DISH Network Q1 2022 Earnings Call Transcript

Participants

Corporate Executives

• Timothy A. Messner, Executive Vice President and General Counsel
• W. Erik Carlson, President and Chief Executive Officer
• John Swieringa, President and Chief Operating Officer
• Charlie Ergen, Co-founder and Chairman of the Board
• Marc Rouanne, Executive Vice President, Chief Network Officer
• Stephen Bye, Executive Vice President, Chief Commercial Officer

Analysts

• Michael Rollins, Citi.
• Rick Prentiss, Raymond James.
• Doug Mitchelson, Credit Suisse.
• David Barden, Bank of America.
• Phil Cusick, JPMorgan.
• Craig Moffett, MoffettNathanson.
• Ben Swinburn, Morgan Stanley
• Walter Piecyk, LightShed.
• David Lim, CNET.
• John Celentano, Inside Towers.

Presentation

[Operator]

Good day, and welcome to the DISH Network Q1 2022 Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Messner. Please go ahead, sir.

[Timothy A. Messner, Executive Vice President and General Counsel at DISH Network]

All right. Thanks, Justin. Good morning, everyone, and thanks for joining us. We're joined on the call today by Charlie Ergen, our Chairman; Erik Carlson, our CEO; and Paul Orban, our CFO. On the Wireless side, we;ve got Tom Cullen, EVP of Corporate Development; Stephen Bye, our Chief Commercial Officer; and we have John Swieringa, President and COO of Wireless. And as always, before we start, I need to remind you of our safe harbors. During this call, we may make forward-looking statements, which are subject to risks, uncertainties and other factors that could cause our actual results to differ from historical results or from our forecast. We assume no responsibility for updating forward-looking statements. For more information on factors that may affect future results, please refer to our SEC filings. And with that, I'd like to turn it over to Erik for opening remarks.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

Thank you, Tim, and welcome, everyone, and thanks for being here today. As many of you are aware, we have an Analyst Day on Tuesday, May 10th, where we're going to go into more depth on our wireless plans. And a link to watch the live webcast will be on our Investor Relations website. As for today, we're going to try to keep it short. But I'm going to begin with a few brief comments before opening it up to your questions. In regard to subscribers for all of our brands, we simply didn't execute according to our expectations. However, we did exercise good financial discipline. We continue to make progress on other fronts. And I'm pleased to report that our wireless network build is on track. In the first quarter, DISH TV lost roughly 228,000 subscribers. This is driven by several factors, including our local programming dispute with TEGNA. As I discussed during our earnings call last quarter, we signed a new agreement with them in the first quarter and now have that largely behind us. In addition, our price increase is now in effect for customers impacted by that dispute, which will make a positive impact on our bottom line this year. DISH TV continues to be profitable and generates significant free cash flow, thanks to our financial discipline and strategic marketing investments. We do remain focused on acquiring and retaining long-term, profitable customers. And we continue to play where we're strongest in rural America with higher credit quality subscribers.

Turning to SLING for a minute. In the quarter, we lost approximately 234,000 subscribers. We had higher than expected customer attrition following the football season, but the bottom line is we simply didn't execute to the level we expected. In the second half of the year, we did finalize the reengineering of the platform and user interface. Look, we had a tough quarter, but we're optimistic that we can leverage the platform, our messaging, high-value products and great experience to reach customers who overall video content bills are too high, but still want the excitement of live TV. We also strengthened our leadership team in SLING. We hired Gary Schanman as our new EVP and Group President of SLING TV. Gary has got an excellent track record, not only in the pay-TV industry but streaming. He, along with new and existing SLING leaders, will be focused on increasing market share and driving profitable growth for the business. Switching gears a bit. Our wireless business continues to make progress. Our retail wireless business has lost approximately 343,000 subs in the quarter. We're still committed to our disciplined operational approach and driving profitable growth in the segment. It's important to note that our retail wireless results have been impacted by our acceleration of the CDMA shutdown, which continues into Q2, albeit to a lesser extent.

However, during the first quarter of 2022, we and T-Mobile reached a proposed settlement and amendment, which, among other things, settled all open disputes, including CDMA matters and contained favorable terms to us. Before we and T-Mobile can enter into this proposed settlement and amendment, we're required to obtain the approval of the Department of Justice, which has been reviewing it since February 22, 2022. The CDMA shutdown along with the delay in approval has materially negatively impacted our ability to compete. This includes our acquisition and retention efforts and our results of operations. We hope to here from the DOJ soon and are optimistic that the settlement and amendment with T-Mobile will be approved. Our wireless network team has made significant progress, and we're well on our way to meeting our commitments, including our upcoming deadline of covering 20% of the population by June 14. Our build-out shows in our free cash flow for the quarter. For the first time in many years, we're in the negative, but that's because of the investment we're making in our network. For some context, capex was $597 million in Q1 for that wireless segment. We expect our quarterly wireless network opex and capex to be consistent with Q1 for the remainder of 2022.

It's important to note that we have the necessary capital to fund portions of the bill happening this year. We are excited to be entering the next phase of our deployment. On Wednesday of this week, we commercially launched Project Genesis in Las Vegas. I want to take a moment to congratulate the entire team. This is a major accomplishment. But look, it's just the beginning as we prepare to launch in additional markets as discussed on our last earnings call. We also just announced a new partnership with Samsung that will help our network expansion and provide greater flexibility to deploy our cloud-native network. Look, it's going to be a remarkable year as we execute our vision to change the way the world communicates. Our best days are certainly ahead of us here. We'll share more details regarding our wireless plans next Tuesday in Las Vegas at our Analyst Day, and we look forward to seeing many of you there. Now, I'd like to open it up to Q&A.

Questions and Answers

[Operator]

Thank you. [Operator Instructions] Our first question comes from Michael Rollins with Citi.

[Michael Rollins, Analyst at Citi.]

Thanks and good morning. I'm curious if you could talk a little bit more about the experience that customers should receive in Vegas and as more markets open up in terms of average speeds performance? And then on the pricing front, the early pricing, do you view this as a promotion to get customers, something where you see pricing sustaining over a longer period of time for DISH or something maybe that moves up as the network becomes more robust over time? Thanks.

[John Swieringa, President and Chief Operating Officer at DISH Network]

Yes. This is John Swieringa. Thanks for the question. I'll take that one. Obviously, a big step forward with us bringing commercial users onto the network earlier this week. With respect to Project Genesis, it's important not to read too deeply into that in terms of our longer-term retail strategy. With Project Genesis, we've been in beta user mode for most of the first quarter. We're looking to attract sort of grassroots users, early access users who can give us feedback on the network and are doing that quite regularly. So as we transition from beta users to commercial, the focus again is to attract early users. We've got an engagement app, other things where users are giving us feedback. The goal is to have a very robust network in Vegas, sort of nail it there, and then we can scale it out across all the other markets. And we're learning quite a lot with the early access users. And we'd expect ultimately to transition Project Genesis into really our retail brands where we compete across the various segments of the market. Speeds are good. Feedback is generally good. We'll be showcasing some of that next week for people who'd like to see it. But we're generally happy with where we are. And obviously, with anything, it's just the start of the race, so there's a lot of work to do.

[Michael Rollins, Analyst at Citi.]

Thanks.

[Operator]

Thank you. And our next question will come from Rick Prentiss with Raymond James.

[Rick Prentiss, Analyst at Raymond James.]

Thanks. Good morning. I got two areas of questions. First on the CDMA shutdown, 3G CDMA shutdown, obviously, painful experience [Indecipherable] at the DOJ. Could there be any reversals to your financial results, benefits retroactively apply? And the second part of that first question is what about the 4G/LTE now, are we expecting any further impacts on that side?

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

Paul, do you want to take that?

[Paul W. Orban, Executive Vice President and Chief Financial Officer at DISH Network]

Yes. I'll take that.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

I can understand the second part. Take the first part.

[Paul W. Orban, Executive Vice President and Chief Financial Officer at DISH Network]

Yes. This is Paul. I'll take the first one. Yes, once we actually do sign that agreement, we'll retroactively all into Q2. But we'll take any benefit of the contract that related to Q1 in the Q2 financial results.

[John Swieringa, President and Chief Operating Officer at DISH Network]

And this is John. I'll take the second part, which I think was with respect to the pending LTE shutdown, which is slated for later this quarter. There's not really a big impact there for Boost Mobile. Some of our other brands, including T-Mobile, which is the postpaid brand we have, as well as Republic Wireless do have some customers on the LTE network. And we've been working to certainly migrate those subscribers that's been there. The customer profile is a little different there. So it's been a little smoother than working with the Boost Mobile subscriber base. But no significant sort of large event there for us. We've been managing that certainly throughout the last several quarters.

[Rick Prentiss, Analyst at Raymond James.]

That's good to hear. And then, obviously, the 10-Q points out, now you are -- will need to raise capital plan to raise capital. Can you help us understand just framework about sizing it, timing it, what type of capital you might be interested in? Does the spectrum purchase of the low band in 3Q 2023 option, the debt maturity 1Q 2023? And how any wholesale or private network contracts might fit on the sizing timing and type as you're thinking about it.

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

Yes. This is Charlie. I'll take that. I want make just one comment on the CDMA shutdown. And the biggest problem is that the delay is that we don't get back any kind of competitive advantage that we have in the marketplace by having a new deal. That will never get back. So every day that goes by that they're not able to get some feedback from Justice, they clearly didn't -- for whatever reason, didn't like the amendment that was presented to them by S&T Mobile. So we expect there'll be -- they have some changes in mind, otherwise, obviously, wouldn't have taken this long. So there must be some changes. So we do have some concerns there. I do think it -- I guess, my biggest concern is I hope that, that Justice still wants four players in the marketplace. I mean, I think that's the biggest thing, because it has been -- it certainly has had a material negative effect. We got kind of the negative benefit. We kind of executed on the negative benefits of that deal with the CDMA shutoff by accelerating that and taking some losses on customers and cost that perhaps could have been -- that maybe never took place. But to T-Mobile's credit, we worked at a more fair arrangement in terms of how to work together on that. And unfortunately, we haven't got the benefit of that. So I know that the Justice has a lot of things on their plate, and maybe this isn't the most important thing that they're looking at.

But for us, obviously, it's a very important thing. And we'll never get back to square one regardless of when they rule and there's no guarantee they're going to rule. So I do think that's a risk that everybody should be concerned about. As far as that exacerbate the problem that in terms of raising money, I think you can look at it the -- we have capital on hand and cash flow to continue our build-out. But we get to March of next year with the next -- I think it's $1.5 billion bond repayment. We'll need to refinance or willing to raise capital or refinance part of that in that time frame. But that gives you an order of the magnitude of what might look at as we've always answered we think there's a number of opportunities available for us in the marketplace. And we look at those and say what's the best one for our capital structure. And we've been a good steward of capital. We're pretty conservative. You can get a feel for we'll look at those options and some will be other. Well, obviously, the market is very choppy right now. So we'll see where the market kind of -- where it stabilizes and go from there.

[Rick Prentiss, Analyst at Raymond James.]

Thanks. we'll see you on Tuesday.

[Operator]

And our next question will come from Doug Mitchelson with Credit Suisse.

[Doug Mitchelson, Analyst at Credit Suisse.]

Thanks so much. I guess two questions. As the launch of the network in Vegas change the nature of the partnership discussions you've been having over the last few years. I think, Charlie, you mentioned in the past that you thought those would get more productive as you prove out the technology and now you've launched the network. And I think secondly, I'm just curious, when will we start to see the band and 70 supported handsets? And is that a prerequisite at all for anything you want to do in terms of starting to go along the device subsidy path? Obviously, you just have the Motorola phone to start. But I assume that's going to -- a number of handsets is going to expand dramatically. But when is that 70 going to be in those handsets? Thanks.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

Yes. I'll let John take the second part on Band 70, But I mean, obviously, we felt like proven to do an OpenRAN, cloud-native virtualized network, 5G, stand-alone hasn't been done in the world. So we're the first people to do it. So we've always felt that -- and it's obviously a very difficult task. Otherwise, other people would have done it. And they've been in the business a lot longer than we have. So we're really proud of it. And obviously, we think that we've taken a lot of risk out of the technology with great support from our vendors. We obviously couldn't have done this alone without a lot of help. And so I think that's one thing. I think the other big overhang is the first milestone for the FCC, which we're still on track for. We're not spiking the football yet, but we're still on track for that. So we think those are too big. Look, there's any good business plan we can raise capital just about regardless of times. And we think we really have something special. And we're excited to talk about it and show people. John, do you want to take the...

[John Swieringa, President and Chief Operating Officer at DISH Network]

Yes, I'll take the second part. This is John Swieringa again. With respect to handsets, so we're out of the gate with Project Genesis with devices that do not have Band 70. The devices that we're deploying under Genesis and in the early days of our network are 65 Qualcomm devices where we're aggregating Band 66 and 71. We do have Band 70 devices in the labs now working with all of our major OEMs on that. And we expect to be able to start launching commercially with Band 70 devices in late Q3. And that's really when we can start hitting the gas in terms of loading retail subscribers on the network, those sorts of things. One of the things we need to focus on is making sure that Band 70 as well as some of the software required to run the network makes it from sort of the highest tier of devices sort of all the way through the portfolio. And our team is working to make that happen. And we're confident that Band 70 devices coming into the portfolio soon.

[Doug Mitchelson, Analyst at Credit Suisse.]

Great. Thank you.

[Operator]

Thank you. And our next question comes from David Barden with Bank of America.

[David Barden, Analyst at Bank of America.]

Hey, guys. Thanks so much for taking the questions. I guess my first would be if you could kind of update us on where the AT&T relationship currently stands on both the wholesale and the network sharing side of things and where you expect maybe that could trend over the course of the year, specifically on the network sharing side? And then second, a bigger-picture question. Charlie, I think as we get further and further into the wireless build, the investment side becomes very apparent. The return side remains a black box, I think, for most of us on the outside of the DISH organization. When we look at Las Vegas from the outside, DISH looks like a last to market, single device consumer wireless broadband player, which doesn't really seem to be as novel an approach to return as the approach you're trying to take towards investment. And maybe this is something that's going to come out on Tuesday. But I think we asked this a lapse every quarter, which is what does the pot of gold at the end of the rainbow look like? Thanks.

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

Yes. I think I'll take the retail wireless part and maybe on the network side, it'd be Stephen and if there is something left over for John but on the retail side, I mean, we'll talk more about this in Vegas. But obviously, as a fourth player, we certainly have historical data where we think that goes and it certainly should be a very profitable business for us. Obviously, as the fourth player, you're going to have to be innovative to get people. You certainly are going to look at price. You're certainly going to look at innovation in terms -- our network allows us to be more innovative, so that is interesting stuff. As John mentioned, right, the time to do that is when you've got a fully loaded bag of tricks, which we knew did Band 70, we do need lower-cost phones. You wouldn't hit the gas on that today with one phone that's $899, right? So on the other hand, so we -- but we have FCC obligations that are focused on retail wireless, and they're not focused as much on maybe some of the other things that we think our network does. So we're -- we didn't make the rules. And so we would probably approach it a little bit different way if it was all P&L. But we have things in place to make sure that we can kind of walk and chew gum at the same time, which is meet the FCC obligations and also make that a profitable business. So I think we'll go a little bit more, a little bit more detail on this in Vegas. And then...

[John Swieringa, President and Chief Operating Officer at DISH Network]

Yes. So maybe just in terms of the question around network sharing as it relates to AT&T. We have a very strong collaboration with AT&T. Network sharing can take on many different flavors. I would say that at this point in time, we continue to work very closely with them on how we utilize their network as a complement to our network, both in market as well as out of market. But we're looking at different options there, but we don't have anything to announce as related to network sharing with them.

[David Barden, Analyst at Bank of America.]

And Erik just -- go ahead yes, please.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

Just in terms of the overall relationship. Obviously, we have a relationship on the MVNO side as well, and they've been very good partners for us as we continue to low customers on AT&T in addition to T-Mobile as it relates to MVNO.

[David Barden, Analyst at Bank of America.]

And I was just going to follow up on that real quick, if I could, please. With respect to the DOJ settlement, at the beginning of this dispute, you settled -- you made this agreement with AT&T and made some commitments to AT&T in terms of longer-term tenure revenue commitments with the expectation that it would happen very rapidly. If the DOJ settlement happens, does that change your mind about how aggressively you want to migrate off the T-Mobile platform to AT&T?

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

Yeah. This is Charlie. So what we had hoped was that we would only have to upgrade customers one at a time, right? So the early termination of CDMA, and it took -- it's taken some time to get our systems tied into AT&T systems. Obviously, their systems are different than ours. So it's taking both parties a little bit longer than we thought. So unfortunately, with CDMA shutoff being accelerated, we had to convert people to T-Mobile as our network obviously wasn't up with handsets available. So we had -- ideally, we would have waited until our network was up and we could have just converted people in our network. So by the accelerated time frame, we then had to change people over to T-Mobile. And to the extent that Justice department does not approve, while we don't get this agreement done with T-Mobile, then yes, we would revert back to AT&T. But that would require another upgrade to an AT&T phone for the most part or await until such time as we have for example Band 70 in our phones in the fall.

So there's just a lot of expense that we didn't expect there and a lot of focus on operational things that our management team has had to deal with that we should -- that we didn't -- maybe our fault for not foreseeing, but we didn't think there would be an issue with the proposed settlement. So I'm sure they have good reasons and so forth. It's just that we would -- it'd be nicer if we get a little bit more communication a little bit more focus on it. But there's already damage done. We hope that, that we'll hopefully get that back under control. So the timing has been really bad for us. But like anything else, when you run a business, you have speed bumps and you have to overcome it. And we're a company that looks at what we can control and try to focus on what we can control and the things we don't control like the government. We have to deal with what the cards that are dealt to us.

[David Barden, Analyst at Bank of America.]

Got it. Thank you guys for the questions. Thank you.

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

On the network sharing stuff, I mean, I do think that if there are four players in the marketplace. We're allowed to compete. There are going to be opportunities for people to share networks. Whichever company share networks will have some cost advantage. And so I think we're always open to that because obviously, we're coming in something new. And so there's things we don't have to build or somebody else has it. To some degree, we're doing a little bit of that with AT&T today on the MVNO deal. But I think there's going to be other opportunities in the future.

[David Barden, Analyst at Bank of America.]

Thanks, Charlie.

[Operator]

And our next question will come from Phil Cusick with JPMorgan.

[Phil Cusick, Analyst at JPMorgan.]

Hi. Thanks. So hitting 20% of the country in five weeks seems pretty fast. How developed does that commercial offer need to be to meet the requirement? And why not ask for an extension given COVID you've been dealing with for the last two years almost since you signed the deal?

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

Yeah. This is Charlie. I mean we don't think we need to ask for an extension at this point. I mean we were fortunate that we ordered radios before kind of the supply chain kind of thing hit. So we actually -- while we had some ups and downs, Fujitsu did an incredible job of making sure we got our radios. The thing that we don't control, the thing that would maybe give us a little bit of -- as your backhaul and your power the utility companies and backhaul providers are a little bit different kind of animal because, and they have experienced some of those kind of things. But we don't think we need to ask for an extension. And we want to keep our nose to the grindstone and do what we said we're going to do. And so we're just going to get it done. I mean, we have a can-do attitude. This is a great project. We've been through it before. This isn't our first rodeo. And we just have our head down. I know you guys are a bit frustrated because we don't talk a lot about what we're doing. every minute that we're not -- every day we're not at a trade show, I mean, now at a conference talking about what we're doing and actually doing what we're doing gets us further down the path where we don't have to ask for an extension.

[Phil Cusick, Analyst at JPMorgan.]

We're all excited to hear you talk about it on Tuesday.

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

You know -- the other part of the question was it's not going to be a robust offering. The commitment that we have to make is we have to do data. We have to do data 20% of the population in the United States. So it's not going to be a robust offering as robust as we'd like. A, we're still waiting on Justice. Two, we have some roaming things that were part of the Justice settlement that without Justice approving makes it a little bit more difficult for us of a robust offering in the marketplace. Obviously, we don't have Band 70 and we have high priced phones. So the main thing is to get the network up and operate and start to put water through the pipes, making sure that we see how it works, learn. We haven't done this before. So it's new to our company, although most of our team has done it before. And ultimately, our ability to compete is going to be the quality of the network. And it's just not -- you'll see more next week. But it's just not the quality. It's the architecture of the network. It's materially different than the legacy networks that are out there today. It's a modern network in a modern world. And we still have a lot of legacy in current networks. I'm very impressed with how well they work. And the incumbents are to be commended for how well they work. But man, they're complicated and they're expensive and they're sluggish in terms of change. So we're going to be different.

[Phil Cusick, Analyst at JPMorgan.]

Any preview, Charlie, you can give us in terms of should we look for a multiyear forecast in terms of revenue and cash flow? Should we expect other speakers aside from the DISH executives who have been announced?

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

I think it'll be just DISH executives. You're not going to get a lot of guidance. We don't normally give guidance. We'll give -- I think we'll give you some high-level things to work off of. It's not the last time we're going to talk to you. We're cognizant of the fact that we need to do a better job of communicating. and we're now to the point where we got some things to talk about. So some of the heavy lifting is done. But you're not going to walk away with the perfect model. I think you're going to walk away with where things -- where we think things are likely to go over the next several years. And you'll be able to build a model from that, but it's going to be -- you're not going to have the kind of guidance you get from others. Because we just -- I mean, it works for start-up in that sense, right? And I don't take you back. We launched our first satellite, and we didn't give any guidance. And we had our own internal plans and where we thought we were going to go. And some of the plans -- we didn't have all the tools that we needed when we first started. But we've got better every day. And in some cases, we blue buy where we certainly long-term blue buy any forecast that we had internally. It was actually my recollection is probably a little slower for six months than we thought it was going to be. And then it was like five times more than we ever thought it was going to be for five years. So, we're going to be prepared for the case.

[Phil Cusick, Analyst at JPMorgan.]

Thanks, Charles.

[Operator]

And our next question will come from Craig Moffett with MoffettNathanson.

[Craig Moffett, Analyst at MoffettNathanson.]

Thanks. So I guess, since we're going to hear a lot more about the wireless business, let me think about the legacy business for a second. You talked about your rural strategy. How much of your base today in the satellite TV business, is still in rural markets or markets that, I guess, as I would define rural, meaning that they don't have access to a wired broadband connection. And as you see sort of all of the fiber overbuilds plans from the Frontiers and Romans and everybody that are sort of increasingly targeting rural areas. How much do you think that's going to shrink over the next, say, five years or so?

[Marc Rouanne, Executive Vice President, Chief Network Officer at DISH Network]

Let me take the first a little bit.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

Yeah.

[Marc Rouanne, Executive Vice President, Chief Network Officer at DISH Network]

Erik, will give you a little more detail, Craig. The majority of our customers do have broadband. They just prefer the user experience, I think, on what we have and maybe Erik will go in more detail. But your -- I think your observation or where your theory there is with $65 billion of RDO funding, that's enough money to wire every remaining household in the country or get broadband in every house in the country as long as you're not trying to put fiber 50 -- 20 miles or 10 miles or five miles out to every home. So I would expect that if the government spends that money wisely, most people in the next two or three years are going to have broadband. So we have to make that user experience better than what you can get from OTT and those kinds of things. And I think there's going to be more competition for what we do, for sure. But we also have some things that we think that we have that just make it a better experience for our customers. So Erik, maybe you want to -- you're much closer to that than I am.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

Yeah. Craig, this is Erik. Maybe just a bit more context, I mean obviously, we've been talking about this specific strategy probably since early 2016 and really focused on redefining our target markets for the DISH TV product and focusing in on kind of a more rural customer. So you're asking a question with the level of detail that we're not going to disclose. However, what I would say is, the majority of our customers are in rural America. As Charlie pointed out, obviously, we think all customers are passed it may not be a wire. But obviously, with satellite broadband, they can achieve connectivity. It's really up to us to make that experience great. And I think look, what you're seeing and writing about, and others the direct-to-consumer marketplace is kind of exploding. However, we'll probably see some consolidation and some aggregation of that content. We feel like the Hopper platform, we've been talking about it for many years, where we have the ability to have Netflix on the box, along with Amazon Prime and YouTube today, our launch of our Android TV, Hopper Plus platform really allow folks to download a lot of other apps.

And so the great thing about the Hopper is not only can you skip those commercials, but you also have a whole home experience versus maybe a Roku in one room and a Chromecast in another and a FiOS TV set. So, I think Charlie is right. I mean look at -- we're eyes wide open on what's happening with broadband and competition. But we're just going to do our best to target the right customer, make sure they're continue to build those customer relationships, whether it's DISH TV or Sling TV or some of our retail wireless products. So, I hope to see you next week, Craig.

[Craig Moffett, Analyst at MoffettNathanson.]

Could I just squeeze in a follow-up then, Charlie, because what you both described actually as fiber gets broader, how does that inform your thinking about the fixed wireless broadband opportunity, a lot of which would logically sort of target rural America. I guess we'll probably hear more about that on Tuesday, but how do you think about using your spectrum for fixed wireless in that context?

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

Yes. So, I think that's the good news, Craig, is that let's assume that if you took an extreme that everybody who had broadband didn't want satellite TV anymore. Now, with our spectrum portfolio and our rural America routes, we think that there is certainly opportunity for fixed wireless in rural America. We're watching closely what T-Mobile and Verizon are doing. I think it's very creative in terms of what they're doing. I think there's other -- maybe other ways to do it depending on where you are and the densities that you have. Obviously, one of the things that is -- now with the FCC and the rulemaking is 12 gigahertz, which we think is an ideal frequency for that, that could be -- that you could get millions of customers in fixed wireless, particularly in rural America. So, we're hopeful the FCC will make some rulings on that in the near order. But I think there's opportunity there. And I think in a funny sort of way, I think there's greater upside in fixed wireless than the loss we might have, the bleed that you have in linear TV.

[Craig Moffett, Analyst at MoffettNathanson.]

All right. Thank you. I look forward to hear more about in next week.

[Operator]

Thank you. And our next question will come from Ben Swinburn with Morgan Stanley.

[Ben Swinburn, Analyst at Morgan Stanley]

Thanks. Good morning. Just maybe focusing in on two questions on the quarter. You guys have had really low churn in Pay-TV really through the pandemic. It popped up this in the first quarter. I think some of that was TEGNA, maybe the price increase. But could you talk about your expectations for churn as sort of we hopefully finish coming out of COVID and whether that you think -- what's normal for that business as you look ahead? And then on the wireless side, your service gross margins were down quite a bit. I think you talked about the CDMA migration pressuring both ARPU and data costs. But just some help in thinking about how much of that gets resolved as you guys hopefully get approval from the DOJ? Thanks.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

Yes, Ben, this is Erik. I'll take the churn question initially to give you a little context around that. Obviously, we've been on a run rate of not only improving the customer experience, but lowering customer churn probably since 2014, 2015, 2016. And I just talked on the previous question about our focus on the DISH TV side regarding really acquiring the right customer and making sure they're profitable and we're giving a great experience. I would say a couple of things. Like, the last two years with COVID is a factor. And obviously, I would say that, churn rates and the desire to switch has been depressed slightly. And you're seeing that kind of a bit throughout the industry. But there's also, you've got stimulus, you have inflation, you have a lot of factors that are happening. What I would tell you is, there's no doubt there was a bit of a bump in Q1, because of TEGNA and, obviously, price increase. But I would look for our run rate to be closer to traditionally where we had been pre-COVID.

[Ben Swinburn, Analyst at Morgan Stanley]

Okay. Thanks.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

You want to probably add anything else there?

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

No, no. I agree with that. And then, as it relates to the margins on retail wireless, you had three items that are giving you pressure. You clearly have significant CDMA migration costs that are hitting there. We are seeing higher data usage. And the favorable terms that we hope to get on the T-Mobile deal should also help that going forward. So you should see that degradation reverse in future periods.

[Ben Swinburn, Analyst at Morgan Stanley]

Thanks a lot.

[Timothy A. Messner, Executive Vice President and General Counsel at DISH Network]

Operator, we have time for one more before moving to the media.

[Operator]

Thank you. We will now take our final question from the analyst community. [Operator Instructions] We will begin the media portion of this call following the answer to this final analyst question. Our final analyst question will come from Walter Piecyk with LightShed.

[Walter Piecyk, Analyst at LightShed.]

That was a lot of buildup for this last question.

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

Come on, [Indecipherable] Walt.

[Walter Piecyk, Analyst at LightShed.]

I want to go back to Craig's question, talking about broadband with the Pay-TV customers. You said that majority already have it and obviously, more getting it with broadband or with fiber and fixed wireless. And then, Charlie, similarly, back when you talked about shared networks, you're like, oh, that makes sense over time. So like, it just seems obvious that a merger of DIRECTV and DISH's Pay-TV business should be happening, given those market dynamics. And similarly, that you should do a shared network bill with AT&T. So you yourself have control of doing this to a certain extent by pursuing it with these companies. So rather than -- it feels like, it's almost like, yes, that may happen if they come to us. But like why not pursue it yourself?

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

You have good insights, Walt. I mean, I think, we're comfortable running our company in private, not in the press. And I think we're comfortable that we have a great business and a great future, and I think we're comfortable that we're going to figure things out. I don't know how else to say it. I mean, you gain a lot of confidence over the years. You work as a team as long as some of us in this room have, you just get confidence that you can get to some of those places. Now, not everybody works that way. Not every logical thing happens. But, look, any time you can do something that both companies or multiple companies can all benefit from, it's easy to have a conversation. You can't always get something done, but it's easy to have a conversation. It doesn't work, as where one company gets all the benefit and one company loses, that doesn't work. Well, believe it or not, there are still people trying to do those deals out there. We just don't spend a lot of time on them. So, look, I think I've said that DISH and DIRECTV is inevitable. And I think that there's -- I think there's opportunity with the number of companies, not just AT&T, where you could share spectrum assets or networks. It is a little bit more complicated because our network is stand-alone 5G and it's not -- doesn't have the legacy hooks in it. So it's not -- we don't -- it'd be difficult for us to share legacy. When you've got a more modern network, that's a little bit more difficult. But there are things, as Craig talked about, in fixed wireless and things where that wouldn't be an issue because that's kind of a new, a new build kind of thing. So we're looking at all those things is all I can say.

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

I think Rich wants to sneak one in again on his favorite topic.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

Charlie, we'll give Rich the last word. Pressure on Rich now.

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

He always get the last word.

[Walter Piecyk, Analyst at LightShed.]

Charlie, Obviously, the video sub-losses, not just from you, but the whole industry video sub losses are accelerating. And streaming sub growth appears to be slowing pretty dramatically. I just -- I guess from a high level, it would be just great to get sort of your views on like what happens next?

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

Well, I think the video content providers, we need to make -- they need to help us help them make the product better, right? If I'm -- this is a trend in the younger generation. If you're watching two hours of TikTok, you're not watching two hours of Discovery. So what you used to do. And I prefer my kids watching Discovery than TikTok. So maybe -- so we just got to make the product better. Still, the commercial load is still heavy. The -- we just do things in the -- that make it frustrating for customers, maybe for the bottom line. And I think maybe we need a little more on T-Mobile's Uncarrier approach to consumers in the video business. We have a lot of ideas about that. Some people have engaged on it. Some people have not. But obviously, as those trends continue for companies, which I think they will, just because I see younger generation spending time on something other than traditional content, people will get innovative. Nothing makes people innovative more than having their trends reverse on them so.

[Walter Piecyk, Analyst at LightShed.]

Is there anything you've seen that is innovative to date?

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

Yeah. I think there's a lot of innovation there. I think what happens is we -- it boils down to customer experience, the user interface, how do you get to the content that you want and is it a fair price? And how -- and I think the biggest complaint we get, Erik, would have to be closer to that to me, but the biggest complaint we get certainly on linear TV, for example, 15, 16 minutes of commercials. So you get a little bit of history in between the commercial. So that's difficult to watch. And so I think we just got to prove -- we've got to improve the product. But they make money from commercials. But at some point, enough people are watching that the commercials become most valuable in which case people start to change. I always like to get out ahead of that and maybe get there one year or two in advance of where I think things are going. So I'm optimistic about content. We've never had better content. I think in the United States than we do now. And I'm optimistic that, people will pay for it. And I think people -- you can give people a good user experience, I think that the company is going to be very profitable. But I think there's a transition there, and we're all going to have to feel our way around. But we're problem solvers. We think we can make our product better with the help of our content providers.

[Timothy A. Messner, Executive Vice President and General Counsel at DISH Network]

We're taking media.

[Operator]

Thank you. We will now take questions from members of the media. [Operator Instructions] And our first media question comes from David Lim with CNET.

[David Lim, Analyst at CNET.]

Hi, guys. A little two parter here. First, can you just give some example at how this network is going to be different for the users and customers, the mobile network than the legacy networks you're describing against? And the second one is your Project Genesis, $30 a month tier. Is that going to be the rate going forward? Is that just promotional? And when would you expect to raise it if ever?

[John Swieringa, President and Chief Operating Officer at DISH Network]

Thanks, Dave, for the question. This is John Swieringa. Two things. I'll start on the Genesis side. So, it's a project to bring on early users. By definition, it's going to be short-lived as we transition to full commercial operations with our brands. There maybe a role for Project Genesis longer term as it relates to our innovation programs. But it's not our sort of full-scale launch of a brand and offers to compete with the large incumbents. As it relates to how we'll go about competing, I don't think this is the right place for me to talk about what our strategy is. And obviously, we don't want to sort of telegraph what we're going to do to the competition, but generally, we're preparing to scale up operations to be competitive in the market and having our own network will be transformative for our retail business as well as, as we enter in enterprise.

[Operator]

And sir, did you have any additional questions?

[David Lim, Analyst at CNET.]

No. Just if there was anything about the network itself that was different than legacy that you could sort of point out right now?

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

Yeah. So just adding to what John said, clearly, we're going to be competitive on the consumer side. But a lot of the capabilities that we have within the network unlock a whole new set of opportunities on the enterprise side of the business. And as we've talked about in the past, we think that there's significant potential with the enterprise business and the capabilities of our network actually enable that as we go forward.

[David Lim, Analyst at CNET.]

All right. Thank you.

[Timothy A. Messner, Executive Vice President and General Counsel at DISH Network]

Operator, I think there's only one more in queue. Thank you. And that question will come from John Celentano with Inside Towers.

[John Celentano, Analyst at Inside Towers.]

Hi. Good morning and thanks for taking the call. You put together a pretty impressive list of vendors to put together your network. And you've acknowledged that it's a different network from the legacy networks. But looking at the list of vendors, and frankly, I've kind of lost track upon how many there actually are. But we keep asking who's got the point? And I know in the last quarter call, you acknowledged that DISH had to become its own systems integrator. And I'm wondering if this deal announced with Samsung who has both RAN and core elements to it that might help streamline that execution on setting up and delivering a network by having a large vendor with those kind of skills to help this through. Is that a fair assessment?

[Charlie Ergen, Co-founder and Chairman of the Board at DISH Network]

Thanks for the question, John. I'll start off, and then I'll take it to Stephen for some additional context. We do view ourselves as a systems integrator. We're working with many of the biggest names in tech and certainly in the wireless space to bring this network together. We're going to continue to be the core integrator, but we're always looking at opportunities to improve our position. Certainly, the opportunity to bring in Samsung is an additional rand and radio partner on top of our existing robust relationship on the device side was a really good opportunity for us. And obviously, we're getting better every day at serving an integrator capacity, working with the partners. And we expect to be able to plug Samsung sort of into our delivery machine. Big focus on execution across-the-board with the names that you've read in the press, Amazon, Cisco, Dell, VMware, Mavenir or others. And -- one of the things that's great about our architecture is that we can bring in different pieces when we see those opportunities because the entire architecture is open by definition. So a big focus on not boxing ourselves in. Stephen, anything you want to add there?

[Stephen Bye, Executive Vice President, Chief Commercial Officer at DISH Network]

Yes. And I think just picking up on what John said is we have an open architecture. And so we are the systems integrator. And we have an ability to bring in vendors that fit within our ecosystem. And I think it's very important to emphasize the fact that it is an open ecosystem and, by definition, allows us to do that.

And as we've talked about in the past, it is an O-RAN architecture. And what was important is every partner we have understands that they're coming into this architecture they fit within our framework. And Samsung is no exception. And I think what's great about the relationship with Samsung is that they've embraced O-RAN, and that was really important for us. They've embraced our architecture, and they're yet another partner that can bring capabilities to complement what we're doing. I think another important factor in the timing for Samsung is the CBRS spectrum as well as the TDD spectrum we recently acquired in the last auction. And that's really important and valuable spectrum for us. Their ability to bring massive miner [phonetic] into our network and be able to tie TDD and FDD together is another important consideration. And just to clarify, they're coming in as a RAN vendor, not a core vendor. So they're coming in to bringing radio software as well as radios that will complement what we're doing with digits on the radio side as well. And perhaps one more point to add is we've already completed some initial interoperability testing with the Samsung infrastructure and software with our existing ecosystem partners, be it VMWare and Fujitsu as well. So we've already down that pot, and we're looking to deploy them later in the year in our network and going into 2023.

[Timothy A. Messner, Executive Vice President and General Counsel at DISH Network]

Operator, thank you, and thanks, everybody, for joining. We'll see you next week.

[Operator]

[Operator Closing Remarks]