won’t actually be missing anything. He pointed to Boost’s customer losses, quipping “the consumer is running away from this company.”
He added that it is critical for competitive markets to have not just winners, but also losers. At least in EchoStar’s case, losing is rather sweet. Entner pointed out that EchoStar only paid around $10 billion for the spectrum it just sold to AT&T for $23 billion.
The other spectrum question
Both Calabrese and Entner said that despite the headline grabbing deal with AT&T, EchoStar still hasn’t addressed the elephant in the room: what it is doing – or rather, NOT doing – with its AWS-4 spectrum.
“The real beef here is AWS-4. They don’t have a network. And that point of contention has not been solved,” Entner said.
Recently, Starlink parent company SpaceX has been gunning for EchoStar, heavily criticizing its lack of deployment in the AWS-4 (2GHz) band in an apparent quest to secure the licenses for its own use. In response, the Federal Communications Commission (FCC) launched the investigation that EchoStar ended up citing as part of its motivation for the AT&T deal.
It's not clear what, if anything, EchoStar plans to do with its 2 GHz spectrum or whether the FCC will actually close its investigation as a result of the AT&T transaction. However, New Street Research speculated that the proceeds from the sale could allow EchoStar to invest in AWS-4 deployments in a way it previously couldn't with substantial debt hanging over its head.
“We also remain hopeful that EchoStar will now use its AWS-4 spectrum at 2 GHz for innovative direct-to-device satellite services,” Calabrese concluded.