Jason Kiser – Treasurer Stanton Dodge – EVP, General Counsel and Secretary Bernie Han – EVP and COO Charlie Ergen – Chairman, President and CEO Tom Cullen – EVP, Sales, Marketing & Programming Robert Olson – EVP and CFO

Spencer Wang – Credit Suisse Jeff Wlodarczak – Pivotal Tuna Amobi – Standard & Poor’s Marci Ryvicker – Wells Fargo Securities Doug Mitchelson – Deutsche Bank James Ratcliffe – Barclays John Hodulik – UBS Mike McCormack – J.P. Morgan Craig Moffett – Sanford Bernstein Bryan Kraft – Cross Research

Good afternoon. My name is Sara, and I will be the conference operator today. At this time, I would like to welcome everyone to the DISH Network Q4 2009 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Mr. Kiser, you may begin your conference.

Thanks, Sara. Well, thanks for joining us. My name is Jason Kiser and I am the Treasurer here at DISH Network. I'm joined today by Charlie Ergen, Chairman and CEO, Tom Cullen, Executive Vice President, Bernie Han, COO, Robert Olson, our CFO, and Stanton Dodge. Before we open it up for some Q&A, we do need to do our Safe Harbor disclosures. For that, I will turn it over to Stanton.

Thanks, Jason. Good morning, everyone, and thanks for joining us. We invite media to participate in listen-only mode on the call and ask that you not identify participants or their firms in your reports. We also do not allow audio taping and ask that you respect that. All statements we make during this call that are not statements of historical fact constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results and from any future events expressed or implied by such forward-looking statements. For a list of those factors, please refer to the front of our 10-K. All cautionary statements that we make during this call should be understood as being applicable to any forward-looking statements we make wherever they appear. You should carefully consider the risks described in our reports and should not place undue reliance on any forward-looking statements. We assume no responsibility for updating any forward-looking statements. With that out of the way, I will turn it back over to Jason.

Thanks, Stanton. And Sara, we're actually going to go straight into Q&A. If you would like to open up the queue, that would be great.

(Operator Instructions) Your first question comes from Spencer Wang from Credit Suisse. Your line is now open. Spencer Wang – Credit Suisse: Thanks and good morning. I just have two questions regarding subscriber related expense growth, which was pretty moderate in the quarter, about I think 3% per sub. Can you just give us first a sense of what programming cost growth was like in the quarter versus non-programming cost growth. And then secondarily, we've heard you may need to swap out some dishes on the East Coast and point subscribers to new transponders. Will that, going forward, lead to any sort of material increase in retention spending? Thank you.

Do you want to take that, Bernie.

Sure. Historically, we haven't broken out on our subscriber-related expenses. We have not separated out programming expenses from other subscriber related expenses. I think, directionally I think everyone knows that there is pressures on programming expenses throughout the industry. And I don't think we're in any different boat than anyone else with respect to that. And with our other expenses, we noted over the last year, when we were trying to fix operations, we spent, at least initially we invested in improving our operations and what that meant was, the very first piece of running operations was being responsive to our customers. When they do call, answering the calls on time and when they do need a technician visit, getting a technician out to their home quickly and by doing that, that throws some incremental staffing expenses at least initially. We have now at a point where we're handling calls the way we want to handle calls. We're getting to folks' homes in a timely manner and we're starting to turn the corner a little bit on trying to do that stuff more efficiently. The easy way to do all of that is to throw more bodies at the problem. And that's what we did initially and now we're trying to do that more efficiently and hopefully as we do more of that, our other subscriber related expenses will come down. And then I think beyond that we want to reduce the number of calls and the number of technician visits, period and the benefit of that is that both improves Customer Service and improves costs at the same time. So we're very far along in terms of being responsive to the customers. We're starting to make good progress on being more efficient about answering calls and doing technician visits. And I think the big piece that remains is to try to reduce the number of customer contacts, visits or calls, both. Your second question about the needing to migrate certain customers from, related to some of our orbital plots in the eastern part of the U.S., yes, there is going to be some activity related to that and no, it is not going to have a tremendous impact on our overall retention expense. Spencer Wang – Credit Suisse: Great, thanks a lot, Bernie.

Your next question comes from Jeff Wlodarczak of Pivotal. Your line is now open. Jeff Wlodarczak – Pivotal: Good morning, guys. You have done a good job at reducing your subscriber churn. Can you talk about how sustainable these current subscriber trend levels are, if you adjust for seasonality, especially as you anniversary subscribers that moved to the two year commitment?

This is Charlie. Two things. One is, the churn has benefited from the transition from an 18-month to 24-month commitment. That ends in the first and second quarter. I think you would have seen us more in line with perhaps where Direct TV was, absent that anomaly. And obviously our churn wasn't quite as bad a year ago because the reverse happened a couple years ago, so there is some benefit to that and we'll have a more accurate picture of that by end of the second quarter.

That being said, Jeff, this is Tom. We do believe that the operational changes that we have been making throughout the year are having a positive impact on the customer experience, but by no means are we where we want to be. We still have a long list of things to do and we're continuing to work them. Jeff Wlodarczak – Pivotal: Thanks. If I can ask a follow-up for Charlie. Charlie, how comfortable are you in Dish's ability to materially reaccelerate after growth and bigger picture, how do you feel about where Dish is competitively positioned today? Thanks.

Let me take just a really step back, if I can. It is going to be a long-winded answer, but a year ago we were in a situation where a lot of high senior management had left the company for various reasons and Direct TV, I mean AT&T had just made a change and we had pretty big piracy problem and fraud problem but I hope that we can continue to make the same kind of progress this year as we did last year. What happened was, we ended up with a new set of leaders who stepped up and some people who were already here and we ended up really building a pretty solid management team in the company. And we made significant progress on the piracy and fraud, which has shown up in the churn factors. And we put ourselves in a position to – we had to do a lot of planning and we realized that some of our operation problems were not quick fixes. So the first real thing that Bernie and his team have done, from an operational point in terms of major way really was rolled out the first of February, so whether we get the kind of results we expect to get on an operational side remains to be seen, but we put ourselves in position, so in that sense I like where we're positioned. From a competitive point of view, an industry point of view, I guess I have been befuddled a little bit, Direct TV, who clearly has had this brand, really had a very nice brand position, actually started discounting that brand about two years ago with heavy discounting. They call it – today they say their price is 50% off. But that means their price is double, so the price actually doubles after a year. That is heavy discounting of a brand, and it took us a while to figure out that they had really turned our business more into a commodity by discounting the brand. We never expected somebody who had a leading brand to discount it 50%. So we kept thinking that might change and it didn't. So once we reacted to that, we've always been much better in a commodity kind of business. And so I think there has been some effect, when we say that our ESPN looks the same as the industry's ESPN, that's true. In fact, our quality might be a little better than most people in the industry, but certainly it is not any worse. And in this kind of environment, once TV became a commodity and again that wasn't, we're not the guys that made it a commodity. It really was – I think history will show that Direct TV started making that a commodity a couple years ago. Once we reacted to that, then I think we have gained some momentum. So I like – if this is going to be a commodity business, I like where we're positioned. If it is a branding business, obviously we're not at that level starting with Direct TV today. So but it looks like it is a heavy discounting, gets you in, raise your price later and try to keep you as a customer, discount some more, kind of business right now and we're very comfortable in that environment. Having said that, as we got into it, our ARPU suffered this year, in part because we actually had two discounts going on at the same time. We had a six-month promotion and a 12-month promotion. So they're both going at the same time. So our ARPU is not as bad as it shows up once that six-month promotion rolls off, and I believe, Robert, it rolled off January 1, February 1.

End of January.

End of January, so you are going to start seeing some ARPU improvement because of one of the big discounts we did last year rolling off. So we're actually discounting less today than we were last year. And as you guys know from these calls, I hate discounting, I hate discounting what we sell. I hate devaluing what we sell. I don't mind giving away hardware but I hate devaluing the actual programming that we sell. And I've challenged our guys to – I think we have some significant room for improvement there, one is I've challenged our guys not to discount as much in the second half of the year, as we do today. Although we don't discount as much as most people in the industry do today. And second, we didn't take a price increase, material price increase. We did take some increases on some of our hardware, but not a material price increase in February because we had all of these operational changes that were going to cause some disruption to our business in the February and March timeframe. So we're positioned now to, on the price side, to do that later in the year. I guess the long-winded answer is, given the environment of the business today, I like where we're positioned because it is more of a commodity business and it is more where we historically have been more comfortable. And second, I think we have a management team that understands our business and has provided great leadership and really operationally turning this company – turning the corner I think, and of course it remains to be seen. Sorry for the long-winded answer. Jeff Wlodarczak – Pivotal: Thanks very much.

Your next question comes from Tuna Amobi, Standard and Poor's. Your line is now open. Tuna Amobi – Standard & Poor’s: Okay. Thank you very much. I have a few as well. So the first one for you, Charlie, is on the, I think you have been pretty vocal in the past about, kind of, calling out for the rule that would disallow the so-called terrestrial TV, terrestrial loophole. So given the FCC's ruling, I imagine it is something that you kind of applaud at, and how do you think that kind of changes your relationship going forward with the likes of Comcast and Cablevision, in terms of the sports nets that had been an issue? I know that that is something that you have been pushing for, for a while, so any reaction on that would be helpful.

Well, maybe I will turn it over to Stanton. But I applaud the FCC. That terrestrial loophole has been out there for several FCC Commissioners and Commissions, and it is an obvious uncompetitive thing that's out there and why, and so this FCC has shown the courage to take on those things that are obviously not very consumer friendly, are anti-competitive. So I think that bodes well for anybody who wants to compete in telecommunications going forward. This is a Commission that actually looks at the big picture and tries to do the right thing for consumers. Obviously, I don't know if – I think technically we have to file that we want those channels and then there has to be a whole process and there is lots of legalities to that. Maybe, Stanton, you want to speak to that.

Yes, sure. Of course, we would have preferred that they just closed it outright but they took a great step in the right direction. What we have to do is actually show that consumers in the particular market have been harmed and assuming we make that showing, then we can have access to the channels. Tuna Amobi – Standard & Poor’s: So, it is fair to say it is something that should, you expect to wrap up in next few months, in terms of the finality of being able to execute on that? Any timeframe in terms of when you expect to finish all of the necessary filing in order to actually take advantage of that?

There is no set timeframe and of course, it could be tied up in appeals as well.

I think when you look at the Comcast, NBC merger, it would be hard to fathom that the Justice Department and the FCC would allow that merger to go through without the elimination of the terrestrial loophole as it relates to Comcast. However, we have other instances. I think we have one in San Diego and other instances where there is not a condition to a merger. So the process is a little bit longer. But I guess the bottom line is, you can see light at the end of the tunnel, where all distributors in the video business will have a chance to compete on regional sports. Tuna Amobi – Standard & Poor’s: Okay. Separately, on the TV Everywhere initiative, I want to commend you first, Charlie, on actually owning the Kid Mag [ph] despite the fact that cable industry are the ones banging the drums on that. So, congrats on your forward thinking as usual. My question on TV Everywhere is what are you guys actually doing around TV Everywhere to be able to kind of take advantage of those kinds of offerings.

Tuna, this is Tom. As you know, this is somewhat of an evolving portion of the industry. So one area that we're active in, like everyone else, is authentication itself. Secondly, we're going to begin deploying sling enabled boxes, which again gives you place shifting capability. We now have Dish remote access capability on cell phones, where in many cases they're able to view the video on their phone. So TV Everywhere is really an overarching positioning. You will also see an increase in PC enabled streaming video, and those are other areas that we continue to work on as well. Tuna Amobi – Standard & Poor’s: Okay.

This is Charlie. I think basically we're still in the building. We're still doing two things. One is, we're putting the building blocks in place for a service that's relatively easy for the consumer to use and understand. And second we continue to work with our video provider. I mean our programming partners because we want to make sure we protect copyright and protect their streams and there is a lot of things out there where people get on either mobile on video or computers where they watch, they don't protect the copyright of the particular copyright holder. So all of those things have to kind of come together. We did – our thanks to AT&T for allowing us to do sling loaded on the iPhone now and so we have an app where we can actually stream to an iPhone, which is quite good. With sling loaded products, anybody can do it with an aftermarket sling product, so that's a step in the right direction. But that's just one small step and it was all done with just two management teams talking to each other and doing the right thing for the consumer. Tuna Amobi – Standard & Poor’s: That's helpful, and lastly, Charlie, quick question. With regard to your hands off rule on the Echo Star CEO role, if you can speak to what that means? Should we interpret that that you are recently starting to think about succession perhaps for DISH Network or both companies? Can you speak to that?

I guess I can. As far as giving at the CEO role of Echo Star, I wasn't a very good CEO – I had two CEO roles and I wasn't very good at either one of them. So fortunately I was able to coax Mr. Dugan to come back and become the CEO at EchoStar, and now I get to find out whether I am very good as a CEO with Dish or whether somebody else would be better. I will give myself a little more time to do it, but I was a bit, as people are going to test you. I was a bit schizophrenic last year, so I am obviously more focused on, much, much more focused now on Dish. Tuna Amobi – Standard & Poor’s: When you see a bit more time, by the end of this year or longer than that? Can you give some timeframe?

In terms of – Tuna Amobi – Standard & Poor’s: In terms of Dish, when you talk about your, any succession implications for DISH Network?

Well, I will say this. I think that we have people on board here today that probably could take over. The question is, can they do a better job than I could do and as soon as they can do a better job, I hope I am unemotional enough to give them the keys. Was that a vote of no confidence for me? Tuna Amobi – Standard & Poor’s: No, you're doing a terrific job. We love to have you on these calls, Charlie. Thank you very much.

I think it is important. I would have been very worried about that a year ago. And I think as an investor that the people that are here on this call, all have amazing skills. And I am in meetings now where people actually know more than I know, and actually come up with better decisions than I do and that's just from experience and knowing the business better. So again, I think that we have a pretty good team here. I am on my sixth CEO at Direct TV. So I don't know how many more I can outlive. Tuna Amobi – Standard & Poor’s: Okay. Thank you.

Your next question comes from Marci Ryvicker, Wells Fargo Securities. Your line is now open. Marci Ryvicker – Wells Fargo Securities: Thanks. Charlie, it sounds like your view of the industry is that it is a commodity right now. And I guess the first question is, do you think that this discounting is a product of the economy or is it increased competition from the telcos, that's the first question. And then secondly, how do you move away from all of this discounting as a business and as an industry?

Maybe Tom will want to jump in on this. But, yes, I think the business, I mean, look, just watch the TV ads, right? Everybody is going to give you $25 or $30 off or cut your bill in half or whatever they're going to do. So I think the discounting again was probably, I don't know why Direct TV ultimately went to it. You would have to ask them. When you go to $25 off a month for discounting, that was heavier than anything we had seen. The way I look at that is, if your sack is $700 and you're not going to give another $300 off in discounting that your sack is really $1,000. Right? And I grant you, you don't – it is an opportunity cost on the programming side. You don't actually have $300 of costs to program. It is an opportunity cost. So I look at total sack, I add discounting back into my sack and say, is that a profitable customer for us when we do that. So I don't know how much it was driven by the phone companies getting into the business, but clearly ARPU is going to come under pressure for two reasons. One is, there is more competition in the industry including the phone companies, but there is also competition coming from IP video, Netflix or Hulu or whatever, where someone may not buy premium programming from all the video providers and so there is additional pressure on ARPU from that perspective. We're a little bit better positioned because we're already kind of under – we have some room for price increases I think that won't materially hurt our business going forward. But, I think you have seen some of our ads. The Direct TV ad, ARPU I think was $92, ours is about $70. So the average customer is paying about $22 more for Direct TV. And if you take NFL Season Ticket out of that, it's still about a $20 difference for virtually the same thing for popular channels. And I think as customers experience that, in this economy, it is more likely that people, if we can articulate that and give them a choice, that we have a chance to gain market share. Tom do you want to–?

I would say that both are contributing factors. But clearly the economy, you're seeing this in other industries. We have gone from co-lo wars to map wars to pizza wars and now we're in video wars. And we changed the marketing and the positioning of our offer in May of last year and really just, we're appealing to the sensibility of why pay more for something that is essentially the same? So it has worked well for us, and we're going to continue doing it. Marci Ryvicker – Wells Fargo Securities: I just have one follow-up. You had some nice subgains in the quarter. Where are they coming from? Are they from Direct TV, cable, the telcos? Can you tell us?

I would say a little bit of each. Obviously, we get more from cable than anywhere else. But within the satellite sector, satellite is now 30% of homes and our share within the sector has grown in the last couple of quarters. Marci Ryvicker – Wells Fargo Securities: Thank you.

Your next question comes from Doug Mitchelson, Deutsche. Your line is now open. Doug Mitchelson – Deutsche Bank: Thanks very much. A few questions. One, you say in your 10-K, to meet current demand we have increased the rate at which we upgrade existing subscribers to HD and DVR receivers, but by my math, I know it is not specifically stated in the 10-K but you can sort of tease out the numbers. Looks like capitalized retention spend actually drops a fair amount last year versus 2008. So can you square those up, where you say you're increasing the rate of upgrading safety DVRs yet GAAP spend is down?

That tends to bounce around, Doug. This is Robert. When you look at the quarterly layout of retention CapEx, it just tends to bounce around. But in general I think that's the long-term trend is that we're going to have upgrades to HD and DVR service.

And we do charge a customer; we do charge the customer generally for the upgrade. So I think we charge a little bit more, that actually reduces our retention costs if we charge a customer a little bit more money up front, depending on the customer. So that's one thing, one possibility of keeping that a little bit lower but how much you can get away with that in the market remains to be seen.

And Doug, this is Robert again. We continue to drive down the box costs for our HD and DVR receivers, and so that contributes to any changes in overall CapEx. Doug Mitchelson – Deutsche Bank: Right. Okay. So for the next one, there's a spot in the 10-K you said you have been and we knew this, change in equipment to migrate certain subs to make more efficient use of the transponder capacity, and I think Spencer might have alluded to that a bit in his questions. And it says, we expect to continue these initiatives through 2010. Can you give me a sense, has the pace of that change, that migration sort of stayed pretty steady as we look forward? Does it accelerate? Does it slow down a bit?

This is Bernie. It is hard to say. It is actually not one big initiative. It is the sum of a number of smaller initiatives where we're trying to move subs around to make their – to make their configuration simpler, more consistent over the long-term. And I don't think, the overall volume is not materially different this year looking forward than in the past year. But it is the sum of a number of initiatives. And we may have more initiatives that we come up with down the road, too, but the volume isn't super huge in terms of influencing the retention numbers too much and the absolute and the comparative values compared to last year I don't think are very different. Doug Mitchelson – Deutsche Bank: Okay, that's helpful. And then, I just wanted to clarify a point in terms of the discussion about churn, having been artificially low in the second half of last year, just to be clear because there has been a little bit of confusion on this out there. The churn doesn't actually rise to unordinary levels in the first half of 2010, they just return to normal as churn starts kicking in, correct? Whatever 1Q churn, for example, would normally be, since you have two year contracts that are ending –

This is Robert. That's correct. Doug Mitchelson – Deutsche Bank: And then a couple more nets here. The cash from set-top box refurbs has been deteriorating. And I guess that is because you're probably swapping out mpeg two boxes, since you're all mpeg four for new boxes. Is there a point where you reaccelerate in terms of the benefit from your refurbishment program, when you're refurbing mpeg four boxes and is this a new level we should look at?

Well I think, Doug, this is Robert again. The thing you have to keep in mind is what will be our net adds for the quarter because obviously on the increment, when you have more net adds incrementally it is just a new receiver. And so that's what we saw a slight uptick in fourth quarter CapEx was we had very low churn and high net adds. And the result was we had a little bit more in CPE. So in your models, you're just going to have to think through what your forecast for net adds will be and if you think it is going to be the upper 200,000, it is a new level. Doug Mitchelson – Deutsche Bank: Well, I was thinking the benefit from the refurbishments, right, which in theory more gross adds, you could actually get a greater benefit.

Right. The number of set-top boxes we get back is depended on our churn, which obviously is very low. Doug Mitchelson – Deutsche Bank: Sorry. Right. Of course. Got you.

You have churn, which is low, so we get less set-top boxes back, and than we have less customers, very few customers upgrading to mpeg two, so their upgrade to mpeg four is just more expensive. Doug Mitchelson – Deutsche Bank: Got you.

So I think your theory could be correct. We don't know yet in the sense that you may see that a year from now as you get into normalized churn and you have, we have more mpeg four boxes coming back, that you may get more benefit from that. It is not anything that's going to happen any time soon. It is more of the level you see now, I think. Doug Mitchelson – Deutsche Bank: Yes, that's helpful. And then, Charlie, I know you always have a plan B and you don't want to spend a lot of time on this call considering potential sort of losing options for the TiVO case. But in case the worst does happen with regard to the litigation, do you think any license fee that you get from TiVO given the price point you have for your DVRs relative to peers could be passed on to customers or is that something that is going to hit margins again if that was to happen?

Well, we always have a plan B, of course. I will show my guys what it is. I think TiVO is a big overhang for both our companies and obviously it will get decided sometime in the relatively near future by a court. And I said before, regardless of what that decision is I think that we like the management, we like TiVO. I think there is not any animosity between the companies and I think it is an honest disagreement. So I think that hopefully the companies will work together one way or the other. I don't think we have pricing power to pass on DVR costs and it would affect margins, and if I was running a model, at least as I run the model that affects our margin. Doug Mitchelson – Deutsche Bank: All right. Fair enough. And then final question, since it looks like you are going to be CEO for a little while longer, since you haven't fired yourself, just any thoughts in terms of, is there any point in time where you see having a more formal plan in place for returning capital to shareholders? I know you want to maintain flexibility, but as the company scales and ultimately matures, do you think it would make sense to have some form of formal construct in place?

All things being equal, I think you would want to. I think there is a couple of things that prevented us from that. One is, we don't have certainty out of Washington as to what even the environment looks like and the tax structure is in the United States, so I think we have to get some kind of certainty from an overall macroeconomic point of view. And then I think that the, some of the things that are going on in the business as it relates to, just the fact that the, probably it's a bit more commodity and looking at bundling and competition, we want to make sure that we have a fundamental part of that business that we know we're secure with. And then I think we would have a more formalized product. But I don't think it is anything that you would see this year. I think that this year, just as last year, I think we'll take a look at the tax situation and I think all companies have to look at the fact that, for example the dividend tax may be materially higher next year than it is this year and whether you're going to return money that way as a one-time event. Certainly if the tax rate on dividends go up, companies, all things being equal, would be less likely to pay dividends because the double taxation is quite a bit higher and then marginal rates could go up, which is another whammy. So I think to get the whole tax structure you have to look at and say, how do you maneuver through that and until we see what it is, we're not going to have a solid plan. Doug Mitchelson – Deutsche Bank: All right. Thanks much, gentlemen.

Your next question comes from Vijay Jayant of Barclays. Your line is now open. James Ratcliffe – Barclays: Good morning. It is James Ratcliffe for Vijay. A couple of questions. First of all, specifically, you mention in the K that you're considering investing, sounds like, in migrating customers toward 8PSK and MPEG-4 on a more proactive basis. Previously it seems like it's mainly letting churn do that. So, can you give us an idea what the timeframe or cost select would be and particularly what sort of positive impact you would see that have on satellite costs?

This is Bernie. The costs incurred, there is no – we're not at a point yet either with APSK or MPEG0-4, where we're artificially forcing customers to more advanced receivers just for the sake of that. The cost of doing that is just part of what's naturally happening in the marketplace is customers are demanding higher end receivers. The benefit, if we get to a point where an APSK will be sooner than MPEG-4, but if we get to a point where we're not too far away from all APSK or eventually not too far away from all MPEG-4, then we may consider a more proactive initiative. And at that point, we might accelerate a little bit of costs and the benefit to us will be bandwidth savings on the satellite side. Both APSK, which is the way of modulating and MPEG-4, which is a way of compressing, both of those would result in satellite bandwidth savings over time, but we're not close in either of those right now in terms of realizing the benefits. The costs are being incurred as every day retention costs. James Ratcliffe – Barclays: Also, have you started to speak with the FCC in any relation to conditions you would like to see around the Comcast NBCU deal?

We have not had any formal discussion yet. James Ratcliffe – Barclays: Can you give us an idea of the sort of things you would be looking to see the deal stipulations contain?

I think there would be two big areas. This is Charlie by the way, two big areas we would look at. One is program access. Obviously, NBC and Comcast for that matter are good partners for us today, so we're going to make sure we program access in a non-discriminatory way And the second big issue would be internet net neutrality, so that our customers are not discriminated against in terms of priority of bids, or in terms of bid buckets, in terms of versus Comcast. So those are two very big broad areas, both equally important and those are ones that I think – I don't know, Stanton, you may have other comments. We'd probably file comments if we haven't already and those would be the two big areas.

Yeah. I would just say, to add with respect to program access reform, we have always been big proponents of baseball arbitration in the event you can't agree on the terms with the programmer and also having a stand still so the consumers don't suffer if you can't get to terms and the programming actually stays up.

I have always been a bit befuddled again, by Comcast and the terrestrial loophole. If you're going to the FCC and Congress and say, trust me, which is basically what Comcast and NBC said at the hearing, they said basically trust us, we would have no reason to make NBC a cable channel, we would have no reason to do this, no reason to do that. But if you say trust me, you certainly wouldn't go out there and have a terrestrial loophole, which everybody looks at and says, well there is no reason for you to have a terrestrial loophole either then. And if you're going to take advantage of the terrestrial loophole, we can't trust you. So I think, as they say in the military, something like trust but verify and I think that's where we would be. They're both, Comcast and NBC are great companies and they have been great partners for us but we need to verify that they're going to be held accountable to act in a fair way. James Ratcliffe – Barclays: Thanks. And a one more, quick one. Do you anticipate the SHIVERA or I guess it is now Stella, delay having any impact or is that just a timing issue?

Well, today actually everybody, there is no copyright law today, literally, everybody in our industry is now in violation of copyright law, so I think having gone through eight years of copyright litigation, that is not a position that we like very well. It would encourage Congress to –there is no, it is actually bipartisan. At this point, I don't think there is any disagreement between republicans and democrats in general. And we would encourage Congress to pass that. I think a delay is not healthy because everybody is in violation of copyright law today. Even though we have letters from Congress that says, go ahead and violate copyright law, it is not a very comforting position to be in. But we're in a catch 22 situation, do we take some channels down or do we listen to what Congress has told us? I think the industry at this point as far as I know has decided to violate copyright law. Fair?

Well, I would say it a little differently, being the lawyer–.

Obviously I was confused, I have the lawyer here.

There was a letter set up by the respective chairs and ranking members of the Senate and House judiciary committees asking everyone to maintain the status quo following the expiration of SHIVERA, which happened last night at midnight. And the expectation is that when they pass Stella, it will be retroactive to last night. And as Charlie said, it's bipartisan support in Congress and business interests have signed off on the language and what's delaying it actually has nothing to do with the substance. We do expect it to be passed in pretty short order.

But it would be a positive for our industry once it gets passed. James Ratcliffe – Barclays: Great. Thank you.

Your next question comes from John Hodulik of UBS. Your line is now open. John Hodulik – UBS: Thanks. On the call a little bit earlier and briefly in your 10-K, you talked a little bit about these operational changes that you made in February. Can you give us a little bit more detail on exactly what steps you're taking and maybe how that should manifest itself in improvements in some of the fundamentals and over what time you think that should happen?

Sure. This is Bernie. I think when I bucketed our operational initiatives into three large buckets, one is being more responsive to customers when they call or when they need a tech visit. Two is doing that more efficiently and not just doing it by the first one by throwing more heads at it. And then, three is by reducing the number of points of contact with the customer either through phone calls or tech visits. The simplification initiatives that Charlie alluded to fall under that third bucket. We're starting to attack the third bucket, which is trying to look at all the reasons our customers need calls, look at all of the reasons they need a visit to their homes and what can we do to try to reduce the need for customers to contact us. And one of the things we've realized, our business first of call is a pretty complex business with a lot of dimensions. We've talked about orbital slots and receivers and packages and promotions and offers and plans. And the fact that it is complicated and the fact that we're in a subscriber base business, you end up building up a lot of complexity over time if you don't shed some of the older permutations of receivers or plans or of packages or things like that. And when things get very, very complex, it hurts us in many, many ways. First of all, customers get confused often and when they get confused often, they call us a lot and they're not happy when they call us. It hurts us in having educated and proficient agents that can handle calls well. And it hurts us in being able to implement new initiatives going forward because our rules and our systems are so complicated that we're tied up in knots sometimes. So, some of the changes we made on 2-1 were to simplify the way we price our equipment, the way we charge for some of our other fees, some of our programming package changes. And the hope is through doing, we've already started seeing some benefit as we're trying to educate agents and educate technicians about how our business now works and how the new rules work. There is actually, during the transition actually there was a counter effect, which is even though we were complex before, a lot of people knew sort of how it worked. So whenever you change things, you do take a little bit of a short term hit, more calls, a little bit more confusion but we're starting to see that some of the simplification efforts that we started on 2-1 are already starting to bear some fruit in terms of training getting a little easier, customer communications getting easier, conversations with customers being a little bit easier. There is going to be, 2-1 was the first step of probably several more steps that are still yet to come to try to continue to simplify our business. John Hodulik – UBS: Do you think this should lead to longer term some improvement in margin and closing the gap with Direct TV in the U.S.?

That is certainly our hope. We can't say with certainty, but when you look at why customers call us, one big bucket of why they call us is because they are confused. They don't understand how things work. They don't understand how to read their bill. And just doing that by itself isn't going to fix it automatically, making things simpler doesn't fix it automatically, but we have to do that combined with better training and making sure that we handle calls easier and more efficiently. So that is definitely one of the bigger buckets with respect to reducing call volume and there is other big buckets that we're also focusing on at the same time. John Hodulik – UBS: Okay. Thanks.

Your next question comes from Mike McCormack of J.P. Morgan. Your line is now open. Mike McCormack – J.P. Morgan: Hey, guys. Thanks. Just a couple of things. First on ARPU, can you give us any quantification what the impact of sort of premium channel and pay-per-view revenue being down was on a year-over-year basis. And whether or not you think that's more technology related or economic related as we look forward to 2010 ARPU modeling. And then second, any update on the 700 megahertz auction, I am sorry, spectrum?

This is Tom. I can answer both. First of all, we don't break out the ARPU components. I will say that premiums, while I think on the last call or the previous call we said were very soft in the economy, I think those are stabilizing a bit. Frankly, I think we can do a better job of marketing pay-per-view and we have plans in place to do that. Regarding the 700 megahertz, nothing materially changed since the last call. We are conducting technology or technical trials in a single market. Those are just beginning to launch, from that we will have a better grasp of interference and coverage requirements in order to build out markets. And from there we'll be able to project what our build out plan will be, but we still have several years to go on those licenses before we have to meet minimum build out requirements. Mike McCormack – J.P. Morgan: So thinking about that spectrum and possibilities, is there any particular products you're thinking about?

Well, in the past we have said our intent was to move forward with the mobile video offering but clearly there is a debate and a healthy discussion right now in DC regarding spectrum in general. So we view it as an asset and it can be used for multiple purposes.

This is Charlie. And we watch what Qualcomm is doing with media flow. And we're not sure that that model works from a mobile video side of it, so we'll do that. There's other things that possibly, you could look at the advent of E-books, take a tremendous amount of data that's mostly one-way, which is what our spectrum is, so there is other possibilities for the spectrum. I think we remain convinced the spectrum is valuable and what we don't want to do is spend a lot of money in CapEx and find out that the model doesn't pay for itself. So we're very fortunate that we get to see what Qualcomm is doing and others are doing prior to having to make those decisions. And perhaps see what the FCC's going to do with spectrum in general. I think that will drive us in a direction that we can monetize that, but I don't think you should expect big CapEx for that this year. Mike McCormack – J.P. Morgan: Great. Thanks, guys.

Your next question comes from Craig Moffett of Sanford Bernstein. Your line is now open. Craig Moffett – Sanford Bernstein: Hey, good morning, Charlie. The telcos put up their first quarter where year-over-year they're now meaningfully down in net subscriber growth this quarter. What are you seeing with respect to competition from the telcos? And then what are you seeing with respect to your partnership with the telcos, both in the regions where they reach and then marketing you in the regions where they don't?

Tom can probably answer this a little better than I can. But I was a little surprised that they were down year-over-year. I think that's primarily, their gross adds probably were up. They probably, as you get a bigger base, you start to get churn. They have always been good competitors. And in terms of AT&T and Verizon and Qwest, we see that primarily when they sell Direct TV, so they get maybe a majority of their gross adds through a competitor that we just don't have access to. On the other hand, it forces us to go and look at long-term business. And one of the things that we were always uncomfortable with the big telco partners was that they had their own video part, so they ultimately were going to be in competition for us. So even if we got a customer and we paid the sack for that customer, ultimately when they called their customer service line, they were going to try to flip that customer to their own service. So, we're not in that situation today, so we still have the smaller CLEC, telco partner. ILECs I mean, not ILECs and they're not for the most part trying to steal those customers long-term or take those customers long-term. So it just forces us to do better and take a look at markets where we think we compete. So we're not a great competitor in New York City versus Cablevision and FIOS. And we don't carry the S network, so that wouldn't be an area where we're as competitive as others. On the other hand, there is markets where we're very, very competitive. And you spend a dollar where you think you get more than a dollar return. And we can't be embarrassed as management to say, we don't have a big market share in Boston or New York or Philadelphia, but we have a pretty good market share in Albuquerque, New Mexico or Salt Lake City, or something like that. So what we want is long-term customers that we can get a return on that will stay with us for a long period of time. Craig Moffett – Sanford Bernstein: Okay. On that topic, it has been a long time since you've updated us on what your mix is between rural, suburban and urban. Can you give us an update on where that is and I am thinking partly as it relates to broadband adoption and availability, are most of your customers still served with DSL when they have broadband or are there a lot of your customers that don't have any access to broadband where the national broadband plan might make a big difference and how do you think about that?

It's been a long time since we updated you. 30 years in fact, because we've never really have broken out where our subscribers are. But obviously we started out as a company in rural America and our roots are in rural America. Our customers have cable, broadband, they have DSL broadband, some of them are starting to get clear wire, wireless broadband today, some have satellite broadband, so some have no broadband at all. So, we have to have a lot of flexibility in how we approach those customers. And again I would say the only thing I can tell you is that we look at each customer and say, look at those factors and where they might have broadband and not broadband and look at where they live and say is that customer likely to be a long-term customer for us. And can we get a return on investment and we don't – the more we can use a Life approach to do that, the better off we're going to be and we try to do that. So ultimately we'll get to a level of subscribers where we're very mature. And I think as Direct TV said on their call, I think one of the great things that everybody can do today is hold on to the customers they have as a focus and that's certainly one of our focuses. Tom, did you –

Craig, on your first point, I think because there are only two national providers, you see some of the regional marketing, more telco versus cable and cable versus telco. And that's not to say we don't compete there, but I think the focus of their messaging is there. We highly value the relationships that we do have with the ILECs. And as Charlie said, they tend to be, A, they're not competing head to head with us. And B, they're in communities that we tend to serve very well. As far as the perception that we're an entirely rural company, I think that is clearly dated and we're competing very well in urban and suburban areas. Craig Moffett – Sanford Bernstein: Thanks, guys.

I think maybe we have time for one more call.

Your last question comes from Bryan Kraft of Cross Research. Your line is now open. Bryan Kraft – Cross Research: Hi. Thanks for taking the question. I have a question on pricing. How would you characterize the net effect on pricing, on the price increases you're putting in place to the average customer's bill. And I guess specifically, you mentioned that you weren't too aggressive this year given some of the operational changes, but my understanding is that certain customers are getting some very large rate increases based on them having multiple DVRs. So if maybe you could clarify kind of the thinking behind the structure of the price increases you're putting in place and kind of how you think that that falls out? Thanks.

This is Charlie. Maybe Bernie will jump in. I think we tried to simplify our business and as we went through our business we realized that we had kind of underpriced some of our hardware, vis-a-vis the market. HD box, not necessarily DVRs, but HD boxes. And so we made some adjustments and people that had the, most people didn't see much, didn't see a price increase or very little price increase, some people had six or seven receivers may have seen a little bit larger increase. But we just had to get it right for the future in terms of how we did that, so it is painful to do it. That all rolls up into some ARPU growth, but it is not – we didn't price enough to cover the programming margin that we suffer from programming prices going up, so we either have to get that through operational efficiencies and/or future price increases. So if that gives you a feel for it, so. But we certainly didn't want to go out and make some fundamental changes on the way. Our hardware is priced and then put, to confuse that message with a programming price increase as well, so it is really more of a two-step process. We'll see another month or so, we'll see how we handled this hardware situation and get that simplified and consistent and makes a lot of sense now in terms of going forward, realize our customers all get their second, they don't pay a hardware cost for the second TV set, which is unique to this industry. So our hardware prices still are less expensive than the vast majority of people out there, but we had really given too good a deal there that customers just weren't aware of. They got their bill and everybody advertised programming, but nobody ever thought about the hardware price. So I think we're positioned to do that. We just have to wait and see how it all flows through. But we certainly, I think we have room to raise prices and certainly I think we have more importantly we have room to quit discounting as much. I hope our guys will come up with plans not to do that, to discount as much and that ultimately will have a positive impact on our margins. Bryan Kraft – Cross Research: Sorry, Bernie.

Brian, the only thing I would add to that, typically around this time of year when we're changing programming prices, all of our customers are kind of universally impacted, consistently impacted. And this year because we're trying to get things simpler and trying to get them more consistent, there was a vast majority of our customers that got impacted less than usual, but there was a smaller tail that got disproportionately hit. The example I think you cited with DVRs, there's certain of our packages where DVRs, going way back in time were included, probably way back when DVRs were much simpler and they weren't as much in demand, but they have gotten obviously a lot more complicated and they're becoming more and more requested. And then we have all kinds of problems when people are switching from a package in which DVRs are included to a package where they're not included, drives all kinds of confusion and problems when that occurs, so we have to make those changes. So, unfortunately there was a small tail of customers that got disproportionately impacted. We spent a lot of time with, working on remediation steps and scripts for our agents to deal with those situations. And for the most part they've worked pretty well, but there is no doubt there are some customers out there who have been disappointed with what they have seen in terms of the bill changes. Bryan Kraft – Cross Research: Okay. If I could just ask a few follow-ups if you don't mind. I guess one is, you mentioned the margin on programming costs, is this year at all an abnormal year for you guys in terms of programming costs, without getting to the specific rate of increase, like is there anything kind of one-time that might push it up or is it more or less normal like the rest of the industry?

I think we're right in line with the rest of the industry. Obviously when you go through a renewal there is a step up period, but because of the staggering of the larger programming agreements, I don't think you will see anything different this year than a normal cost impact that we have had in the past. There is some timing. Bryan Kraft – Cross Research: Other than programming prices are going up materially more than inflation.

It is two to three times inflation and that's an issue we all have. All distributors are wrestling with this.

And if somebody only raises their price 4%, my guess is their program prices are going to be materially more than that. So I think everybody in this industry, again, once you start giving your product away and making it a commodity, my guess is long-term you're going to face some margin pressure, which puts more emphasis on your operations, which is why Bernie is focused on that. Bryan Kraft – Cross Research: And do you, given the operational changes now, does that mean that maybe you look at a rate increase later in the year or do you think you just wait until next February to reevaluate?

I think we have room to do it later in the year. It just depends on getting ourselves in position to be able to do that. I think we're under index compared to the industry. Let's put it that way. Okay. I think we're back with you guys in May. Is that right? And appreciate the time today.

Thanks a lot.

This concludes today's conference call. You may now disconnect.