Dish Network CEO Sees Some Pricing Power Versus Peers

NEW YORK -(Dow Jones)- Dish Network Corp. (DISH) has some element of pricing power because its service offering is cheaper than its peers, said Chief Executive Charles Ergen.

"We have more pricing power than most, because we have lower costs than most," Ergen told analysts during a conference call on Monday.

The average revenue per user is lower than its competitors, so there is room to increase its rates, he said. He noted the cable companies have raised their rates as well.

Dish was dealt a blow when AT&T Inc. (T) decided to switch to DirecTV Group Inc. (DTV) as its satellite TV partner. While the deal doesn't start until February, Dish reported a higher turnover rate in its AT&T subscriber base.

While the numbers are higher, they don't skew the overall numbers, Ergen said. He noted the laxer credit policies by AT&T may have led to the higher turnover.

The turnover rate won't get better among AT&T customers when the carrier makes the switch to DirecTV. Under the contract, AT&T won't be able to go after the existing Dish customers. But there are concerns that those customers will switch to AT&T's U-Verse TV service.

Ergen said he is concerned about the customer service for those AT&T customers, noting that subscribers who deal with billing need to call AT&T, and that there already is a "ping-pong" effect for customers looking to get their problems resolved.

When asked about why AT&T chose DirecTV, Ergen referred the question to the telco.

The company continues to struggle with subscriber growth and retaining its base.

"There's no excuse for us not leading the industry in customer service," Ergen said, adding the company has made progress, but it has been slow. For example, the company has opened up a new customer call center, but he said it would take a while before the center would be up to speed.

Ergen declined to specify too much on its ongoing legal battle with TiVo Inc. (TIVO). Dish lost the patent suit regarding live digital video recording, and still pending is a follow-up suit determining whether its technology work-around is sufficient.

Dish recently fell 2.2% to $13.30.

- By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

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11-10-08 1304ET
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