Dish 2Q17 Earnings Call Notes

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Charles William Ergen – DISH Network Corp.

Have to move with the market

“I think it’s realistic to assume that a Linear customer today that you might get on randomly across the United States, the odds on that customer lasting 7 or 8 or 9 or 10 years is probably not good. So we just look at it and say, we have to knew that over the air antennas to get them. We have to be willing to focus on areas that may be not as many options for the consumer, right, rural America is an example, and be a little smarter about it and then bring in the new technology of OTT where the churn is going to be higher, but the SAC is going to be very low, and where you have an enhanced revenue opportunity with advertising and add-ons and everything else. So I think we just change with where the market is going.”

Going to focus on IoT and wait for 5G

“Yeah. And this is Charlie. I’d only add that you realize that we have nationwide 600 megahertz spectrum now, which is a great low band frequency, which is really a necessity in my opinion for a lot of the use cases of IoT. We can’t actually use – we can’t use that nationwide frequency, because there’s still 38 months that the broadcasters have before they have to turn it over. And they’re asking for more time at this point in time. So unfortunately, that’s kind of after our 2020 schedule for the FCC.

And then we’re still involved in litigation on some of the AWS-3 spectrum. We’re still awaiting court decisions on that. So that’s a bit tied up in terms of us making long-term strategic decision. So it just so works out that we’re really – it just makes logical sense to go with a narrowband IoT and wait for 5G where we’ll probably have some specs and some time we’ll probably have some specs in 2018 and we can start planning that network.

And hopefully the second phase will come along as soon as 5G is available. And it’s realistic to assume, I think, that we’re going to need some help. And we need help in doing that both in technical knowledge and know-how and financial and everything else because just like we needed help to launch satellites. We launched our first satellite in 1995, and I think we’ve launched 21 or 22 satellites now. We needed a lot of help to get there, and we’re not afraid to ask for help.”

The telecom carriers each have a little bit different strategy

“I think each carriers offer a little bit different strategy today. I mean, obviously AT&T is getting more heavily into the content side of the business. Verizon’s got more of a small cell strategy and T-Mobile is just taking away a lot of the pain points that are out there. So each have strategies that those guys are a lot more knowledgeable about the wireless business than I am, so each of the – there’s no reason that each of those strategies can’t work.”

You’re going to use a lot of data in your lifetime

“So, all those things are going to happen. The only thing I know for sure is that if you’re born today in the United States, you’re probably not going to have one second of your life you’re not connected. And you’re going to use a lot of data during your lifetime. And there’s going to be – and that’s just people. And every microprocessor and every light and every other thing is going to have a sensor that’s going to be connected. And that’s just – it’s going to make us more productive. And it’s going to save companies money. And so there’s going to be very large companies coming out of the connectivity business on a big scale, and we hope to play a part in that.”

Amazon is one of those companies that probably needs to think about connectivity

“I think Amazon is one of those $500 billion companies that probably have to think about connectivity in their future. They have three main businesses, right? So their cloud business doesn’t work unless it’s connected. And that cloud business is connected by fiber a lot of times, but it’s wireless too. And so they don’t make any money if that’s not connected. And their retail business is going to – future delivery is going to be drones or autonomous vehicles. Both of those are not connected, so both of those are going to need connectivity. And then they have a big video business now. And that video business lot of times, is watched on mobile devices. So, you need connectivity for that.”

If net neutrality rules get more defined you’re not going to be quite as confident

“So I think they have to – look, I don’t have inside information here, but they have to look at connectivity as part of their future. They may be able to do that if they could just peel off some money and buy one of the incumbent carriers, or they could lease spectrum, or they could just hope that the – I think everybody in – the really big companies have always assumed there’s going to be a connectivity network out there that they can piggyback off of. And I think that if net neutrality rules get more defined, and I think you’re going to find that it’s maybe not quite as – you’re not going to be quite as confident of that in the future.”

You can’t have all the profits going to three or four companies

“You can’t have all the profits going to three or four companies and have the guys that are – the companies that are providing them the raw material to make that money, not get wake up one day and get a little smarter. That’d be my guess, but I don’t know if that’s going to happen. But at some point, all the money going one direction, a lot of people are enabling that. They’re going to wake up and say maybe they should get – I’ve been through this business long enough to know that the money ebbs and flows between distribution and content. It’s probably going to continue to do that today. And a lot of the content companies, probably the distribution guys, probably are going to be in position to get a more of it. Then it may go the other direction.”

Thomas Cullen

Use cases of 5G are going to dwarf current use

“The average smartphone probably consumes, I don’t know, 5 gigs a month. Use cases that are being discussed around 5G that will start to materialize in the early 2020s, they’re going to dwarf that in terms of the amount of data consumed whether that be drone network or autonomous vehicles or healthcare or massive connectivity. So to look at the marketplace in terms of today’s four big competitors and the new entrants, I think you have to really think about how the market will get redefined in the next five years to seven years to ten years.”