- EchoStar/Dish/Boost Mobile is trying to get out of its agreements with contractors and tower companies
- Crown Castle is the second tower company, after American Tower, to file suit against Dish
- Boost Mobile is still chugging along as a prepaid cell phone provider
Over the past year, we’ve seen the EchoStar/Dish/Boost Mobile brand go from positioning itself as a real contender to the Big 3 wireless carriers to one that’s circling the drain as a postpaid wireless phone brand.
In between, Boost’s boosters (so to speak) claimed it was on its way to becoming the undisputed direct-to-device (D2D) satellite leader, thanks to parent company EchoStar’s agreement with MDA Space, which for almost 40 days was going to be the prime contractor for its new low Earth orbit (LEO) constellation.
That never happened. EchoStar terminated its MDA Space contract after EchoStar reached a deal to sell $23 billion worth of 3.45 GHz and 600 MHz spectrum to AT&T and another $17 billion deal to sell 2 GHz spectrum licenses to Elon Musk’s SpaceX/Starlink. Earlier this month, EchoStar agreed to sell unpaired AWS-3 spectrum licenses to SpaceX for another $2.6 billion.
With those kinds of funds coming in, it’s easy to see why EchoStar’s contractors and tower vendors are miffed about getting stiffed for work already completed and master lease agreements (MLAs) signed, sealed and delivered. Last week, Crown Castle became the second tower company, after American Tower, to file suit against Dish Wireless over EchoStar’s claim of a “force majeure” — or extraordinary — event, preventing Dish from living up to its contractual obligations.
Crown Castle files suit
In its suit, Crown Castle noted that Dish’s Boost Mobile business will rely on capacity from other wireless providers, meaning Dish no longer needs the cell towers and fiber it has leased from Crown Castle.
“Dish has invented an excuse to try to avoid its contractual commitments: that EchoStar was forced by the U.S. government to dispose of its spectrum. That excuse is a feeble one: the FCC has issued no order requiring EchoStar to sell any of its spectrum,” Crown Castle told the U.S. District Court for the District of Colorado.
“EchoStar’s spectrum sales do not even remotely approach the stringent requirements of the agreements or controlling Colorado law with respect to force majeure,” Crown Castle stated. “The indisputable facts demonstrate that there have been no unforeseeable events that would excuse Dish from fulfilling its contractual obligations to Crown Castle. The only basis asserted for invocation of force majeure – that the FCC ‘compelled’ EchoStar to sell its spectrum – is demonstrably untrue.”
It’s understandable why some people in the industry feel snookered – although many also saw it coming. For decades, wireless industry executives accused EchoStar Chairman and co-founder Charlie Ergen of stockpiling spectrum for the sole purpose of selling it off to the highest bidder, as opposed to actually using the spectrum to support a viable wireless business.
Alongside its Q3 earnings report earlier this month, EchoStar announced the formation of EchoStar Capital, a new entity responsible for investing capital from the pending spectrum sales to fuel future growth for EchoStar Corporation.
Hamid Akhavan, formerly CEO of EchoStar, is now CEO of EchoStar Capital, while Ergen serves as president and CEO of EchoStar Corporation, assuming day-to-day responsibility for the pay-TV and wireless business units. Ergen has described EchoStar going forward as a “capital-rich, asset-light” growth company.
Staying alive: Boost Mobile
Where does all of this leave Boost Mobile? No one would be surprised if you thought the brand was dead.
Boost added 223,000 wireless customers in the third quarter, showing signs of life after losing about 2 million customers since Dish took it over five years ago. Whether that trajectory continues is anyone’s guess. Boost closed the third quarter with about 7.52 million total subscribers.
On EchoStar’s Q3 conference call, Ergen was asked about the strategic vision for the Boost business. Reading between the lines, it looks as though that’s something he and his team still need to figure out.
On the technology side, Ergen said they made their first strategic move by signing an agreement with SpaceX for Boost customers to get access to worldwide connectivity for voice, text and broadband to handsets. “I’m sure others will follow suit with SpaceX, but many carriers have some choice as to who they might sign up with and there a wide variety of where those carriers are going,” he said.
“We are highly confident that we have aligned with the company [that] is going to have the best technology, and we can do some things different than others. So we've already started that. That's two years away, probably realistically, but that we've already started,” he added.
Any company that comes in as the fourth or fifth player needs to do two things to be successful: use technology in a way that’s different from the existing players and “do things that the other guys aren’t doing or they could do, but they won’t do,” he said.
“How we do things differently, I think, is for our team to come up,” he said. “We'll start having strategic sessions on how we can think about how we do some things differently … I don't think we can be successful if we look just like the other guys. They just have too much scale.”
That was a few weeks ago. Yesterday, Boost Mobile announced that while the big carriers push bloated, multi-line plans, it’s kicking off the holiday season with simple, wallet-friendly offers that deliver premium connectivity without the premium price tag.
Analyst: Boost succeeds in prepaid
Jeff Moore, principal of Wave7 Research, said he remains skeptical of Boost Mobile as a postpaid brand, but it continues to be a strong urban prepaid brand with about 3,000 retail stores.
It's basically an MVNO using AT&T’s network as opposed to the fourth facilities-based prepaid/postpaid operator that it set out to be five years ago.
What Boost has going for it is a “very fine reputation for providing a lot of value for the dollar and just being a good value prepaid carrier. That continues to be the case,” he told Fierce.
If being a good value prepaid carrier is good enough, then Boost Mobile lives on – with or without life support.