Dish Network 1998 Annual Report Download - page 6

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4
from WebTV. This product also provides for digital video recording, an advanced electronic program guide,
broadband data delivery and video games. The vast majority of the data delivery and video game services are provided
through telephone lines and are not delivered via satellite. While we are currently only able to provide a limited
number of one-way data services via satellite, we are working to further develop this technology. There can be no
assurance that we will be able to cost-effectively develop this technology, or at all. We believe we will be able to
increase our subscriber base and average revenue per subscriber by offering these and other similar services.
Local Strategy. In order to provide the strongest possible competition to cable, and thereby maximize our
potential market, we are working on solutions to seamlessly provide local broadcast network channels to our
subscribers. Subject to eligibility conditions, we currently offer satellite-delivered local network signals to consumers
in some of the largest markets in the continental United States, including Atlanta, Boston, Chicago, Dallas/Ft. Worth,
Denver, Los Angeles, Miami, New York, Phoenix, Pittsburgh, Salt Lake City, San Francisco and Washington, D.C.
Under existing regulation, we can only broadcast these signals to “unserved households” in the local areas from which
those channels originate. See “ – Government Regulation.” Presently, a subscriber must install a second 18-inch
satellite dish to receive our satellite-delivered local network programming in most markets. Therefore, we are still at a
competitive disadvantage compared to cable operators because many consumers do not want to install a second satellite
dish. We may be able to implement a one-dish solution for local programming in 20 or more major markets around the
United States if, among other things, we are able to consummate the 110 acquisition and effect changes in existing
legislation.
EchoStar Receiver Systems. EchoStar receiver systems include an 18-inch satellite dish, a digital satellite
receiver that descrambles signals for television viewing, a remote control, and other related components. DISH
Network reception equipment cannot be utilized with competitors’ systems. We offer a number of set-top box models.
Our standard system comes with an infrared remote control, an on-screen program guide, and the ability to switch
between DISH Network and off-air local programming using the remote control. Our mid-level model has all of the
basic features but also includes a UHF remote control that allows subscribers to control their EchoStar receiver system
from up to 150 feet away through walls, and a high-speed data port. Our premium model includes additional features
such as on-screen caller identification capability, event timers to automatically tune into or record selected
programming and one-touch VCR recording.
Although we internally design and engineer our receiver systems, we do not manufacture these systems.
Rather, we outsource the manufacturing process to high-volume contract electronics manufacturers. SCI Technology,
Inc. manufactures the majority of our receiver systems. During 1998, Vtech Communications, Ltd. began
manufacturing our set-top boxes. JVC Company of America also manufactures other consumer electronics products,
including a digital VCR, that also incorporates an EchoStar receiver system.
Installation. Currently, third-parties perform the majority of EchoStar receiver system installations. We also
offer installation services from 21 of our own locations throughout the United States. We currently intend to invest to
expand our installation business during 1999.
Customer Service Center. We currently operate customer service centers in Thornton, Colorado, Littleton,
Colorado and McKeesport, Pennsylvania. These centers field all of our customer service calls. Potential and existing
subscribers can call a single telephone number to receive assistance for hardware, programming, installation and
technical support.
Digital Broadcast Operations Center. Our digital broadcast operations center is located in Cheyenne,
Wyoming. We would acquire a second digital broadcast operations center in Gilbert, Arizona, if we are able to
consummate the 110 acquisition. We plan to begin utilizing the second facility as our customer base expands and the
added expense can be justified. Almost all of the functions necessary to provide satellite-delivered services occur at the
digital broadcast operations center. The digital broadcast operations center uses fiber optic lines and downlink antennas
to receive programming and other data at the center. The digital broadcast operations center uplinks programming
content to our DBS satellites via large uplink antennas. The digital broadcast operations center also maintains a
number of large uplink antennas and other equipment necessary to modulate and demodulate the programming and data
signals. All compression and encryption of the DISH Network’s programming signals are performed by equipment at
our digital broadcast operations center.