Jason Kiser, Treasurer David Moskowitz, Executive Vice President, General Counsel, Secretary and Director Charles Ergen, Founder, Chairman and Chief Executive Officer David Rayner, Executive Vice President and Chief Financial Officer Carl Vogel, Vice Chairman and Director

Lale Topcuoglu, Goldman Sachs Aryeh Bourkoff, UBS Warburg Katherine Styponias, Prudential Equity Group, LLC Tuna Amobi, Standard & Poor's Equity Bryan Kraft, Credit Suisse First Boston Jeffrey Wlodarczak, Wachovia Securities Vijay Bhayani, Merrill Lynch Craig Moffett, Sanford Bernstein & Co. Leon Cooperman, Omega Advisors, Inc. Douglas Shapiro, Banc of America Securities Doug Mitchelson, Deutsche Bank Securities Thomas Eagan, Oppenheimer & Co. Dmitry Khaykin, Gabelli Asset Management, Inc.

Jason Kiser, Treasurer: Thanks for joining us, my name is Jason Kiser, and I'm the Treasurer here at EchoStar. I'm joined today by Charlie Ergen, our Chairman and CEO; Carl Vogel, our Vice Chairman; David Moskowitz, our Executive Vice President and General Counsel; and Dave Rayner, our CFO. I'm going to give you a quick recap of the financial performance for the quarter and then I'll turn it over to Charlie for his comments before we open it up for some Q&A at the end. Before we get started, as most of you know, we do need to do our Safe Harbor disclosures, so for that I will turn it over to David. David Moskowitz, Executive Vice President, General Counsel: Thanks, Jason, and let me add my thanks for joining us as well. Good morning. As you know we do invite media to participate listen-only on the call, so we ask the media not identify participants and their firms in your reports. We also do not allow audio taping of the conference call, we ask you to respect that. All statements we make during the call that aren't statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results or from any future results expressed or implied by the forward-looking statements. I'm not going to go through a list of all the factors that could cause our actual results to differ from historical results, but I would ask that you to take a look at the front of our 10-Q for a list or a summary of those factors. In addition, we face other risks described from time to time in other reports we file with the SEC. All of the cautionary statements that we make during this call should be understood as being applicable to any forward-looking statements we made wherever they appear. You should of course carefully consider the risks described in our reports and should not place undue reliance on any forward-looking statements that we make. We assume no responsibility for updating any forward-looking statements that we make as well. With that out of the way, I'll turn it back over to Jason. Jason Kiser, Treasurer: Thanks, David. Let's take a look at the quarter and we'll start with the total company. Total revenue for the quarter was 2.29 billion, an increase of 5% over last quarter, and 13% higher than the same period a year ago. Continued subscriber growth and higher average revenue per subscriber were the primary drivers of the increase. From an EBITDA perspective, we generated 582 million during the quarter, an increase of 106 million over last quarter, although 14 million lower than the same period a year ago. Net income for the quarter came in at 147 million, an increase of 15 million over last quarter, but 170 million lower than the same period a year ago. We should note that net income for Q1 of last year included a 134 million gain related to the insurance settlement of EchoStar IV. Basic earnings per share for the quarter was $0.33 compared to $0.30 last quarter and $0.70 for the same period last year. During the quarter free cash flow was 331 million. This represents a 484 million increase from the last quarter and 157 million higher than the same period a year ago. The increase from the prior quarter resulted from an increase in operating margins and a decrease in purchases of property and equipment. Let's look at the DISH Network specifically. During the quarter, we added 225,000 net new customers. This represents almost 47% of the incremental growth in the DBS industry for the quarter. We ended the quarter with 12,265,000 subscribers. Churn for the quarter was 1.57% compared to 1.6 in Q4 and 1.44% for the same period a year ago. The year-over-year increase was driven by increased competition, content renewal disputes that resulted in channel takedowns, and Q1 price increases. During the quarter, our average revenue per subscriber was $59.93, an increase of $1.97 per sub over the fourth quarter, and an increase of $2.93 from the same period a year ago. The year-over-year increase in ARPU was driven by several items. First of all, we had price increases in February. Also had higher equipment rental fees resulting from increased penetration of our lease program. The increased availability of local channels from 157 markets in Q1 of last year to 164 markets in Q1 of this year helped to increase ARPU as well. And lastly, we continue to see increases in advance set-top box households which show up as increased ARPU from the additional fees that we received. Subscriber-related margins increased nearly 90 basis points from Q4 and we're above Q1 of last year by over 250 basis points. The year-over-year increase in subscriber-related margins was driven by several factors. First, there was an increase in subscriber-related revenue, a decrease in the number of SuperDISH installations and other antenna upgrades, and a decrease in cost for installations and other services related to our relationship with AT&T. During the first quarter, subscriber acquisition costs plus the capitalized portion and amounts recovered under the lease program decreased 6% or $41 per add from Q4. For the quarter, we averaged approximately $665 per gross addition compared to $706 for Q4, and $623 for the same period a year ago. The increase in SAC from Q1 of last year was primarily driven by several factors. First, there was a decrease in the number of cobranded subscribers acquired under our prior AT&T agreement, we also experienced higher costs for acquisition advertising during Q1 of this year. Take a quick look at the balance sheet. At the end of the quarter, we had approximately $7 billion of debt and capital leases. We also ended the quarter with cash and marketable securities of 2.6 billion, which excludes $67 million of restricted cash. During the quarter, we repurchased about 429,000 shares of our Class A common stock for approximately $12 million under our current stock repurchase program. We also redeemed the balance of our 9 1/8 notes for a total of $462 million, and sold 1.5 billion of new notes at 7 1/8. On a total debt per subscriber basis, we ended the quarter at $569 a sub, and on a net debt basis that drops to $359. CapEx in the quarter were 299 million with about 237 million of that amount going for capitalized lease equipment and the remaining 62 million for satellite and general corporate CapEx. That's everything on the numbers, so with that, I'll turn it over to Charlie if he has any comments before we open up for Q&A. Charles Ergen, Chairman and Chief Executive Officer: I don't have any general comments other than it was another pretty solid quarter for us, and with that, we will take questions. Questions & Answers:

Q - Lale Topcuoglu: Hi guys, it's Lale from Goldman. I guess, two questions. One, a lot of us get stuck on this share buyback activity, so I have to ask this question. How do you guys think about how much should you buy in a quarter versus what you should do in terms of reinvesting in your business? And Charlie, as the satellite stocks come in and in and out of favor, how do you think about LBO? You're reaching a point where you're actually generating free cash flow, you have a lot of cash on the balance sheet, you can clearly support your leverage at this point. Is that even a possibility? How would you think about it? And then finally in terms of the broadband plans, have you guys made any recent comments whether you're going to participate in the AWS? And also can you give us a little bit of a flavor in terms of why do the satellite players feel like they have to have a broadband alternative? Because in our view, as long as you can deploy boxes that can leverage the connectivity within the home, why do you need to be the Internet provider yourself? Thank you. A - Charles Ergen: That's a lot of questions. I'll probably leave some out but in terms of stock buyback, we basically have one of those like a Ouija board and we kind of go to the Ouija board every day and guess most of the time it said no last quarter, I guess. But in seriousness, there's not an exact science to it. Our board looks at it, we look at it, and, we look at all the other -- we've answered this question a million times, we look at all the opportunities we have and we balance that out with the price of our stock and decide based on that. And that's kind of how we approach it, and we try to make long-term decisions. We think our leverage should be between $500 and a $1,000, we're at $500 today. So, we're at the low end of the leverage but interest rates are creeping up and I think we had pretty good timing to raise the last 1.5 billion and take out some higher interest paper, and we're pretty conservative. I think that people got in trouble before when Wall Street was throwing money at them, an then some day you got to pay these -- my understanding is some day you have to pay people back. And so, I think we in general by nature are a fairly conservative company. And we're certainly at the low end of our leverage that we could support but we're comfortable being there with where rates are going. As far as broadband, I certainly don't think it's the life or death situation for a company to have broadband by any means. Obviously, our focus is to be really good at video today. But I think that there is going to be a convergence of broadband and video in the next 10 years and you're starting to see -- and so, I think that consumers – our many, particularly high end consumers long-term are going to want a broadband connection. I think we have to determine strategically where we play in that world. We by no means have to own that infrastructure, we have to look at whether investment in owning that infrastructure is a good use of our capital versus perhaps using somebody else's infrastructure or I think that -- I think it will be interesting to see how that works out. We get a really good look at it with our partner, AT&T, in the sense that between both of us we do really three different things. One is we sell just video through satellite, one is they're selling video through their IP to the home, and the third thing is really a combination box, which is we'll roll out later this year, which is a video from satellite and also a broadband connection that also does video, which we'll be seeing most of the consumers to where he gets his video. So, we don't really know how the consumer's going to react to all that, but we'll have a lot of good intelligence in terms of how that works out. My gut feel is that some homes will pick satellite only, that may skew a bit more rural of course, some homes may pick video through a cable only, and that could involve -- obviously the cable industry does very well there and the phone companies may do well there as a competitor to them. And then many customers may want a satellite/cable connection where a satellite gets the most popular programming that a lot of people watch and the more niche stuff and Video on Demand stuff may come through the cable. So, we'll have to see how that plays out. I think we're well-positioned for how I think it's going to turn out. But we're proceeding as if we need to be prepared to live in that kind of environment. And in terms of how we might approach broadband, we look at all options. It's our job as management to look at all the different technologies out there and different things and see whether any of those things make sense for us and put ourselves in position that if any of those things make sense. So, we've done that basically by making sure our balance sheet is strong and that means that to the extent that we see things that make sense to us, we can make a fairly large bet at this point. Q - Lale Topcuoglu: Just a follow-up, I think the short form filings were due for AWS yesterday. Can you guys comment whether you've actually filed one or not? A - Charles Ergen: No, we can't comment. Q - Lale Topcuoglu: Okay.

Your next question comes from the line of Aryeh Bourkoff. Q - Aryeh Bourkoff: Yes, thank you very much, good afternoon. I wondered, Charlie, obviously EchoStar is strategically positioned very well in the video marketplace given your concentration of control as well as the footprint. Is there ever a point where you would consider partnering with other providers potentially, someone like DirecTV who mentioned that from a regulatory perspective on their call, it could pass most of this time or someone like AT&T? Do you feel like you need a partner going forward? Thank you. A - Charles Ergen: And I guess the short answer is we don't feel like we need a partner, but I do think that it's prudent for management to look at every situation that you can increase shareholder value. And that's ultimately -- so we look at everything. And if you want to ask me -- my personal preference is, we'd always remain an independent company and always be nice to run it and so forth, but we're not suicidal as a company. And if there's opportunities out there that make sense, we've shown in the past that -- I think we've tried to merge with DirecTV a couple of times. And that hasn't worked out for one reason or another. So, it's not like the company doesn't have a history of looking at prudent things to do. I think we do. But from a personal perspective, I like us being an independent company where we can move quick and take advantage of things we see out there, but at the end of the day, we run this company for the shareholders. Q - Aryeh Bourkoff: Do you think the regulatory environment is easier to come around from a DirecTV standpoint if you ever pursue that option? A - Charles Ergen: I'm just the wrong person to ask about regulatory, I mean, whatever I thought would be quite wrong because I've got a bad batting average. Q - Aryeh Bourkoff: Okay.

Your next question comes from the line of Katherine Styponias. Q - Katherine Styponias: Hi, thanks. I apologize if you've already answered this question Charlie, but in looking at your churn rate this quarter, it ticked up a little bit higher than we would have anticipated, I was just wondering if you can give us your thoughts as to what you think might have contributed to that and what your expectations are for the rest of the year in terms of trend? Thanks. A - Charles Ergen: Your question, it was certainly higher than it was a year ago, I think there's a variety of factors, I don't know that we have the exact answer, but we took down a top five service, when we took down lifetime that was down for 30 days. You always have a -- it's a popular service, it's a good service so that definitely had an impact. And that impact goes on not only when you take it down, but it goes on for a few months afterwards because people -- it takes a while for people to change their service out, so that continues to go on. We had a price increase, that always has an impact. And I think competitive situation in the marketplace is -- I think cable was positive in the first quarter, and by several hundred thousand as an industry, and I think that's the first time they've had that kind of -- I think they've typically been about neutral, they finally had a positive quarter as an industry. So, I think that has an impact as well. So, had all those combinations. We haven't changed anything, we still have tight credit policies, we're not out there trying to get -- we're petty consistent in terms of what we've done, so nothing's really changed in terms of how we operate our business but you have those other three factors. And again, and piracy remains a concern for us as well in the sense there's always people who try to steal your service, all those things can contribute to churn in the marketplace. Q - Katherine Styponias: Thank you. A - Charles Ergen: So I don't know what the outlook for the -- we don't really speculate on the outlook for the year but we view churn as a barometer of our business, and something we have to focus on, we know that that we've eliminated the lifetime effect in the second quarter. The other effects are probably still out there. Q - Katherine Styponias: Thanks.

Your next question comes from the line of Tuna Amobi. Q - Tuna Amobi: Tuna Amobi, Standard & Poor's Equity, Charlie, could you please update us on where you are today regarding the one DISH transition given the fact that the deadline is just around the corner? It seems also that you've been deploying more SuperDISH installations despite the complications, which you had noted. I'm just wondering if this is kind of an interim solution that you're now racing against that deadline and you're just looking to beat the deadline and in longer term to kind of go to a more prudent strategy? And related to that, if you could please comment on the hundred million cost estimate for compliance, and how that is -- how that's looking today based on everything that you know? Thank you. A - Charles Ergen: Okay, I'm going to let David just answer the one DISH question. Then I'll start with the rest of it. A - David Rayner: Sure. So we feel comfortable at this point. EchoStar 10 successfully launched its operational. Most of the markets that were previously two-dish are now one-dish markets on EchoStar 10. You'll see if you compare our disclosure that we have toned it down to some extent as a result of that. The reason that there's still some caution in there is because in the event that something that we don't expect does happen to EchoStar 10, we could still have problem. But we certainly at this point today don't expect we'll have a problem. We do expect we'll be able to comply with the one-dish obligation within the time frame required, and that the costs will be nominal. So, we do not currently expect that it will have a $100 million or anything like that price tag. Charlie, you wanted to respond to the other piece of his question? A - Charles Ergen: Well, just to chime in, the successful launch of EchoStar 10 last quarter did eliminate a significant risk from our business plan in that we now can comply with the mandated legislation, number one. Second, we're now able to on a single dish, with all channels, which makes it more competitive, I don't know that Congress ever understood it, but we were always at a competitive disadvantage where we had to put two dishes in for people to get all their local channels as opposed to one dish, so it actually makes us much more competitive in the marketplace today in the 38 markets where we had two dishes. So now -- and the third thing it does, it gives HDTV local to local in about 24 markets I think we had, -- we just launched 11 more today. So, we're now at about 95% or I think over 90% of local-to-local. Analog across the country, which is higher than cable penetration has local-to-local. If you put all the cable companies together, I think we have more local distribution than they do today. We have over 40% of the country in Hi-Definition local-to-local with the big networks, and we're all on one dish. That does eliminate the need for -- most of the need for SuperDISH. There's still on the international side will be, SuperDISH will continue on. But for the 38 markets that are two-dish solution or a SuperDISH is required, we've greatly simplified our business. That should help us in the third and fourth quarter in terms of operational metrics to some degree. So, Echo 10 is the big plus. Again, as David said, the only risk there is that today we don't have total backup for that satellite for all markets. We do have some backup with primary markets, we have back up with Echo 6 but we don't have back up for all markets. But the satellite's new and operating. Q - Tuna Amobi: Okay, that's helpful. One more quick separate question, if I may. Charlie, last quarter, I think you alluded to possible leaving out of some extra selling capacity, it seems like you have five or six satellites coming on stream in the next couple years. I'm just wondering if you've given more thought to that strategy in terms of the timing and the different elements to that? Is that something that we should expect would be a major part of your strategy looking out? A - Charles Ergen: Well, I think you're correct in the sense that -- just by the way, David said, there is a cost to the Echo 10 in terms of where we had two-dish markets to go out to those customers and offer them a one-dish, there is a cost to that, it's not going to approach the $100 million market. And I would say given the size of our company, it's probably not a material amount expense but there will be certainly expense in the millions or tens of millions of dollars there but won't approach the $100 million mark. And that will affect -- that will happen over the next three quarters probably that we make that transition as people ask us to do that. Q - Tuna Amobi: Is the bulk of that going to be in Q2 then? A - Charles Ergen: Probably go through the summer, so that would be Q2 and Q3. Q - Tuna Amobi: Okay. A - Charles Ergen: And then we do have excess capacity now at the launch of Echo 10 and the lease of -- from SES of a couple satellites, and so we continue to look at ways to monetize those assets. And I think that there is a fair degree of demand for KU band capacity and that market is fairly firm in the United States. It's firmed up in the United States. And so we think we're well-positioned there for other revenue streams other than our core business today which is really the leasing business, very similar to what the Pan Am stats and SES and Intel stats of the world do, not on that kind of scale that they do it, of course. Q - Tuna Amobi: Thank you.

Your next question comes from the line of Bryan Kraft. Q - Bryan Kraft: Hi, thank you. First question, how are you preparing in the event the TiVo case goes against you and you can no longer deploy DVRs that I guess allegedly infringe on TiVo's patents? And then, secondly, how much of an impact has the reuse of set top boxes from churn subscribers impacted SAC per gross add? And how do you see SAC per gross add trending through the back three quarters of the year? A - Charles Ergen: You can see that SAC per gross add has trended down, and that's in part -- I mean, given the fact that we're in MPEG-4 receivers now which are more expensive, so you take all things in consideration, it's probably at least down from last quarter. So obviously, we don't give guidance on where that's going, but the strategy of leasing boxes and getting them back and then redeploying them, if successful, would tend to lower your SAC. TiVo, I mean, I'd say it this way that we believe that we ultimately will prevail, that we do not, in fact, violate their intellectual property as alleged in this particular case. Having said all that, obviously we're a company that if we do use somebody's intellectual property, then we expect we would pay for that, to do that. And we don't normally go out there and take somebody's intellectual property. We think in this particular case that they got it wrong and there were some reasons they got it wrong and if you read our 10-K or 10-Q -- maybe David you can, you know this better than I do. Maybe David speak for the recent appeal of the court ruling A - David Moskowitz: Sure. So if you take a look at the disclosure in our 10-Q you'll see that we think that a lot of things went wrong and should not have and will ultimately lead to our success on the merits of this. But one of them that we've disclosed in the 10-Q is the fact that the Federal Circuit Court of Appeals has now said that -- after the trial -- has ruled that the -- our inability essentially to introduce the opinions that we got from outside counsel was wrong. And we should have been able to introduce those that showed that we did not infringe the opinions from outside counsel that we didn't infringe. So we think that by itself is a pretty significant development. But it remains to be seen how the judge will deal with it and how the Court of Appeals might deal with that in the future. As we've said, this is going to be a long process and the first round of it is over but we do continue to feel confident that at the end of the day, we will be able to continue providing DVRs to our customers, and that -- you can never be sure how long it will be before the court will take a look at whether to enjoin us. If the Court does take a look in the near-term, we think that they should grant a stay of any injunction. We can't be certain of that, but we believe they would. We think that becomes more likely with the ruling from the Federal Circuit Court of Appeals, and a number of other issues that came up at trial. With litigation, there's always uncertainty and we can never be 100% sure of how it will turn out. We have a great group of engineers, we've got -- who are looking at a variety of alternatives in the event that things don't end up how we believe they will and obviously there are an awful lot of people out there selling DVRs and DVR technology who haven't taken a license from TiVo and who TiVo has not at least as yet asserted -- infringed its patent technology. So, we think there are all kinds of possible options out there that we can pursue and in the end we feel confident but you can't be certain with litigation. A - Charles Ergen: So I mean I think just to follow-up, it's significant that we were not allowed to present to the court that we had a legal opinion that we didn't violate this TiVo patent. And I think I can go further to say that they were allowed to tell the jury that we--? A - David Moskowitz: They actually were allowed to say to the jury that we had never received such an opinion and, in fact, that is not accurate. A - Charles Ergen: That amendment would be a significant development, let's put it that way. But then I would also point out that we were in the same situation with Gemstar many years ago and we fought that one through to a victory in court. But we ultimately did a business deal with Gemstar that made sense for both parties where we bought their C-band business and have a continuing great relationship or good relationship with Gemstar to this day. So, I think smart business people do smart business things and we have our own intellectual property in the DVR space that we think is compelling. And that is -- we certainly would vigorously enforce our own intellectual property in the DVR space. So you have to make your own judgment about it but that -- and I guess you'd have to make your own judgment, I just wouldn't comment further. Q - Bryan Kraft: Thanks very much.

Your next question comes from the line of Jeff Wlodarczak. Q - Jeffrey Wlodarczak: Wlodarczak -- that's good. How's everybody doing? Couple of quick questions. Judging by your subscriber result that was lower than at least we expected, better than expected premarketing margins, lower than expected subscriber acquisition costs, higher than expected ARPU and churn, it would appear you decided to be less aggressive on acquiring and retaining subscribers. Can you talk about why you were less aggressive? And I guess by extension, are we beginning to move into harvest mode highlighted by the free cash flow you generated this quarter? Thanks. A - Charles Ergen: I don't -- I guess everybody's entitled to their opinion, I don't know that I necessarily would agree with everything you said. I will say that you don't -- in the marketplace you don't know exactly what's going to happen based on what you try to do. And so I think it's always a -- it's always a case of trying something and fine-tuning it, if it doesn't work or if it works, to fine tune it until it works better. So, I think you have to look at a longer period of time than a quarter. But I think we try to make in general, we've said this in every conference call, I think the last 10 years, we really just try to look at all churn in and by itself doesn't mean anything to us because it depends on which customers we're turning. Right. So if we're turning customers who don't pay us much or don't pay their bills, that's not necessarily a bad thing for us, if we're turning really good customers that are paying us $100 a month, that is a bad thing. So, we try to look at all those variables and try to put business plans out there that make sense. And today I think we can confidently say that paying $660 to get a sub is a good use of our capital. Q - Jeffrey Wlodarczak: And then if I could ask one follow-up. Can you just quickly talk about what your plans are in China? The potential investment you're making there in an S-band satellite, and do you see any other international deals on the horizon? A - Charles Ergen: I can answer in a broad sense that we do think there's business opportunities internationally; we think there's business opportunities domestically. But we have as a company realize we are one of the few companies in the world that have engineering talent on the digital, digital set top box, video IP, DVR technology, we know how to build and launch satellites, we know how to bill and encrypt and uplink and put a total system design together. So, we have a unique set of talents as a company that really doesn't really reside in any one company around the world today, right. And so we're unique in that sense. So, we think that there are a lot of places that, as you know, many of the world economies are growing much faster than the U.S. economy and have much stronger -- those countries have much stronger balance sheets, so to speak. So, we think the international side is a place for us to look. Whether we do something internationally or not in a major way remains to be seen, but we have a lot of opportunities. I don't think we're commenting beyond that at this point. Is that fair? A - David Moskowitz: That's fair. A - Charles Ergen: I'm looking at the lawyers, they gave me the hook. Q - Jeffrey Wlodarczak: Got it, thanks.

The next question comes from the line of Vijay Bhayani. Q - Vijay Bhayani: Thank you. Charlie, you had a pretty elaborate AC offering in the quarter. Can you give us any sense of the trends on HD and do you see that being a differentiator at that time during the quarter and a differentiator going forward. Following that, this is a background question for Jason probably is your CP CapEx, can you just tell us how much was attention in that number? Thanks. A - Charles Ergen: Do we break out retention, Dave? A - David Rayner: We do not break out retention, however we do break out new customer CapEx which was 195 million. Q - Vijay Bhayani: Okay. So that calculator know how to add and subtract. A - David Rayner: In total subscriber CapEx was 237, so $42 million. Q - Vijay Bhayani: Okay. A - David Rayner: In CapEx. Q - Vijay Bhayani: Thank you. A - Charles Ergen: HD, we still think satellite in general has an advantage. Again over 40% of the country as of today with HD local-to-local, I think 24 services nationwide services HD I don't think anybody else in the country has that kind of offering in HD. We're somewhat dependent on of course HD being a trend, a positive trend which we think it is, and we think -- it's a bit more seasonal than our core video business. I think HD is probably -- looks like it's a bit more of a seasonal business where you could expect the third and fourth quarters to be bigger for HD than you would expect the first and second quarter. But I think we're pleased where we're positioned for HD, but we don't really break out the -- we're not really breaking out those metrics yet. If it gets significant enough we will. Q - Vijay Bhayani: Thank you.

Your next question comes from the line of Craig Moffett. Q - Craig Moffett: Yes, hi. Charlie, I'll come back to the question that was asked before about the prospect of trying to do something with DirecTV. Can you comment on what kind of cost savings do you think you could get? And is there a technology that's available in your mind that could allow you to retain both sets of existing set top boxes and still work with the existing conditional access system? A - Charles Ergen: I don't know the answer to that question because the -- I don't know the answer to that question because it's a little bit different than we looked at them before in terms of technologies. I believe we looked at it -- there's obviously a lot of synergy between the two companies. Obviously in major, major synergies. We both have billions of dollars of satellites, we both have to spend hundreds of millions of dollars in back halls and so forth and so on. The technologies are somewhat different and whether you could merge them in an efficient way, I just don't know. I know when we looked at it three or four years ago that there was a path to do that. That wasn't going to break the bank and made a lot -- that you could more than do to deal with the synergies. So, it was accreted but I don't know that -- I haven't obviously looked at that today. Q - Craig Moffett: If I could ask a separate question, Charlie, to follow-up on Vijay's question from a moment ago, at what rate are you seeing the HD upgrade to the base? We've seen numbers out of the consumer electronics association that says we're in a run rate for maybe 16 million HD sets this year in the U.S. What portion of your existing base is upgrading every quarter? A - Charles Ergen: I don't think we break that out. But we would expect that we would be -- I mean, let me tell you what I would hope for. I would hope that if -- I don't know how many TV sets are out there, but if 10% of the TVs are HD, I would expect we'd have more than 10% of the HD customers. I would hope that we would get more than our fair share of the HD customers. Do you understand what I'm saying? Q - Craig Moffett: Yes. A - Charles Ergen: I mean, to this point we would be disappointed if we didn't get more than our -- I think we're probably 10% of the -- or more than 10% of the video population today. What are we, 90 million? I don't know, we're 12 over 90, whatever that works out to 13%, 14%. We're 13% of the video market I would hope that we would be more than 13% of the HD market. Given that we have advantages there. Q - Craig Moffett: Okay. A - Charles Ergen: So I mean, I think we're well-positioned in HD. Q - Craig Moffett: All right, thank you, Charlie.

Your next question comes from the line of Leon Cooperman. Q - Leon Cooperman: Charlie, let me explain. My phone, I got so flustered when I was called first, it never happened before that the release button is next to the hands-free button and I hit the wrong button, but I'm back on. A - Charles Ergen: It happens to me all the time if I go off this call, you'll know why. Q - Leon Cooperman: Well, I hope it won't be my questions. I apologize also, I think one or two of these questions may have been asked in a different way, I'll try to rephrase it maybe to get more out of you. First, free cash flow is almost double the year-over-year and your balance sheet by your own admission is underleveraged or at least you're at the low end of the amount of debt per sub that you were comfortable with. I'm just curious, what do you see as the best use of your free cash flow at this point? Sitting on it and waiting for the market to clarify because there's nothing really good to do out there or could you prioritize that, anything, I mean dividend stock repurchase, debt reduction, CapEx beyond what you're now spending; what your sense would be where the big opportunity would be? A - Charles Ergen: Well, I answer the question pretty much the same all the time, one is we're fortunate to have Carl back on board, we now have somebody who can full-time look at a lot of opportunities that are out there. Again, I would say it this way, we've probably never seen more opportunities out there than we see today. Having said that, it's an interesting world with hedge funds and private equity firms and a very liquid market in terms of cash out there. And there seems to be some -- I think it's -- with Sarbanes-Oxley, it's difficult for a company to perhaps compete with a private equity firm under different rules in terms of finding deals that make sense. So it's a -- there's a lot of opportunity but it's a more difficult environment to structure something that makes sense. So what we do is we look at all the things you mentioned, which is we look at buying back debt, buying back stock, paying a dividend, reinvesting in our business, and acquisition or building of more satellites or whatever. And today, today, decisions we're making today are to reinvest at SAC to get new customers, to upgrade some of our customers, to build new satellites. Those are the things that we've decided to do with our capital. Even after doing all that, as you have mentioned, we're positive -- even after we did all that we made, I think we were over $300 million in positive cash flow for the quarter. And so we look at the stock price, we looked at the debt we have with coming, we look at interest rates, we have a floating rate piece of debt that we think -- the fed went up 25 basis points, it cost us 25 basis points more. At some point that one looks -- that might move up the ladder in terms of as interest rates get higher, our fixed rate debt, we like our fixed rate debt in terms of where it is based on where the market is today. So, we look at everything. And Carl, when Carl came on board, I told him he could do deals, if he could find good deals. So you know, I would like to keep something reserved for Carl. I want to make sure Carl has fun. Q - Leon Cooperman: Got you. All right. Three other – A - Charles Ergen: Do you want to comment on that Carl? He's over there laughing. A - Carl Vogel: Well, I'm having fun, I guess. It's a good question. I think we do -- Charlie mentioned that we have a unique set of talents that we think are transferable to other things. And the kinds of things that we look at are things that are consistent with our video business that we think will add significant shareholder value over a reasonable period of time. Personally, I like buying cash flow versus assets without cash flow, but I think we're looking at all sorts of things where we can leverage the operating infrastructure that we have. With returns that we can see pretty clearly versus taking fliers, and as we go through that analysis, if we don't find things that make a lot of sense, we'll continue to look at improving our capital structure and ultimately shrinking the base if we can't find anything that makes sense. We're actively looking I think there are things that do make sense. We don't want to talk about too much of what we're doing in specifics on the call because we want to make sure the opportunities are appropriately priced when we get there. So, I think the notion is clearly to leverage the set of talents that we have that we think we can transport both domestically and internationally to provide things that will ultimately deliver more cash flow and enhance the experience for our current customer base. So, I think there is a lot of things that have been discussed from broadband to mobility to everything else and we're looking at all those things. To the extent that we can find something that we think we can make a reasonable investment with a time horizon that will generate free cash flow in a shorter period of time, that's complementary to our existing business that leverages our operating infrastructure, that's where we're headed certainly from an investment standpoint. And in between we'll work on improving the capital structure to the extent opportunities present themselves. Q - Leon Cooperman: The initial part of the response from Charlie, I don't want to go there, just take the pain to respond to it but when you start saying hedge funds, private equity, Sarb-Ox, underleveraged, it's all the kind of explanations that people would use for not being a publicly held company and going private which of course you can finance. But let's not go there. The questions I had is, it seems to me at least in the most recent quarter, the economics of new subs have improved. Am I looking at that correctly, that the rate of return on a new sub is improved based upon recent numbers? A - Charles Ergen: Well, certainly SAC has gone down, ARPU has gone up and our operating margins have improved. So, I think that's certainly a fair assessment, but -- balanced by an increase in churn. A - David Rayner: But that's as much as the base soaring up as well as new customer adds. Certainly it's competitive but we're pretty happy with our subscriber economics. A - Charles Ergen: I mean, one thing that gives us confidence, Leon, is where are you going to go to get a better video experience? I mean you are not going to, if you leave DISH Network, you're going to get, your guide's not going to be as good, your DVR's not going to be as good. Not Leon, Lee, sorry. Q - Leon Cooperman: It’s okay, I've been called worse. A - Charles Ergen: We look at that and we have just got to be really good at video and fill in the gaps. Q - Leon Cooperman: All right. I heard that you increase dealer incentives a few weeks ago, is this a function of a more competitive marketplace given the inroads by the cable's triple play or did I hear wrong? A - Charles Ergen: I think the competition is greater than it was, I think the cable guys are more formidable, I think you saw in their numbers, again, I'm not the analyst here, but they were positive several hundred thousand subscribers in the first quarter, that hasn't happened for a long time. So, yes, I think the cable guys are more formidable and competition, I think we like competition, I don't think that we'd shake in our boots because of that yet. And phone companies are coming. So, it obviously is more competitive. Q - Leon Cooperman: Lastly, I know you depreciated the value of your opinion on this question, but assuming I'll accept a depreciated or a less valuable opinion, is your view that the regulatory environment has changed enough that a merger with DirecTV could get through? I realize your opinion is not worth much based on what you said. But I have a high regard for your opinion than most other opinions I hear so - A - Charles Ergen: Let me put it this way, I bet $600 million we could get it through three, four years ago, in what I thought was a competitive market. Obviously the market is much more competitive today. But -- Q - Leon Cooperman: All right. Well, good luck, Charlie, I really appreciate the job your team is doing here. A - Charles Ergen: I think the regulators are a lot smarter than I have, they have information I don't have, they understand the law better than I do. That's their job, right, they're experts at it and we're not. Q - Leon Cooperman: Good luck, Charlie, thank you very much for the job you're doing.

Your next question comes from the line of Douglas Shapiro. Q - Douglas Shapiro: I seem to follow Lee a lot on these calls for some reason. So some more prosaic matters, I guess. Charlie, you had a couple of quarters in a row where gross adds have been about flat year-over-year, even though you got much smaller contribution obviously from AT&T relative to the prior-year period. I just wonder if you can talk about what those dynamics are? Is it that you have proactively worked to make up the difference through other channels and you've done a good job with that or does it suggest that AT&T was always just cannibalizing other channels in its footprint to begin with? A - Charles Ergen: I don't think we know exactly how much AT&T cannibalized, but you're right, AT&T has not been a big factor in our growth the last few quarters. And, in fact, we still have -- they still have kind of owned -- I know they have kind of owned and operated subs in there, but I don't know exactly how it works but now it's a different animal. So those tend to churn off and so the net effect is that AT&T is not -- I think they published the number, I can't remember what it was. 36,000 -- 34,000 or something. A lot of material for it. And that doesn't include the ones that churned off, so they're not material to our business today. I think it's important that we control our own destiny, I think strategically we want to make sure that we compete on our own and control our own destiny. Having said that, I think, this will be a question for AT&T probably but I think that they are -- at least what I heard on their conference call, they're focused on two things, on three things, one is to have a video offering, bundle it from what they do, but the main focus is going to be their Light Speed that they're investing billions of dollars in, and kind of a combination broadband, kind of a combination DSL broadband/satellite box which they're bringing out later this year. And so I think they would probably go slow. If it was me, I would probably go slow until I got the real thing I want out there in the marketplace, and then I probably would get a bit invigorated and so forth as long as I've got the right product. And so that remains to be seen if the product comes out on time and how it's accepted by the marketplace. But we certainly haven't gotten the kind of lift from third parties which perhaps DirecTV has. Q - Douglas Shapiro: Maybe to ask the question--. A - Charles Ergen: It's not good news, bad news, maybe we're in a bit more control of our own destiny, but maybe haven't got quite the look. Q - Douglas Shapiro: I wanted to maybe ask in a slightly different way, I was just curious, on the numbers we can see, which is obviously the consolidated numbers are looking like, again, they're pretty much flat year-over-year, but if you were to look specifically at the AT&T footprint, are you seeing that the gross adds in that footprint are pretty similar year-over-year as well or is it that other territories that have made up that difference? A - Charles Ergen: I don't have that information. I don't know the answer to that question off the top of my head. Q - Douglas Shapiro: Okay. And then one follow-up also kind of a housekeeping thing. Do you guys ever talk about what proportion of your SAC is hardware subsidy? A - Charles Ergen: What kind of subsidy? Q - Douglas Shapiro: What of SAC is hardware subsidy? A - Charles Ergen: No, we don't break that out. Q - Douglas Shapiro: All right, thanks a lot.

Your next question comes from the line of Doug Mitchelson. Q - Douglas Mitchelson: Hey, can you hear me? A - Charles Ergen: Yes. Q - Douglas Mitchelson: Great, thanks. So on -- just a question on rural satellite broadband, WildBlue is headed towards maybe a million subs in three to five years, there's about 14 million households that don't have access to broadband, any kind of thoughts on you getting into that business? A - Charles Ergen: Well, we lost $150 in that business so far as I recall. But obviously the technology's improved a lot since then. There's two -- there's three players, Galot, H&S and WildBlue, they all had pretty good products, they're much improved over when we were in it. We'll continue to evaluate that. But that would not be core to our strategic -- I think video is our core strategic play and perhaps you're right, I think there are 10 or 12 or 14 whatever it is, million homes that satellite broadband could make some sense to. I think there's other people like Clearwire that have terrestrial in some of those places, it is going to be interesting to see how that shakes out, but it's not core to our strategy. Q - Douglas Mitchelson: Okay and then a couple of follow-ups. Just interested in the SAC trend, so, in the first quarter, I'm trying to see if I have this right. If you had EchoStar 10 up in the air in operation for the entire quarter, would SAC have been even lower than what you reported? A - Charles Ergen: It would have had -- it's kind of good news, bad news, I don't actually know how that shakes out, it probably wouldn't be material one way or the other. But when Echo 10 is up there, to the extent somebody wants HD, we put the 129-degree slot. We now have a system that looks at three different satellites versus a system that we can do two satellites. And so if I'm looking at two satellites it's actually a little bit less, if we're looking at three, it's a little bit more. So net-net that's probably not -- we have HD customers who look at three, we have regular customers who only look at two, you shake all that out, it's probably not material. Q - Douglas Mitchelson: And the last for you -- A - Charles Ergen: I will say that Echo 10 we do -- I do expect that we would get some efficiencies going forward in the sense that even if it's three -- even if it's a triple-headed dish it's smaller and ultimately becomes less of a service problem in the wind and less of an install cost than would be a SuperDISH. So, to the extent we can win ourselves from SuperDISH, which Echo 10 goes a long way to doing, that will help us in some metrics, if we can execute operationally and we continue to struggle some degree there. But to the extent we execute operationally, we'd put ourselves in position to get some efficiencies. Echo 10 is a very big -- was a fairly large risk reduction positive potential for us. Q - Douglas Mitchelson: Okay. And then last one for you, free cash flow obviously was pretty terrific, were there any one-time items or things that reversed in future quarters that were in that first quarter number? A - Charles Ergen: Dave? Does the -- does the investment gain come through there? A - David Rayner: We had some gains on investment, whether those will ultimately be recognized and realized in cash, yes, time will tell. But I would refer you to the cash flow statement that's going to pretty much layout what -- where our free cash flow is - Q - Douglas Mitchelson: Can you walk us through it? A - David Rayner: Yeah, I mean, I can. It's a lot of detail, obviously walking through the cash flow statement but I think overall we've got good operational results coming out of results from operations. You've got continued strong management of the balance sheet in terms of current assets and current liabilities and getting positive cash flow coming out of that. And obviously SAC coming down relative to the prior quarter is also helping. So, all those things are contributing to increased free cash flow. Those are all the things that we focus on each and every day in managing the business. A - Charles Ergen: Does the -- you want to talk about market investment, that doesn't -- does investment float the cash flow or not. A - David Rayner: Yes, but it goes the other way. A - Charles Ergen: I think the variability of our free cash flow is really going to be somewhat contingent on the timing of our CapEx. As Dave points out, we've got a fairly consistent cash flow out of the operation of the business, our SAC is going in the right direction, and the largest variable is how we spend our CapEx and how we deploy our satellite fleet over time. So, I think we're pleased with the first quarter results, we certainly hope to sustain them, and the largest variable, I think, truly from a pre-cash flow standpoint is going to be how we spend the money. A - David Rayner: Our core business is fairly consistent positive cash flow. You can just look at the trends with that, it's certainly a focus of our -- all things being equal, if I can only have one thing, I'd rather have cash flow. Q - Douglas Mitchelson: Thank you very much.

Your next question comes from the line of Tom Eagan. Q - Thomas Eagan: Great, thank you. Two quick questions. First, on Adelphia, Charlie, we're all waiting for that deal to close, maybe it will close by July. Do you think actually that it could have a positive impacts on DISH in the sense that subscribers will actually have to make a decision now with a new cable operator? So could they actually go to satellite instead of staying with cable? And the second question is for Carl, I guess, Carl what have you all learned in terms of the development and launch of the mobile dish player you guys kind of put out a little while ago, and how might that change or revise any plans you're making towards investments like that going forward? Thanks. A - Charles Ergen: Adelphia, we're not particularly waiting for it, you guys may be. But I think it ultimately makes Comcast and Time Warner more formidable, I think it's not -- overall it just makes those guys bigger and better and particularly with the programming assets and probably causes more problems for us. Yes, customers are probably do have to face a decision they otherwise wouldn't, but Comcast and Time Warner have shown that they're pretty adapted maneuvering through those mine fields. And I think basically it makes those companies tougher. A - Carl Vogel: In terms of the mobile DISH player, I think the -- so far the best thing we've seen is the appreciation of the investment, but that type of investment is consistent with what Charlie described earlier where we are trying to enhance the experience for our video customer and are always looking at ways to improve that so a customer that has a DishPVR has the ability to take some of their content with them on the road and we think that's a positive. It hasn't -- it's not moving the needle in terms of our financial results other than the investment gains, but we certainly like those kinds of elements that add value to our customer base. Q - Thomas Eagan: Now, just as a quick follow-up, what are your impressions of this Slingbox, do you think it's really going to make a big -- is it going to change the landscape at all? Are there other devices that may be similar to that? Do you think they have -- are there legal challenges against it? Thanks. A - Carl Vogel: Well, we like Sling Box enough to invest in it, let me just leave it at that. Q - Thomas Eagan: Right. Okay, thank you. A - Carl Vogel: Operator, I think we'll take one more call.

Your final question comes from the line of Dmitry Khaykin. Q - Dmitry Khaykin: Thanks for the call. I just had a quick question. You outlined three reasons for churn, the price increase, the content issue, and there was one more. Could you quantify at least for the content issue which seems to be non-recurrent, what impact did it have on churn? A - Charles Ergen: No, we really can't because customers don't really always tell you the truth when they churn, and so, but -- I'll just say it this way, you don't take off a top 5 network and not lose some customers. But you also can't do bad deals and we are a long-term customer and we're not going to do long-term bad deals and we'd rather take the pain in the short term. But it certainly is painful and as I tell programmers, their pain goes away as soon as we put them back on. But our pain continues. So - Q - Dmitry Khaykin: I mean, I totally agree with -- A - Charles Ergen: The deals are on the table the day we take them down, they're not deals you can do once you take them down because you've got to -- it's a fine line because you've got -- the pain you suffer you have to get back some other way, so… Q - Dmitry Khaykin: Charlie, I totally agree with you that it is better to deal with short-term pain but get the right deal done and move on. But what I'm trying to understand is particularly given your comments and the cable guys comments in the competitiveness in the marketplace, where there was a one-time kind of increase that should probably normalize going forward because of this content issue, or there is a kind of an elevated level? And you've had similar type of situations in the past where you've taken networks off the air and based on the history that you've seen, what has been the experience for the subsequent quarters? I know there are a lot of variables and moving parts elsewhere. A - Charles Ergen: Yeah, I mean I'd say without a significant takedown, and realize when Outdoor Life came down to a smaller degree, one of the top 5 network by any means, but some impact because it had hockey and bull riding, yes, I would say it has -- in terms of overall 12 million customer base in churn, it probably didn't have a huge impact but it certainly had a negative impact, and how that translates going forward you probably -- you tend to live with it for once you take it down, you live with it for a couple of months because people make -- they get a chance to make a different decision. And of course our competition is out there with offers and other things during that period of time. But it wouldn't be the big – I mean the big driving force in churn remains -- it remains people moving, and it remains competition, and the competition is stronger today than it was a year ago or two years ago or three years ago as you saw by the cable numbers. And with phone companies just starting to rev up, so we're going to have to be on our game. Having said that, I don't believe you can get a better video experience than what we offer today. And we have to be really, really good at what we do. And if we are, I think everybody will be happy. If we're not, we don't execute, then we won't be a very good business, just like any other business out there. The video business remains strong, it seems to be recession-proof, it seems to be war-proof, people seem to be watching TV, they seem to be watching more of it. We're -- nobody does it as efficiently as we do it. Nobody does it with as good a picture as we do it, nobody does it with as much choice we do it and nobody does it in a portable way like we can with now. So, we have a role to play that makes us a very solid business. And what we do with the cash flow and how we build that business and how we react to technology and competition, will tell us -- that will tell us what our stock price will be five years from now. That's why I come to work every day. Q - Dmitry Khaykin: Well thanks for the call and we certainly trust you with our investments. Thanks a lot. A - Charles Ergen: Thank you. All right. We'll talk to everybody again -- where we -- August? A - Jason Kiser: July, August. A - Charles Ergen: I guess we're in August. We're in August. Talk to you all then.

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