Dish haunted by Boost Mobile founder in prepaid phone wars
Dish, the struggling satellite TV and wireless company, faces a threat from an old nemesis in the battle over prepaid phone service.
Just three years after Dish was anointed the fourth major telecom carrier in the US — part of DOJ antitrust’s efforts to make sure the newly combined T-Mobile and Sprint had adequate competition — the company has hemorrhaged millions of customers.
Now, the Australian founder of Boost Mobile, which Dish acquired in 2020 for $1.4 billion as part of the DOJ’s deal, is back on the scene with an announcement he’s joined forces with Walmart for his latest venture.
Peter Adderton touted MobileX, a mobile virtual network operator, earlier this week and said its prepaid phones will be sold exclusively at 4,000 Walmart stores across America.
“Based on playing around with the product I think it’s really compelling but the challenge in mobile is getting the product in the hands of consumers,” Jonathan Chaplin, an analyst for New Street Research, told On The Money. “Being on Walmart shelves legitimizes products and puts it in front of consumers.”
Shares of Dish, which has seen its wireless customer base drop to nearly 7 million from 9 million in 2020, dropped more than 7% on the news.
Walmart sells several prepaid phones but Mobile X’s deal with the discount retailer could help the company piggyback on Walmart’s multi-million dollar advertising budget or even get a direct investment from Walmart’s venture arm.
Having Walmart behind it will certainly help MobileX compete with other carriers’ multibillion marketing efforts, Chaplin said.
Adderton — and Walmart by extension — are betting on the idea that millions of Americans will leap at the opportunity to lower their phone bill.
The US ranks 219th out of 237 countries in the world when it comes to accessing affordable data, according to a new study.
The main reason for the exorbitant charges is that it costs $6 per gigabyte of data in the US, compared with just 2 cents in Israel — the cheapest country for data.
Adderton – who sold Boost Mobile to Nextel in 2003 — believes that MobileX can provide the competition to create cheaper plans than Dish.
The company could get around 1 million customers to sign up within the next year, sources said.
The service, which will be available over Verizon’s extensive network, will give customers a free trial that tracks how much data they use.
It then suggests a plan that is tailored to how much data a customer uses each month instead of charging them hundreds of dollars a year for data they don’t use.
On average, customers use around 5.6GB of data a month at a cost of $144.
Under MobileX, that plan would be reduced to $14.88 per month, the company claimed.
However, cracking the already crowded prepaid service field may prove tough.
“Consumers aren’t as price sensitive for wireless given it’s such an important service. Being cheap isn’t enough to drive demand,” Chaplin cautioned.