DISH Network Corp (DISH) 2021 Q2 法說會逐字稿

Good day, and welcome to the DISH Network Corporation Quarter 2 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.

All right. Good morning, everyone. Thanks for joining us. We're joined on the call today by Charlie Ergen, our Chairman; Erik 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; Stephen Bye, 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 same 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.

(Operator Instructions) Now we'll take the first question from David Barden at Bank of America.

I guess a couple of questions, if I could. Congratulations on the AT&T network services agreement. Obviously, there's been a lot of talk about it or above, if maybe you probably could give us a little background on how that deal came together, why it came together? And I think specifically, is this a vehicle for DISH to achieve its FCC coverage requirements, specifically the 70%, I think, coverage by June 2023?

I think 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 road map between now and, say, the 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.

Dave, I'm going to have Dave Mayo talk 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 Bye 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 shut off -- 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 2 really good companies that we can work with. The -- it doesn't help us in the AT&T or T-Mobile, either one of those agreements, do not help us with our -- do not help us in the CDMA shutoff time line, and they don't -- the AT&T doesn't help us in terms of meeting SEC milestones. So -- but it does -- but I do think the agreement with AT&T is, from a big picture, certainly moderately -- I'll 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 Steve and then -- and maybe give you a little more color on it.

Yes. So just to add some more color to Charlie's comments, 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 skew -- tend to skew more rural, so they have a much better network and the quality of network and reliable network in that -- 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 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 T-Mo 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 running 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 but doesn't remove any of our obligations on the build. And so with that, I'll hand it to Dave.

Great. Thanks, Stephen. And David, with respect to our build program, you might be aware, we've implemented a very decentralized approach. We have 4 regions in 36 markets. And the early markets that we'll be building are substantially all colocations, 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 1/3 of the sites. As 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 will -- that we've commenced construction on.

And then 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 we'll -- and as we've talked about, we'll be beta testing customers in the fourth quarter.

We'll now take the next question from John Hodulik at UBS.

How quickly will you guys be able to migrate the traffic from the T-Mobile network to the A&T network? And more, I guess, on new gross adds go right on to the AT&T network.

And then as part of the announcement, you talked a little bit about cooperation on the infrastructure side. But could you talk about whether AT&T will be helping you guys light up spectrum? I know the 700 in particular, fits well with what they're doing with their blocks of 700.

And then lastly, on the Las Vegas launch. Just anything you could tell us about what that will look like once that network is lit up? Will you guys have sort of retail pricing plans in the market? Or were you sort of the -- establishing a sales force to talk about distribution in the wholesale side and the business side? Or just sort of what should we expect once that network gets turned on?

Yes, 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, AT&T will be our primary partner from an MVNO perspective going forward. But that doesn't mean that we're transitioning 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. But we hope -- maybe somebody else's (inaudible) or maybe one of our guys can talk about that. And obviously, the -- 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 want to stay where they are. And then for new customers, 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 the phone, so they're a little confused, nobody can charge more for 5G in the United States today.

And so obviously, for a new set of customers for us, we think the AT&T network 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 up rural America for their FCC milestones.

The other part of it is the T-Mobile today, probably arguably has an advantage is certainly in perception of 5G and probably in 5G build out of the 600 megahertz. And while it doesn't really show up as a particular feature on -- the 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-bands or 2.5 that T-Mobile's building out. That's going to be a real race for those guys, and we'll see who does the best job of building something that can differentiate 5G to the consumer. That will 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 we're just well positioned. We get the customer, the network that they think is the best coverage and quality and value for them. But AT&T is going to get the -- be the primary going forward. The -- with AT&T in terms of -- Stephen touched on it, but there's other things beyond -- I said some -- it's probably moderately positive for both companies, but it could be extremely positive. You mentioned one spectrum we have, we have spectrum -- both have mirror images of 700 megahertz. There might be some interesting things you could do there, and save some -- 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 sooner rather than later by AT&T. So I think there's a there's technology where things are going that our teams have committed to working together on. And 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.

So -- and we're both in the video business, and we have common interest there. So 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, we will -- I'm sure we'll remain frenemies. We'll -- we obviously compete with each other as well. And then as far as -- I forget the question about Las Vegas.

It's more distribution.

Distribution.

Yes. Just what the service looks like when you guys turn that network on. 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 have changed maybe in the last 6 months. But we're going to put our network in the cloud, our core in the cloud and start that way. Even though we have a core working today that's not in the cloud, we decided we don't want to change and we want to put the net start with the core in the cloud, which hasn't been done by anybody heretofore. We obviously are doing O-RANs that are our baseband and radio vendors have to make sure those things work together.

And so -- 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 a lab today, but when you take them out of the lab and we get them on days network, that will be deployed by the end of September, we can light up Vegas in total. That goes from the lab to the reality. In my experiences, things don't work exactly right the first month or 2, and you've got to integrate that. But -- and then we'll go from there. We will have retail. Obviously, Vegas, as in other cities, it will 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.

We'll now take the next question from Jonathan Chaplin of New Street Research.

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, both for you guys? I understand that it won't change the FCC requirements, but does it change the way you think about the build?

Yes. 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. And (inaudible) Dave.

Yes. We're not doing anything differently as a consequence of the AT&T deal, with respect to the meeting of our FCC milestones.

We'll now take the next question from Phil Cusick at JPMorgan.

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?

Yes. In terms of DIRECTV and DISH, I mean, obviously, I've said it the last year, I think that those 2 companies go together, that's inevitable. Really, there's another party involved in terms of PPG. So whether that's positive or negative, I don't know. But from a regulatory point of view, 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 is CDMA shutoff. Yes, look, I said early this year that, that was -- that's kind of a false -- T-Mobile had under oath, talked to regulators in California that they would be a minimum of 3 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 view that as a very anticompetitive move because that's a situation where the people that we run, 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 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 2 years, extraordinary offer. So that's obviously aimed at customers to upgrade to their network. And I think that -- that's not -- it's -- the bottom line is that they really sort -- what I call sort of winners. It's hard to be a good winner sometime. And they got $70 million of synergy. The government -- $70 billion of synergy, the government allowed them to have and now they want $71 billion by getting some customers that we already paid them for, so.

And you've all met that guy in grade school, who wanted to brag about himself and brag how good he was and spike the ball in front of you. And that -- sometimes it takes a bit of maturity to be a good winner, and they're kind of -- they're a sore winner. And so it's -- but it's good -- on the other hand, it -- the fact that a consumer could upgrade, that may not be good 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, that's -- and doesn't lose their service, I'd much rather have that than the customer lose a service.

So I think that we expect that they'll continue that promotion through January 1. 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, and everybody was going to be upgraded by January 1. And I expect that they're going to continue that promotion. They're going to upgrade everybody by January 1. 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.

How many customers do you still have that will be exposed to that CDMA shutdown, Charlie?

Well, I think our last disclosure was the majority of our customers, a quarter -- was that a quarter ago? The majority of our customers that we are making -- we are taking all reasonable efforts to, to migrate customers, and we've made good progress on that, so that people don't suffer from a premerger 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 1 will still have CDMA phones and will lose their service. And again, this is the most economically challenged group in America, 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. So I think it's even more important that these people don't lose their service.

We'll now take the next question from Doug Mitchelson at Credit Suisse.

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.

Yes, I'm going to let Stephen answer that.

Yes. So Doug, the -- basically, AT&T can deploy our 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.

Okay. That's clear. And then given the Las Vegas wireless network coverage you are building, would you anticipate -- 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?

Yes. 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.

Okay. And then Charlie, I'm just hoping to gauge you on longer-term capital needs. Maybe this won't go anywhere, but you've talked in the past about achieving 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 1 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 out for wireless quickly or you could go after wireless at a pace that you could afford with just internal capital. Any thoughts on accessing the capital in the future post Las Vegas?

Well, I mean, I think historically, we've accessed the capital markets, so over our 40-year history. So I don't -- 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 accordingly to -- and we've been pretty innovative. And obviously, 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 we're comfortable in that space. But we have the capital to -- I think Dave sleeps at night, knowing that he had the capital available to meet his deployment guidelines for now. And obviously, Erik has run the business in a positive cash flow manner, so. But if there's opportunity out there with partners or with the markets themselves, we obviously look to take advantage of those things.

Maybe I could try it this way, Charlie, is there sort of line of sight on this network will take 4 to 5 years to build and it will 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 -- stand this business up and get it running in the way that you like?

Well, I mean, I think we're less than 2 years away from critical -- what I would call critical mass. We're going to cover 70% of the country for the next 2 years of 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 million or 60 million customers. So -- and we're going to have a better network than they had, and we're going to have a differentiated network. So -- and better roaming than Sprint had. So this isn't a 5-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 for -- in our case, more importantly for enterprise business.

All right. I'm looking forward to that Las Vegas pricing. That will certainly help with the model.

We'll now take the next question from Brett Feldman.

It's actually a follow-up to exactly what you were talking about. 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. 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 to 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?

I'm going to throw it over to Stephen, other than say that the -- I think there's a lot of models in the 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 we haven't built out, they want built out. You can certainly -- your scenario, certainly plausible. Or you can imagine just straight business deals where people pay by the drink or pay by the gig and -- but I'll let -- I think the broader answer is -- I'll let Stephen answer is really, why the architecture that we're building is so enticing for enterprise customers, and why it differentiates maybe from what they can get with the incumbents.

Yes. 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 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 a good thing about these private networks that we're working on is they're not constrained by the geography of building a 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. And so not just to say that they can't get there in the future, clearly have an advantage today that we're taking advantage of.

I think it's also important that, 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.

We'll now take the next question from Craig Moffett.

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 than 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 whether companies are interested in buying services that are really on a much more localized or regional basis wirelessly than they are today.

Yes. So -- and Stephen may jump in here. But there are clearly national enterprise areas where we wouldn't be competitive today, but there's -- but even within national companies, there's much -- there's very much of it that's localized. So you can imagine the hospitality industry, where that -- 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 want to -- you're going do that in a market-by-market basis. You can imagine things like mining, right, that aren't -- 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 Craig, that the profitability on a per bit, on a per dollar of CapEx and the per gig basis is going to be much higher in the enterprise business and global consumer business. But the consumer business is quite competitive. And with 3 big players and us entering the marketplace, so -- and with -- 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 3 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 a 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 a big revenue item next year. But peripherally, we just know by the interest that there's never a conversation with the company at high levels where they don't want what we're building, I guess, is how I'd say it. We may not be the right company for them. It may be one of our competitors that's better suited, but they want where things are going. And you just can't get there with legacy networks, because you have to automate. And to automate, you have to be in the cloud, and we're going to be there. And then O-RAN, nobody wants to build 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, we're going to want to go.

Sorry, I just -- if I can ask a quick follow-up. Do you envision bringing those same capabilities to wholesale markets and for being a network provider for other MVNOs? And are there any limitations under the AT&T agreement in your doing that?

There's no limitation in the AT&T agreement. I mean, you can 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 said it for 2 years now, we're interested in working with those companies, but we -- how we define a partner, working with companies who want to help our company get better, and we're going to -- 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 some companies, it's a zero-sum game, where I win and only if I win and you lose, am I going to do a deal. And I understand that. I fought 30 years ago, that probably sounded like me. But 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.

And I think -- I just think that, particularly in capital-intensive industries, I think that where people can -- where people decide that they could take the approach where -- more partnership approach, and I think that's a competitive -- potentially competitive advantage. And I'm sorry, we're so conceptual, Craig, at this point, but that -- all those concepts turn into real business models that ultimately you can see the cash flow generation in the future. But strategically, we're kind of -- my job strategically, is to make sure that the concepts can then turn into that.

We'll then take the next question from Ric Prentiss at Raymond James.

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 and T-Mobile have, i.e. maybe a U.S. Cellular relationship, if that makes sense, maybe?

The answer is yes. That's -- we're not -- you know that -- would we be prevented from doing something with U.S. Cellular for the AT&T?

No. No, we're not prevented and 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 have a number of those conversations.

Certainly, so you can imagine that part of our rural strategy would be working with those people that are already in rural America. Now AT&T, as much as geographies as they cover, which is a lot, they still don't cover -- there are still rural carriers and, including U.S. Cellular, that cover areas that AT&T does not or T-Mobile does not.

Makes sense. Second question, you mentioned on Vegas there's busy 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 in this time frame?

Yes. We're in active discussions on enterprise and wholesale. 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.

But I would say that the bar is a little bit higher. The bar is a little bit higher in the enterprise business in terms of quality, and we're going to walk before we run. So I wouldn't expect that enterprise happens in, just so you know, enterprise is a 2022 kind of thing because we got to get Vegas right first.

Might make sense, I just show enterprise, what you're doing in Vegas, so they can really see what the new topography looks like, and...

No, we'll definitely do that, as well everybody in this call. We'll probably be a consumer electronics show, you'll get a phone. And I know you'll do two things. You'll measure speed and you'll see if you drop any calls. You'll check coverage and you'll check your speed. Right, so.

So 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 into your business? And related, Shenandoah's wireless network T-Mobile close, do those Boost customers come on to the plate for you, if you wanted them?

We always look for any kind of acquisition or -- that makes our company better. Any sale that we can sell that is more beneficial to somebody else than us. So we always look at that. And then -- you want to take that one, Tom? Because you know more about that than I do?

Yes. The Shenandoah customers were purchased by T-Mobile.

But we own the brand, right?

Yes, they're operating under a reverse TSA, similar to the transition services agreement that we operate with T-Mobile on. So they're supporting the Boost -- we're supporting the Boost customers on behalf of T-Mobile in that region.

But we shouldn't expect maybe a sale of that to you guys?

Nothing to report there.

We'll now take the next question from Walt Piecyk at LightShed.

Charlie, your 10-K had 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 and the FCC? And similarly, with Verizon, I think, also may have interest in setting up an MVNO with you guys.

Well, again, the conversations that we have with regulators, absent need to publicly disclose like we did because it's material to our business, are going to stay confidential. So -- but I think it's -- we take the regulators and regulation seriously, right? So you can read the letter from the DOJ and obviously, we're going to continue to take all reasonable steps to mitigate the expected harm from the city may shut down, 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 we all knew, when we did the T-Mobile, Sprint, we all knew the conditions that were going to be part of that agreement, we just all have to live up to them. And I forget the other part of your question was...

The other part was basically Verizon. You spoke -- because -- and by the way, T-Mobile on their call claim that you're only paying them for less than $2 billion. So whether it's Verizon or AT&T, just kind of, a, are you talking to Verizon? And then b, like how much of the $2 billion do you think remains after 2 years?

Yes, I won't get into those details. Well -- but look, we're large MVNO. And if Verizon is successful in Tracfone, acquisition Tracfone, we're the largest guys out there. And 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 if we've been treated like the largest customer, let's put it that way.

Richard, chomping at the bit to ask about Sinclair, but let me just get one more spectrum one in. The -- 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?

Well, I think, first of all, any -- I think they'd be interested in -- 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. And so far, the relationship with AT&T, we've been able to work through those issues.

Got it. Rich, do you want to hop on?

Yes. 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 retrends 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 like how these -- whether this is being tied whether it can be tied and what your recourse is?

Well, that's a lot of good questions. 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 16, so. And obviously, many negotiations come down to the wire. So we're still going to bargain in good faith and hope that, disappointed that they seem to come to the conclusion as 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 network less, and they have other ways to get those networks, but they didn't -- they haven't had all those ways in the past. And -- 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 the 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 [Allnet] was able to negotiate in the part -- our customers that wanted regional sports had left. And so there was no way that, in fairness to our customers, we can tax them in a basic package and tax customers who -- almost nobody that was left, who wanted regional sports was left on our network. They've gone to somewhere else to get them. So 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, they'll -- I don't -- I'm not going to speak to all the legalities and regulations, Sinclair is 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.

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 stations not to carry RSN? Is that just to be clear?

Well, I mean our -- we don't have any customers calling us on RSNs today, to the extent the local channels were to go down, we would have more than one customer call us the next day and say, where is my local channel in those particular markets. So our focus is on making sure that our customers aren't disenfranchised for their local channels.

If there's some opportunity on regional sports, it makes sense for us 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 when they don't watch the channel. That doesn't make any sense. And our customers will understand that. And if -- we would lose some customers if the networks go down and some customers just watch the networks. You may want to jump in on this, Erik, but we've been through this before. The impact of local channels is -- used to be devastating. It's still pretty bad, but not the same. And there's other alternatives.

Rich, as you know -- I mean, this is Erik. 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 I think Charlie's point on us being sympathetic to some of these folks is true. I mean, they're also in competition with their big owners. I think NBC announced that they're moving (inaudible) football game to Peacock, the home open, right? So I mean, whether it's award shows or whether it's sports or whether it's big tune in 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 as you know, Rich, I mean, there's other ways to get to get the networks, right? Whether -- I mean, we've obviously helped our customers with either offer antennas or new technologies like locast or technologies like CBS All Access, which is now Paramount or Peacock, right? So it just -- it kind of depends on the customers' viewership habits and some of those are changing.

Walt, customers figured 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 learn how to -- they know how steal it. That piracy's 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.

We'll now take the next question from Kannan Venkateshwar of Barclays.

So Charlie, on the wireless front, I mean, one part of it is the network build-out deadlines, which obviously are capped in stone in some ways. But 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 divert 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 this tax front, it would be great if you could give us some kind of an update on the thought process there. It's been a while since we heard from you on that.

Okay. Yes, I won't take his back question on here, but -- Netflix had a fraction of blockbuster employees. So how did that work out I mean, we've built the -- we had a good base of engineering already at DISH. And obviously, we had a lot of talented individuals, some of which are on this call, some of which are not on this call. So we built -- 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 Erik is able to run vision and sling in a highly efficient manner, as well as work on our 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. And we're fine -- this is a great place to come work and help us do something and we're finding a good flow of people.

So operator, we have time for one more analyst call before we take a few press calls.

We'll now take the next question from Michael Rollins at Citi.

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 to 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.

I'll let Erik 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 done there. And so I think that's -- 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 this 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 -- strategically fit into that and whether that's a good business for you.

So obviously, we continue to really 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 potentially for Americans that don't have service today. With that, I'll give it to you and slide.

Michael, maybe just a few points on your questions there. I mean, one is, the traditional DISH TV satellite business, as you know, for some time, we've really been pointing our efforts towards both acquiring and retaining those profitable customers that are in a more rural geography. And that strategy's been -- they're 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 SVOD services along with a service like Sling, which can be very complementary to obviously, Netflix or Peacock, et cetera.

On the Sling side, 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 OTG 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 obviously better 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 heading into football about our ability to deliver a better customer experience. And then obviously, you had a couple of tune in events like either Euro 2020 or NBA, which obviously helps on the Sling numbers in Q2, so.

All right, operator. Now, we'll take questions from the press. I'm not sure how many are in queue.

We'll now take questions from the media. (Operator Instructions) And our first question from the media will be from Scott Moritz at Bloomberg.

Charlie, on the 5G launch in Vegas, just trying to get an understanding of how that is going to work. You're calling it a 90-day beta, I believe. But what's the -- who's coming on to it? Is it going to be Boost customers? Are these new customers? And if it's a new customer, is this a new consumer plan?

Yes. 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 network's not going to work perfectly. So we're looking for people that give us feedback and have improvement. We'll find areas. We have to tune the network, for example, part of the -- 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 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.

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?

I mean, I think the way I'd say it is, if our normal expectation would be that, yes, we turned in a full-fledged product early next year, right? And it's commercialized. But we'll have to see how our beta goes, right? So I'm in a beta test now for a service of a different sort that I'm thinking, I've got 9 months into beta. So it depends on -- we don't think -- but that's where we are. But we have to get more data on the beta to know when we rolled out.

We want to -- we get a first impression, and we want it to be a good first impression. Obviously, we have -- we do -- and as soon as we -- everything we learn in Vegas rolls directly into the other networks that we can line 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 of the year.

We'll now take the next question from Mike Farrell of Multichannel News.

Just a couple of quick things about Sinclair. Just wondering if there's any way you can kind of comment on what you might think is the kind of sticking point in this whole thing? I mean is it beyond just the -- they're asking for too much money as regarding fees. And there have been a lot of talk before, I mean, because you haven't had their RSNs for about 3 to 4 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 meaning, you probably won't be able to talk too much directly about that for this contract, but is hearing something that you're looking at when you do RSN negotiations going forward?

Yes. It's -- at the end of the day, it's about money, it's about economics. That hasn't changed in any programming negotiation that I've ever been involved in, right? And one thing that we do differently is we have viewer metrics, and we know what the cost to the viewer is and how -- and we have a -- we have knowledge of how the customer values a channel. And if you get real-time viewing data as we have for the last 7 or 8 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 give Wall Street or whatever it is, and they just say, here's the number we want. And sometimes, those are pretty far part.

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.

We'll take our final media question from John Celentano of Inside Towers.

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 this, 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 in 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?

I mean, Tracfone proved you didn't have to own anything. Very successful business. They bought for billions of dollars or had billions of dollars market. They were very successful with no infrastructure. So -- and what -- when you start looking at that -- I think the world will change. I think the kind of architecture we're using, the fact that technologies in terms of cloud and overhand and virtualization are going to change things. And we're open-minded about it. I don't think -- I think we're open-minded about the fact that things could change maybe even a way that we can't predict today or maybe in a way that's not even beneficial to us. But our bet and our -- and everything we know that it's changing. It's very -- 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.

All right. Thank you, operator. Thanks, everyone. We'll talk to you again next quarter.

That concludes today's call. Thank you for your participation. You may now disconnect.