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spk19: Good day and welcome to the Dish Network Corporation, quarter two, 2021 earnings conference call. Today's conference is being recorded. And at this time, I'd like to turn the conference over to Tim Messner. Please go ahead, sir.
spk22: All right. Good morning, everyone. Thanks for joining us. We're joined on the call today by Charlie Ergen, our chairman, Eric Carlson, our CEO, Tom Cullen, our EVP of corporate development, Paul Orban, our CFO. And on the wireless side, we've got Jeff Blum, our EVP of regulatory affairs, Steven By, our Chief Commercial Officer. Dave Mayo, our EVP of Network Development. We're not going to be making any opening remarks today, but we will start with the standard safe harbors. Statements that we make during this call that are not statements of historical fact constitute forward-looking statements that are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from historical results and or from our forecast. We assume no responsibility for updating forward-looking statements, For more information, please refer to the risks, uncertainties, and other factors discussed in our SEC filings. That's it, and with that, operator, we'll open it up to questions, and let's start with the analysts.
spk19: Thank you. If you'd like to ask a question, please signal by pressing 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow the signal to reach our equipment. Again, that is star 1 to ask a question. We'll pause just for a moment to allow everyone the opportunity to signal for a question. Thank you. Now we'll take the first question from David Barden at Bank of America. Please go ahead.
spk24: Hey, guys. Good morning or good afternoon. Thanks for doing the call again. I guess a couple questions if I could. You know, congratulations on the AT&T network services agreement. Obviously, there's a lot of, you know, talk about it. I would love if maybe Charlie could give us a little, background on you know how that deal came together why it came together and i think specifically is this a vehicle for you know dish to achieve um its fcc coverage requirements um you know specifically the 70 i think percent coverage by june 2023 i i think the the second question i would have is obviously we're obviously waiting for the las vegas network launch I was wondering if you could kind of give us a little bit of a roadmap between now and, say, you know, maybe first half 2022, what the network build is going to look like and what we should expect. I guess some of your partners in the infrastructure side have suggested that you've been contemplating a broad geographic build, and it would be great to get some more color on that. Thank you, guys.
spk09: David, I'm going to have – Dave Mayo talked about your second question on deployment and how that looks. And I'm going to make just an opening comment and throw it over to Stephen By on the AT&T question. But obviously, we're always looking for ways to improve things for our customers. And it's no secret that the CDMA shutoff, premature shutoff, from T-Mobile was not helpful to the relationship. So it was an opportunity for one of their competitors to work with us. And so that led to discussions that probably otherwise might not have happened. But make no mistake, T-Mobile is still super important to us and we're happy to have two really good companies that we can work with. the the it doesn't help us in the AT&T RT mobile either one of those agreements do not help us with our do not help us in the CDMA shutoff timeline and it and they don't AT&T doesn't help us in terms of meeting SEC milestones so but but it does but I do think the the agreement with AT&T is is our big picture certainly Moderately, I let AT&T speak for themselves, but I view it as certainly moderately positive for both companies and potentially extremely positive for both companies. And with that, maybe I'll throw it over to Stephen and maybe give you a little more color on it.
spk12: Yeah, so just to add some more color to Charlie's comments, you know, this is, as you've seen, a long-term strategic partnership that we have with AT&T. It really, we went into it with sort of a win-win approach for both companies. It certainly creates value for both of us, which we feel is very important as companies, but also for our customers. And so one of the things that's very important in this relationship is the quality of the AT&T network as it relates to supporting our customers and particularly our dish customers that tend to skew more rural. So they have a much better network and the quality of network and reliable network in those markets. It allows us to go beyond our existing footprint that we serve with Boost today to broaden our distribution and address a different part of the market, given the quality of the network and the coverage. I think the other part of the relationship is, you know, beyond being strategic, it is a long-term partnership. And we've been working with them on how we manage the customer migration, as well as the support for those customers, both on our network as well as the AT&T network, but in addition to that, also with the TMO network. And so it is a good relationship and one that we're working towards operationalizing as we go forward. The other thing to add in the relationship with AT&T is it is a broad roaming agreement. So it does give us in-market roaming in addition to out-of-market roaming for a long time. As you've seen, it's a 10-year agreement. So that's very important as it helps to support our build. It doesn't remove any of our obligations on the build. And so with that, I'll hand it to Dave.
spk08: Great. Thanks, Stephen. David, with respect to our BUILD program, you might be aware we've implemented a very decentralized approach. We have four regions and 36 markets. And the early markets that we'll be building are substantially all co-locations, hence the activity that you saw in some of the tower company calls this last couple of weeks. In that regard, we've signed substantially all the leases that are required to meet our 20% mandate for next June and have received notices to proceed on close to a third of the sites. As you know, we've commenced construction on close to 30 markets in 30 geographies within those 36 markets. So in some cases, there may be multiple geographies within a market. that we've commenced construction on. And then, you know, as to your Vegas question, we'll be substantially complete with the construction activities in the next 60 days by the end of the third quarter. And as we've talked about, we'll be beta testing customers in the fourth quarter.
spk07: Great. Thank you guys so much for the call.
spk18: And I'll take the next question from John Hodelick at UBS. Please go ahead.
spk23: How quickly will you guys be able to migrate the traffic from the T-Mobile network to the AT&T network? And will, I guess, all new gross ads go right onto the AT&T network? And then, you know, as part of the announcement, they talked a little bit about, you know, cooperation on the infrastructure side. Could you talk about you know, whether AT&T will be helping you guys light up spectrum. I know they would, you know, the 700 in particular fits well with what they're doing with their blocks at 700. And then lastly, on the Las Vegas launch, just anything you could tell us about what that will look like, you know, once that network is lit up, will you guys have, you know, sort of retail pricing plans in the market or, you know, will you sort of be, you know, establishing a sales force to talk about, you know, distribution in the wholesale side and the business side, or just sort of what should we expect once that network gets turned on? Thanks.
spk09: Yeah, this is Charlie. I'll try to take some of those and maybe somebody else will want to jump in. In terms of transition from AT&T, I mean, obviously, you know, AT&T will be our primary partner from the MVNO perspective going forward. But that doesn't mean that we're transitioning all our customers off of T-Mobile. They, again, remain an important part of what we're doing to the extent that they want to be an important part of what we're doing. So one of the things that we'll do that relate to Las Vegas is obviously we have to be able to provision on AT&T, so that's going to take us a bit of time. that we hope maybe somebody else on this call, maybe one of our guys can talk about that. Obviously, some customers will want to move to AT&T because it's a better network. Some people, the T-Mobile network will be better and they'll want to stay where they are. And then for new customers, you know, big picture kind of thing is our customers today And for the most part, I think most customers across the United States that we talk to, they really want consistency and coverage as their priority. And the speeds on 4G and LTE are normally fast enough for them. And they don't really see a difference in 5G when 5G pops up on their phone, so they're a little confused. Nobody can charge more for 5G in the United States today. Obviously, for a new set of customers for us, we think the AT&T has a tremendous coverage advantage that we don't have today, although T-Mobile is going to be a fast follower there as they build out rural America per their FCC milestones. The other part of it is that T-Mobile today probably arguably has an advantage certainly in perception of 5G and probably in 5G build out of their 600 megahertz. And while it doesn't really show up – there's a particular feature that customers can point to. It's still, from a marketing perspective, I think they're considered the leader in 5G, and that's where 5G is important for our customers, that's going to be important. The key is going to be the 5G development, both our own development, which we think we're doing a little bit differently, but also as you get the big 100 megahertz blocks in C-band or 2.5 that T-Mobile is building out, that's going to be a real race for those guys and And we'll see who does the best job of building something that can differentiate 5G to the consumer. That'll be the key. But we're well positioned with both T-Mobile and AT&T, depending on who kind of wins that race, plus what we think that we're going to do different within 5G and our architecture that might be different than either one of those two. So, you know, we're just well positioned. We're going to give the customer the network that they think is the best coverage and quality and value for them. But AT&T is going to be the primary going forward. With AT&T in terms of, you know, Stephen touched on it, but there's other things beyond, you know, I said it's probably moderately positive for both companies, but it could be extremely positive. You mentioned one, Spectrum. We have Spectrum... Both have mirror images of 700 megahertz. There might be some interesting things you could do there and get scale and save cost if companies are so inclined. We share an interest in the 12 gigahertz spectrum. We have some spectrum that, as we build out, we'll lay fallow for a bit until we build it out, and it probably could be put to use later. sooner rather than later by AT&T. So I think there's technology where things are going that our teams have committed to working together on. We're buying other services from AT&T like backhaul that we have to buy from somebody. And since they're our partner now, they get the benefit of the doubt on a lot of those deals. And we're both in the video business and we have common interests there. You can see this potentially could be a much better deal than the $5 billion that we're committed to. It may not. The companies may not get along. But I think both parties realize that there are things that we can share that are beneficial to both companies. And when we can do that, I'm sure we'll remain frenemies. We obviously will compete with each other as well. And then as far as, I forget the question about Las Vegas. We're distribution distribution. Oh, distribution. Yeah. Just what the, what the service looks like when you guys turn that network on or is it, is it going to be in beta for the rest of the year or do you actually start adding customers to it? No, I think we'll be in beta for a minimum of 90 days. You got to realize what kind of the things that have changed maybe in the last six months. But, um, we, we, uh, we're going to put our network in the cloud, our core in the cloud and start that way. Uh, even though we have a core working today, that does not in the cloud. We decided we don't want to change and we wanted we want to put the net start with the core in the cloud Which hasn't been done by anybody here before we obviously are doing O-RAN so our Baseband and radio vendors have to make sure those things work together and so and and and now we're adding AT&T integration to the network that we hadn't planned on doing in addition to the integration of T-Mobile, so We've got a lot of, so we think that's going to be at least a 90-day kind of beta integration. Things work in the lab today, but when you take them out of the lab and we get them on Dave's network that will be deployed by the end of September, we can light up Vegas in total. That goes from the lab to reality. In my experiences, things don't work exactly right the first time. First month or two and you've got to integrate that but but and then we'll go from there Well, we'll have retail, you know, obviously in Vegas as in other cities. It'll light up very quickly after Las Vegas We'll have a retail presence and we'll have offers for consumers that we think will be competitive Yeah, that picture Well now take the next question from Jonathan Chaplin at New Street research, please go ahead and
spk14: Hey guys, it's actually Phil Burnett for Jonathan. Quick one, will the in-market roaming element of the AT&T deal lead to a more efficient and quicker network build for you guys? I understand that it won't change the FCC requirements, but does it change the way that you think about the build? Thank you.
spk12: Yeah, so I'll start and then I'll let Dave wrap it up. The in-market roaming is important in terms of the customer experience. and the ability to manage our customers. But it really doesn't impact the build plan that Dave and his team are working on.
spk08: Yeah, we're not doing anything differently as a consequence of the AT&T deal with respect to the meeting our FCC milestones.
spk07: Got it. Thanks, guys.
spk18: I'll now take the next question from Phil Cusick at JPMorgan.
spk19: Please go ahead.
spk11: Hi, guys. Thanks. Charlie, you alluded to this with the AT&T comments, but any updated thoughts on a DBS merger now that DirecTV is separated? Does that separation change anything? And what's lost as time passes? And then just quickly as well, what's the exposure on the CDMA shutdown still? Thank you. Yeah.
spk09: You know, in terms of DirecTV and DISH, I mean, obviously, I've said it the last year. I think that those two companies go together. That's inevitable. Really, you know, there's another party involved in terms of TPG, so whether that's positive or negative, I don't know. But from a regulatory point of view, you know, obviously, there's less and less reality to objections to it because, obviously, the – hundreds of billions of dollars for broadband deployment and continued competition from the programmers themselves in the marketplace. So I think that's just, we'll just have to wait and see whether there's desire on everybody's part to do that. But I think it's a timing issue more than anything else. In terms of, I think the question was CDMA shut off. Yeah, look, I said, early this year that that's kind of a false, you know, T-Mobile had under oath talked to regulators in California that they would be a minimum of three years. I think there's kind of a, I think it's a false artificial deadline to turn it off in January this year. We viewed that as a very anti-competitive move because that's a situation where the people that we pay that our partners from an MVNO are actually obviously challenging, outwardly challenging to get our customers. And that was a convenient way to do it. You may notice that they've got, and I think they're kind of smoked out now, right? They have extraordinary offer in the marketplace for a free upgrade to a 5G phone and 50% off for service for two years, extraordinary offer. So that's obviously aimed at customers to upgrade to their network. And, you know, I think the, you know, it's not, you know, it's, the bottom line is that, you know, they're really sore, what I call sore winners. You know, it's hard to be a good winner sometimes. And they got $70 million of synergy. The government, $70 billion of synergy, you know, the government allowed them to have. And now they want $71 billion by getting some customers that we already paid them for. um you know and you know you've all met that that guy in grade school you know won and bragged about himself and bragged how good he was and spiked the ball in front of you and and um you know that sometimes it takes a bit of maturity to be a good winner and and um and and they're kind of a they're they're a sore winner and and so it's it's it's it's but it's good on the other hand the fact that a consumer could upgrade that that that may not be good for for boost but At least the customer, our main objective at DISH and Boost is to make sure customers don't lose their service. And to the extent that the customer upgrades and doesn't lose their service, I'd much rather have that than the customer, you know, lose their service. So, you know, I think that, you know, we expect that they'll continue that promotion through January 1st. I think that they probably, they've been in the business, they went on TV and their CEO went on TV and said that nobody would be impacted, that everybody was going to be upgraded by January 1st. I expect that they're going to continue that promotion. They're going to upgrade everybody by January 1st. And if they do that, then there's probably no controversy other than competition. But we'll have to wait and see how things go.
spk11: How many customers do you still have who would be exposed to that CDMA shutdown, Charlie?
spk09: Well, I think our last disclosure was the majority of our customers. Was that a quarter ago? The majority of our customers. We are taking all reasonable efforts to migrate customers, and we've made good progress on that so that people don't suffer from a premature shutdown. And I think the number is now smaller. But I would say this, that our projections show a material amount of customers on January 1st will still have CDMA phones and will lose their service. And again, this is the most economically challenged group in America. You know, Boost is not, these aren't the customers that have bank accounts and high-paying jobs. And these are people that are challenged, and so economically challenged. I think it's even more important that these people don't lose their service.
spk07: Thanks, Charlie.
spk18: We'll now take the next question from Doug Mitchelson at Credit Suisse.
spk19: Please go ahead.
spk02: Thanks so much. A couple of short ones and then one for Charlie. In terms of the NSA and AT&T requesting to use portions of the dish spectrum, Would AT&T be able to use that DISH spectrum to serve their own customers in addition to serving DISH customers? The reason I ask is the language in the 10-Q wasn't quite clear since it noted AT&T would be able to deploy the spectrum to support DISH customers. So that's the first quick one.
spk09: Yeah, I'm going to let Steven answer that.
spk12: Yeah, so Doug, basically AT&T can deploy that spectrum for not just our customers, but for all customers on their network. And part of the reason we looked at that was as we load up capacity on their network is just making sure that our customer experience and their customer experiences continue to be market leading.
spk02: Okay, that's clear. And then given the Las Vegas wireless network coverage you are building, what would you anticipate would be customer usage in the Las Vegas area on the DISH network versus needing to roam on AT&T or T-Mobile?
spk12: Yeah, so the majority of the usage will be on our network, but complemented by the coverage and the network that we have access to with AT&T.
spk02: Okay, thanks. And then, Charlie, I was just hoping to engage you on longer-term capital needs. Maybe this won't go anywhere, but you've talked in the past about achieving, you know, O-RAN and now, I guess, Cloud Core proof of concept as a driver of cheaper access to capital for DISH. At this point, are you contemplating a wireless strategy that's aggressive enough that you think you will need outside capital? I know you've talked about self-funding most or all of this sort of phase one initial build, but I imagine you've got multiple scenarios where you could be a lot more aggressive with spectrum and customer acquisition and pace of build and other things to go after wireless quickly, or you could go after wireless at a pace that you could afford with just internal capital. Any thoughts there? on accessing capital in the future post-Las Vegas?
spk09: Well, I mean, I think historically we've accessed the capital markets over a four-year history, and obviously we have obligations we need to pay back, so we continue to, as always, we're opportunistic in the capital markets if there's reasonable ways to raise capital, and we plan our business you know, accordingly that, you know, and, and, you know, we've been pretty innovative and obviously we've never, we've never had the kind of capital that some of our competitors do. And so we've had to be more innovative. And I think that, that we're, we're comfortable in that, in that space. And that, but, you know, we have the capital to, I think Dave sleeps at night knowing that he had the capital available to, to meet his deployment guidelines, you know, for now. And, and obviously Eric is, run the business in a positive cash flow manner. But if there's opportunity out there with partners or with the markets themselves, we obviously look to take advantage of those things.
spk02: Maybe I could try it this way, Charlie. Is there a line of sight on you know, this network will take, you know, four to five years to build, and it'll be in a pretty good place. It's going to take 10 years, 15 years. Is there sort of a sense of time to get, you know, stand this business up and get it running in the way that you like?
spk09: Well, I mean, I think we're less than two years away from critical, what I would call critical mass. We're going to, you know, we're going to cover 70% of the country for the next two years, the population, and that's critical mass. We're that's enough critical mass. That's on par with where Sprint was. And I think they had 50 or 60 million customers. And we're going to have a better network than they had. And we're going to have a differentiated network. And better roaming than Sprint had. So this isn't a five-year project. This is, I think, obviously our first milestone of 20%. I think you'll have a pretty good feel and we'll be able to start helping you develop models of where this goes. But clearly, the 70% milestone will be enough to compete at a very high level in the marketplace, both for consumers, but maybe in our case, more importantly, for enterprise business.
spk02: All right. Thank you. I'm looking forward to that Las Vegas pricing. That'll certainly help with the model. Thank you.
spk19: We'll now take the next question from Brett Feldman. Please go ahead.
spk16: Thanks. It's actually a follow-up to exactly what you were talking about. You know, for a while you have flagged the enterprise space as a key opportunity for the advanced capabilities of the network you're building. You've talked about network slicing and maybe private networks. You know, typically in the enterprise market, particularly when you're deploying infrastructure in response to a customer win, it's not uncommon for those enterprise customers to help fund the deployment of that infrastructure through large upfront payments. Are you contemplating that that is a part of how you're going to fund the business going forward, meaning as you think about that $10 billion budget you outlined, is it plausible that some of that could be financed by enterprise customers? And then the flip side of the question would be, if that's not the case, How are you thinking about pricing your services in the enterprise space, particularly when you're deploying network in response to contract wins? Thank you.
spk09: I'm going to throw this over to Steve and others and say that I think there's a lot of models in enterprise business. And you can imagine enterprise customers who want a slice of the network and they want a certain level of quality and they want it to happen in the geographic region that they're We haven't built out. They want built out. You can certainly, your scenario is certainly plausible. Or you can imagine just straight business deals where people pay by the drink or pay by the gig. But I think the broader answer is, I'll let Stephen answer, is really why the architecture that we're building is so enticing as customers and why it differentiates maybe from what they can get with the incumbents.
spk12: Yeah, so adding to Charlie's comments, we're seeing significant traction and interest today in private networks and private 5G networks. And the architecture that we're deploying really enables a level of control and a much deeper level of security that allows the enterprise to utilize that network for their own business operations. So we're seeing significant interest there. We've been responding to multiple RFPs, RFIs. We're working on proof of concepts right now. And, you know, we're partnering with a number of different SIs as we bring the services to market. And so there are different business models depending on the customer, depending on the geography. And the good thing about these private networks that we're working on is they're not constrained by the geography of building our macro network. So we're able to serve customers in different geographies within that environment. And then the other thing which is also important to highlight, it's across all verticals. There isn't a specific vertical that has an interest in this. We're seeing interest across every vertical and every industrial segment. And we're very well positioned to take the architecture that we're deploying, being cloud native, but also the open architecture, the ability to do slicing. It is distinctively unique compared to what the other operators have in the market today. It's not to say that they can't get there in the future, but we clearly have an advantage today that we're taking advantage of. I think it's also important to add that even in the dish business today, we do a great business in serving hospitality. And so we're able to partner with the systems integrators we have within that business to augment what we're doing on the video side. And so that's really a terrific model where we can integrate kind of the capabilities and the assets that we have across the whole company to serve other verticals as well that some people may not have on their radar screen today.
spk07: Thank you.
spk18: We'll now take the next question from Craig Moffitt.
spk19: Please go ahead.
spk13: Yeah. Hi. Thank you. Let's stay with the same topic if we could, Charlie. The enterprise market today is mostly national sales for devices that really aren't dissimilar from the consumer market. But I think what you're describing is quite different. Can you talk about some of the particular opportunities, if not by verticals, then by applications that you see in the enterprise market that you can uniquely serve and how large you think they are as businesses and which ones in particular you envision being regional rather than national sales? Because I think a lot depends, I guess, on
spk09: whether companies are interested in buying services that are really on a much more localized or regional basis wirelessly than they are today yeah so and Stephen may jump in here but but they're colors they're clearly our national enterprise areas where we wouldn't be competitive today but there's but there's but even within national companies there's much there's very much of it that's localized so you can imagine in the hospitality industry where your hospitality is still localized. But in the hospitality industry, you're going to differentiate yourself from your customer service because that's the hospitality industry, and you're going to do that in a market-by-market basis. You can imagine things like mining, right, that need private networks, and they probably have to get built because they're probably not in anybody's footprint today on the other extreme. So there's just a lot of different – areas there. And I would contend, Greg, that the profitability on a per bit, on a per dollar of capex and a per gig basis is going to be much higher in the enterprise business than it will the consumer business. The consumer business is quite competitive. And with three big players and us entering the marketplace, so it's quite competitive. Enterprise business, each company is going to have different needs. In some cases, we won't be able to fulfill those needs. One of the other three carriers will be able to do it. But in many cases, we're the only guys that can really, in the foreseeable future, fit their needs. And that's going to be good business for us. And those are long-term contracts. They are a long-term sales process. So from a revenue perspective, you're not looking for that to be big revenue next year. But You know, peripherally, we just know by the interest that there's never a conversation with a company at high levels where they don't want what we're building, I guess is the way I'd say it. We may not be the right company for them. It may be one of our competitors that is better suited, but they want where things are going. And you just can't get there with legacy networks because you have to automate it. And to automate, you have to be in the cloud. And, you know, we're going to be there. And then O-RAN, nobody wants to build, you know, last century's network. They want to build the 21st century network, and that's what we're building. And so that's where people are going to spend their money from an enterprise perspective are going to want to go.
spk13: And if I could just – Do you envision bringing those same capabilities to wholesale markets for being a network provider for other MVNOs? And are there any limitations under the AT&T agreement in your doing that?
spk09: There's no limitation in the AT&T agreement. I mean, you could imagine that if another network provider, let's take AT&T, since obviously we have a long-term relationship now, And they wanted to wholesale from our network because they had an enterprise customer and we had maybe some architecture that helped them get there. That's an interesting conversation to have because we both would win. And again, I've said it for two years now. We're interested in working with those companies. We define a partner working with companies who want to help our company get better. And in return, they should expect that we're going to help their company get better. And that's not always the way business works, right? So, you know, some companies, it's a zero-sum game, where I win, and only if I win, and you lose, am I willing to do a deal. And, you know, I understand that. I thought 30 years ago that probably sounded like me. But, you know, I'm kinder and gentler now, as people around me know. At least I'm more experienced and more mature, let's put it that way. I just think that, particularly in capital-intensive industries, I think that where people decide that they could take the approach where a more partnership approach, that I think that's a potentially competitive advantage. And I'm sorry we're so conceptual, Craig, at this point, but all those concepts... turn into real business models that ultimately you can see the cash flow generation in the future. But strategically, my job strategically is to make sure that the concepts can then turn into that.
spk07: That's really helpful. Thanks, Charlie.
spk19: Well, let's take the next question from Rick Prentice, Raymond James. Please go ahead.
spk03: Thanks. A couple of follow-up questions. Obviously, a lot of discussion on the MVNO agreement. To provide the best network to your customers, could it make sense to do other network sharing agreements with people that have better networks in rural America than maybe AT&T or T-Mobile have, i.e., maybe a US cellular relationship? Would that make sense, maybe?
spk09: The answer is yes. Would we be prevented from doing something with U.S. cellular for the 18T group?
spk12: No, no, we're not prevented. In fact, we've talked to a number of regional and rural operators about how do we do things, to Charlie's point earlier about partnership. How do you do it in a capital-efficient way that both parties benefit? So we've had a number of those conversations.
spk09: Certainly, so you can imagine that part of our rural strategy would be work with those people that are already in rural America. Now, AT&T, as much as geographies they cover, which is a lot, they still don't cover, they're still rural carriers and including U.S. Cellular that cover areas that AT&T does not or T-Mobile does not.
spk03: Makes sense. Second question, mentioned on Vegas, Dave's busy at work there. The consumer beta trial, how should we think about why not a wholesale enterprise beta trial, or is that something that would also be occurring in the fall winter timeframe?
spk12: Yeah, we're in active discussions on enterprise and wholesale. You know, not all wholesale is national, and a lot of business services are local. And so we are actively pursuing a number of opportunities, not necessarily just in Las Vegas either, for that matter.
spk09: But I would say the bar is a little bit higher. The bar is a little bit higher in enterprise business in terms of quality. And we're going to walk before we run. So I wouldn't expect that enterprise happens. And just so you know, enterprise is a 2022 kind of thing because we've got to get Vegas right first.
spk03: It might make sense to show enterprise what you're doing in Vegas so they can really see what the network topography looks like.
spk09: No, we'll definitely do that as well. Everybody in this call will probably be a consumer electronics show. You'll, you'll get to get a phone and you'll, you know, I know you'll do two things. You'll measure speed and you'll see if you drop any calls. Exactly. Right. I mean, you'll check coverage and you'll check your speed.
spk03: Right. So. The last one for me is you guys have done a bunch of tuck-in acquisitions. Are there other opportunities out there to kind of add scale with business and and related, Shannon Dulles, wireless sale to T-Mobile Clothes, do those boost customers come onto the plate for you guys if you wanted them?
spk09: We always look for any kind of acquisition that makes our company better or any sale that we can sell that is more beneficial to somebody else than us. So we always look at that. And then, Shannon, you want to take that one, Tom? Because you know more about that than I do.
spk04: Yeah, the Shenandoah customers were purchased by T-Mobile. Okay.
spk07: Very good. Thanks, guys.
spk04: But we own the brand, right? Yeah, they're operating under a reverse TSA, similar to the transition services agreement that we operate with T-Mobile on. So we're supporting the Boost customers on behalf of T-Mobile in that region.
spk07: We shouldn't expect maybe a sale of that to you guys. Nothing to report there. Okay. Thanks, guys. Stay well.
spk19: We'll now take the next question from Walt Pysak at LightShed. Please go ahead.
spk06: Thanks. Hey, Charlie. Your 10K has a letter that the DOJ sent you guys in early July. I'm just curious if there's been any follow-up dialogue with the DOJ, the FCC, and similarly with Verizon, I think, also may have interest in setting up an MVNO with you guys.
spk09: Well, again, the conversations that we have with regulators, absent needing to publicly disclose like we did because it's material to our business, you know, are going to stay confidential. But I think it's, you know... you know, we take regulators and regulation seriously, right? So you can read the letter from the DOJ and obviously, you know, we're going to continue to take all reasonable steps to mitigate the expected harm, you know, from the CDMA shutdown, but we're not able to do everything and we do think it's an issue and obviously the regulators are paying attention to it. So I think that's probably, what they should be doing. And I think, you know, we, we all knew, we all knew when, when we did the T-Mobile, T-Mobile Sprint, we all knew the conditions that, that were going to be part of the part of, of that agreement. And we just all had to live up to them. And I forget the other part of your question was.
spk06: Well, the other part was basically Verizon, if you spoke, because, you know, and by the way, T-Mobile on their call claim that you're only paying them or less than 2 billion. So whether it's Verizon or AT&T, just kind of, A, are you going to Verizon, and then B, how much of the $2 billion do you think remains after two years?
spk09: I won't get into those details. We're a large M&O. If Verizon is successful in track phone, acquisition track phone, we're the largest guys out there. It's disappointing. This is personal, but we've been T-Mobile's largest customer for the last year, not named T-Mobile. right? And I don't know that we've been treated like the largest customer, let's put it that way.
spk06: Rich is chomping at the bit to ask about Sinclair, but let me just get one more spectrum one in. Any agreement you have with AT&T, is this going to be in the form of a lease, or are you just going to basically give them the spectrum to make their network work better? Because I think that Band 66 stuff they've, or Verizon at least, has shown in the past can be flipped on within a matter of days. So how do we conceptualize AT&T using that spectrum? Is it a lease agreement? Is it for free? And how does that work?
spk09: Well, I think first of all, I think they'd only be interested in spectrum that they could utilize pretty quickly. In other words, they have the equipment ready to do it. And then like any partnership, it would have to be mutually beneficial to the companies. So far, the relationship with AT&T, we've been able to work through those issues.
spk06: Got it. All right, Rich, you want to hop on?
spk17: Yeah, thanks, Walt. So, Charlie, Tom, I guess when you dropped Sinclair's RSNs, you basically said that just sort of given how long they've been gone, it sort of felt permanent. From what the press release, Sinclair just put out a press release saying that they expect their TV stations to get dropped. due to a retrans impasse in a week, I guess it feels like they're trying to tie RSN carriage to retransmission consent, which I don't think is allowed. I'd be curious, like, don't they have to treat these separately? I mean, it seems sort of crazy for your customers who don't even have the RSN. This isn't an RSN renewal. It seems like to be forced as part of a retrans renewal to take on channels that cost an extra $4 to $6 a month seems pretty crazy. for DISH without a lot of upside. Could you just give us some sense of whether this is being tied, whether it can be tied, and what your recourse is?
spk09: Well, that's a loaded question. First of all, I'm disappointed that they put a press release out that they expected the networks to come down since I think we have until August 16th. And obviously, many, many negotiations come down to the wire. So we're still going to bargain in good faith and hope that, you know, just the point that they seem to come to conclusions, channels are coming down at this point. But the good news for our customers are they have other ways to get their channels. First of all, they watch them less, the networks less, and they have other ways to get those networks that they haven't had all those ways in the past. But we're empathetic to Sinclair because they are having to compete against their own content providers. And we've had a long-term relationship with Sinclair, and it's been good. And we've been able to work through issues at least as tough as this one over the years. The regional sports question that realized that Sinclair didn't own the regional sports networks, when those networks came up for renewal, By the time Sinclair owned it and was able to negotiate on their part, our customers that wanted regional sports had left. There was no way that, in fairness to our customers, we could tax them in a basic package and tax customers who almost nobody that wanted regional sports was left on our network. They'd gone to somewhere else to get them. I think there's innovative ways to reinvigorate the regional sports networks. Sinclair themselves have talked about it in a direct-to-consumer product. So I think there's other ways to do that. And we'll continue to work with Sinclair to the extent that they want to try to work with us in a win-win situation. But if not, I'm not going to speak to all the legalities and regulations of Sinclair They're pretty savvy about those things, and so they'll work their way through that. But my expectation and hope would be that ultimately the companies find a way to resolve all the issues of concern to both parties, and if not, and we go our separate ways, we'll work to mitigate that for our customers.
spk17: And just to be clear, Charlie, when you say work to mitigate those issues or get to a mutually satisfactual, you're talking about a deal for the TV station's not to carry RSNs. Is that just to be clear?
spk09: Well, I mean, we don't have any customers calling us on RSNs today. To the extent that local channels were to go down, we would have more than one customer call us the next day and say, you know, where's my local channel in this particular market? So our focus is on making sure that our customers aren't disenfranchised for the local chance. If there's some opportunity on regional sports, it makes sense for us. And, and, and Sinclair, we're not, we're happy to talk about anything that's creative and doesn't harm our customers, but we're not interested in taxing our customers for when, when, when, when they've, when they don't watch the channel, that doesn't make any sense. And our customers will understand that. And, um, And, you know, if we would lose some customers if the networks go down and some customers just quit watching networks. You may want to jump in on this, Eric, but we've been through this before. The impact of local channels used to be devastating. It's still pretty bad, but not the same. And there's other alternatives.
spk03: No, and Rich, as you know, I mean, this is Eric, but as you know, I mean, obviously viewership on broadcast is, declining. I mean, we just ended the Olympics, and I think you've done decent reporting on viewership on Olympics. And, you know, I think Charlie's point on, you know, us being sympathetic to some of these folks is true. I mean, you know, they're also in competition with their big owners. I think, you know, NBC announced that they're moving, you know, a Notre Dame football game to Peacock, the home open, right? So, I mean, you know, whether it's award shows or whether it's, you know, sports or whether it's you know, big tuner events like the Olympics, I mean, you're seeing viewership decline. And so the local broadcast networks do become less important for our customers. And, you know, and as you know, Rich, I mean, there's other ways to get the networks, right? Whether, I mean, we've obviously helped our customers with either off-air antennas or new technologies like, you know, low-cast or, you know, technologies like, you know, CBS All Access, which is now Paramount or Peacock. It kind of depends on the customer's viewership habits and some of those are changing.
spk09: Thanks very much. Customers figure it out. If they get disenfranchised, they'll leave the networks. That's why Netflix has viewership and Prime has viewership and Disney has viewership because They get taken down and customers get frustrated. And then as things get online, they know how to steal it. And piracy is a huge problem with online. There's not a network you can't get online if you're savvy. So young people already know how to get it if they want to watch it. So it's not always the most rational thing to take a network down from a net, no matter, forget, going down is not good for anybody. Let's put it that way, but we'll see what happens.
spk19: We'll now take the next question from Kanan Venkateshwar at Barclays. Please go ahead.
spk01: Thank you. To tell you on the wireless front, one part of it is the network build-out deadlines, which obviously are cast in stone in some ways. The rest of it is the organization build-out with respect to scaling the service. And telecom organizations are obviously significantly bigger than where you are in terms of number of people and so on. So could you help us think through how the scaling of the rest of the wireless organization is going and if you basically plan to pivot some of the resources away from the DBS business to the wireless business and how long does it take to scale that whole thing up? in terms of people. And secondly, on the SPAC front, it would be great if you could give us some kind of an update on, you know, the thought process there. It's been a while since we heard from you on that. Thanks.
spk09: Okay. Yeah, it won't take a SPAC question on here, but, you know, Netflix had a fraction of Blockbuster employees. So how did that work out? I mean, we've built the, you know, we had a good base of engineering already at DISH, and obviously we have a lot of talented individuals, some of which are on this call, some of which are not on this call. So we build, and a set of executives who are working on where things are going, not where it's been in the past. So I think there's plenty of resources out there and for what we need to do in wireless, and I think we can walk and chew gum at the same time, and Eric, you know, is able to run DISH and Sling in a highly efficient manner, as well as work under retail wireless, and I don't see a conflict there. I mean, don't get me wrong, it's always hard to find good people, and it's probably a little tougher in this environment today with unemployment being low, but When you're building the future, people with ambition and people who are curious, that's where they want to go. This is a great place to come work and help us do something, and we're finding a good flow of people.
spk04: So, operator, we have time for one more analyst call before we take a few press calls.
spk19: Thank you. We'll now take the next question from Michael Rawlings at Citi. Please go ahead.
spk15: Thanks, and good afternoon. Just two questions, if I could. First, curious how you see the opportunities to leverage your 5G network for fixed wireless broadband services over time, and how you view the potential funding for broadband in the proposed infrastructure bill as an opportunity in which DISH may want to participate. And then just separately, a question on Sling. It returned a positive growth in the quarter. What are your learnings on the customer interest to migrate from legacy video platforms to live streaming platforms. And just curious for your latest views on the opportunities to move a larger portion of your historic DISH video base to your streaming Sling service.
spk09: I'll let Eric take the Sling question. I think fixed wireless, I think, is a place where the wireless industry can go. And Verizon and T-Mobile have already gone there, maybe AT&T some as well, but certainly T-Mobile and Verizon have gone there. And so I think that as they light up more of their spectrum, there are certainly places that we can go there. And obviously, I do think you bring up a good point. I think that all of us in the connectivity business are going to have to look and see what the subsidy of the government infrastructure, where the government wants to go, and whether your particular company or whether, you know, strategically fit into that and whether that's good business for you. So obviously we continue, we'll look at that. But I think that's, I think the infrastructure, the amount of infrastructure that the government is talking about is probably a positive for all connectivity companies and certainly companies potentially for Americans that don't have servers today. With that, I'll give it to you.
spk03: Michael, maybe just a few points on your questions there. I mean, one is, you know, in the traditional DISH TV satellite business, as you know, for some time, we've really been pointing our efforts towards both acquiring and retaining, you know, those profitable customers that are in a more rural geography. And that strategy has been... been working well for us. And so as the opportunity presents itself, as broadband continues to densify, obviously, Sling can be an opportunity for those customers that want to cut the cord there and maybe have a couple of SVOD services along with a service like Sling, which can be very complimentary to, obviously, Netflix or Peacock, et cetera. You know, on the Sling side, you know, there's a couple of things we've been talking about over the past few quarters. One is there is a touch of seasonality, obviously, to the OTT business. It is a low barrier of entry, and it's easy to cancel. But with that said, we also put the onus on ourselves to create a better customer experience. And in Q2, you've seen us deploy now kind of some new technology and a new app to most of the Amazon base and about half the Roku base now. So you're seeing us provide a better customer experience. We're seeing, you know, obviously better, you know, in the key metrics that you would follow associated with kind of customer engagement, we're seeing those all improve. And so we're optimistic, you know, heading into football, you know, about our ability to deliver a better customer experience. And then obviously, you know, you had a couple of tuning events like either Euro 2020 or NBA, which obviously helps them to sling numbers.
spk04: All right, operator, now we'll take questions from the press. Not sure how many are in queue.
spk19: Thank you. We'll now take questions from the media. Again, if you are a member of the media and you would like to ask a question, please press one, star one now to enter the queue to ask a question. And our first question from the media will be from Scott Moore at Bloomberg. Please go ahead.
spk05: Great. Thanks. Charlie, on the 5G launch in Vegas, I'm just trying to get an understanding of how that is going to work. You're calling it a 90-day beta, I believe. But who's coming on to it? Is it going to be Boost customers or these new customers?
spk07: And if it's a new customer, is this a new consumer plan?
spk09: Yeah, so the beta test will be, we have something called Project Genesis where people are signing up today to be online, to be beta customers. So it will come from, it may be some of our employees, but it will be random in terms of, it's basically set for people to give us feedback. We expect that the network's not going to work perfectly, so we're looking for people that to give us feedback and how to improve, and we'll find areas. We have to tune the network, for example. So we need to know location and service, and so we'll just have people that our regular customers are using it that are willing to give us feedback. And so that's how we'll start. And we've been through that with when we've rolled out high-definition television or DVRs or any kind of new service, that's the approach. that we've taken and it works quite well. And it allows us to move pretty quickly to improve our network because it's not going to be perfect the first day.
spk05: So it's a 90-day beta launching in September, I believe you said. And after that 90 days, it becomes a full-fledged product, which is probably, what, early next year?
spk09: Well, I mean, I think the way I'd say it is if our normal expectation would be that yes we turn into a full-fledged product early next year right and it's you know commercialized but we'll have to see how our beta goes right so um you know i'm i'm in a beta test now for a service of a different sort that i think i'm about nine months into beta so you know it depends on you know we don't think that that's where we are but but um we have to get more data on the beta to know when we roll that. We want to roll, we get a first impression, and we want it to be a good first impression. Obviously, we have, we do, you know, and as soon as we, everything we learn in Vegas rolls directly into the other networks so we can light up at the same time. So the bottom line is that it's going to be a minimum of 90 days. And if we do our jobs correctly and our vendors do our jobs correctly, then we're going to be ready for prime time at the first year.
spk07: Great. Thanks.
spk19: We'll now take the next question from Mike Farrell at Multi-Channel News. Please go ahead.
spk20: Hi, guys. Just a couple quick things about Sinclair. Just wondering if there's any way you can kind of uh comment on what you might think is the kind of sticking point in this whole thing i mean is it beyond just the you know there's asking for too much uh money as uh you know regarding fees and there have been a lot of talk before i mean because you haven't had their rsn for uh three or four years, that you were at a competitive advantage here and that maybe you guys would have been looking to tier it, tier those channels, and maybe they're pushing back on that. And, I mean, you probably won't be able to talk too much directly about that for this contract, but is tiering something that you're looking at when you do RSN negotiations going forward?
spk09: Yeah, I mean, at the end of the day, it's about money. It's about economics. But that hasn't changed. that hasn't changed in any programming negotiation that I've ever been involved in. And one thing that we do differently is we have viewer metrics and we know what the cost to the viewer is and we have knowledge in how the customer values the channel. And if you get real-time viewing, Data, as we have for the last seven or eight years, you can be pretty precise on what a channel is worth, and that's the metric we use. If you're on the other side of it, most programmers just have a budget, and they have a number they gave Wall Street or whatever it is, and they just say, here's the number we want. And sometimes those are pretty far apart.
spk04: But obviously the specific commercial terms of any negotiation aren't something we're going to talk about publicly. Operator, we have time for one more from the media.
spk19: Thank you. We'll take our final media question from John Tarantino at Inside Towers. Please go ahead.
spk21: Thanks for taking my call. This is the first time I've been on your call. Inside Towers, if you're familiar, is a daily newsletter that covers the wireless infrastructure business. And up to now, we really haven't covered DISH, but once you decided to build your own network, then we took an interest. But let me ask a broad question that doesn't necessarily apply to DISH, but I think has implications across the industry. For all the planning and studying you've done and building the network, do you think it's feasible that a carrier does not have to own its own infrastructure aside from, say, spectrum and software?
spk07: I mean, TrackPhone proved you didn't have to own anything.
spk09: They're a very successful business. They bought for billions of dollars or had billions of dollars market. They were very successful with no infrastructure. So, you know, when you start looking at, I think the world will change. I think the kind of architecture we're using, the fact that, in terms of cloud and O-RAN and virtualization are going to change things. And we're open-minded about it. I think we're open-minded about the fact that things could change maybe in a way that we can't predict today or maybe in a way that's not even beneficial to us. But our bet and everything we know that it's changing, we're helping change it. And when you help change it, when you are part of the future, then you usually win. It's the people who fight the future that usually have a problem, and we're embracing the future, and we think that gives us competitive advantage.
spk07: Great. Thanks very much.
spk04: All right. Thank you, operator. Thanks, everyone. Talk to you again next quarter.
spk19: That concludes today's call. Thank you for your participation. You may now disconnect.
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