Dish Network 2000 Annual Report Download - page 35

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During the year ended December 31, 2000, our marketing promotions included our DISH Network One-
Rate Plan, C-band bounty program, Great Rewards program (PrimeStar bounty), Digital Dynamite Plan, cable
bounty and a free installation program. Our subscriber acquisition costs under these programs are significantly
higher than those under our marketing programs historically.
Under the DISH Network One-Rate Plan, consumers were eligible to receive a rebate of up to $199 on the
purchase of certain EchoStar receiver systems. To be eligible for this rebate, a subscriber must have made a one-year
commitment to subscribe to our America’s Top 150 programming or our America’s Top 100 CD programming
package plus one premium movie package (or equivalent additional programming). This promotion expired on January
31, 2001.
Under our bounty programs, current cable customers were eligible to receive a free base-level EchoStar
receiver system and free installation. To be eligible for this program, a subscriber must have made a one-year
commitment to subscribe to either our America’s Top 100 CD programming package plus one premium movie package
(or equivalent additional programming) or our America’s Top 150 programming package and prove that they are a
current cable customer. This promotion expired on January 31, 2001.
During July 2000, we announced the commencement of our new Digital Dynamite promotion. The Digital
Dynamite plans offer four choices to consumers, ranging from the use of one EchoStar receiver system and our
America’s Top 100 CD programming package for $35.99 per month, to providing consumers two EchoStar receiver
systems and our America’s Top 150 programming package for $49.99 per month. With each plan, consumers receive
in-home-service, must agree to a one-year commitment and incur a one-time set-up fee of $49.99, which includes the
first month's programming payment.
During February 2001, we announced our Free Now promotion offering all new subscribers a free base-level
EchoStar receiver system and free installation. To be eligible for this program, a subscriber must provide a valid major
credit card and make a one-year commitment to subscribe to either our America’s Top 150 programming package or
our America’s Top 100 CD or DISH Latino Dos programming package plus additional programming totaling at least
$39.98 per month. Although subscriber acquisition costs are materially higher under this plan compared to historical
promotions, customers under this plan generally are expected to produce materially greater average revenue per
subscriber than a typical DISH Network subscriber. In addition, we believe that these customers represent lower credit
risk and therefore may be marginally less likely to disconnect their service than other DISH Network subscribers. To
the extent that actual consumer participation levels exceed present expectations, subscriber acquisition costs may
increase. Although there can be no assurance as to the ultimate duration of the Free Now promotion, we intend to
continue it through at least March 2001.
Under our free installation program all customers who purchase an EchoStar receiver system from January
2000 through April 2000, from May 24, 2000 to July 31, 2000 and from September 15, 2000 to March 31, 2001, are
eligible to receive a free professional installation. The free installation program was responsible, in part, for the strong
subscriber growth during the first half of 2000.
We subsidize the cost and installation of EchoStar receiver systems in order to attract new DISH Network
subscribers. There is no clear industry standard used in the calculation of subscriber acquisition costs. Our subscriber
acquisition costs include subscriber promotion subsidies – promotional DTH equipment, subscriber promotion
subsidies - other and DISH Network acquisition marketing expenses. During the year ended December 31, 2000, our
subscriber acquisition costs totaled approximately $1.155 billion, or approximately $452 per new subscriber activation.
Since we retain ownership of the equipment, amounts capitalized under our Digital Dynamite Plan are not included in
our calculation of these subscriber acquisition costs. Comparatively, our subscriber acquisition costs during the year
ended December 31, 1999 totaled $729 million, or approximately $385 per new subscriber activation. The increase in
our subscriber acquisition expenses, on a per new subscriber activation basis, principally resulted from the impact of
several marketing promotions to acquire new subscribers, including most significantly our free installation offer which
was reinstated during September 2000. As a result of continuing competition and our plans to attempt to continue to
drive rapid subscriber growth, we expect our per subscriber acquisition costs for 2001 will remain in a range consistent
with our 2000 average of approximately $452 per new subscriber activation.