Dish Network 2000 Annual Report Download - page 66

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–15
Construction in progress consists of the following (in thousands):
December 31,
1999 2000
Progress amounts for satellite construction, launch, and launch
insurance:
EchoStar VI......................................................................... $ 243,633 $ –
EchoStar VII ....................................................................... –76,382
EchoStar VIII ...................................................................... –46,487
EchoStar IX......................................................................... –22,215
Digital broadcast operations center............................................... 47,000 39,797
Other.......................................................................................... 28,695 41,573
$ 319,328 $ 226,454
Digital Dynamite Plans
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 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 pay $49.99 up front, which includes the first
month’s programming payment. Since the equipment in the Digital Dynamite plans are owned by us, those
equipment costs are capitalized and depreciated over a period of 4 years.
EchoStar III
During the second quarter 2000, two transponder pairs on EchoStar III malfunctioned. Including the three
transponder pairs that malfunctioned during 1998, these anomalies have resulted in the failure of a total of ten
transponders on the satellite to date. While a maximum of 32 transponders can be operated at any time, the satellite
was equipped with a total of 44 transponders to provide redundancy. As a result of this redundancy and because we
are only licensed by the FCC to operate 11 transponders at the 61.5 degree orbital location (together with an
additional six leased transponders), the transponder anomalies have not resulted in a loss of service to date. The
satellite manufacturer, Lockheed Martin, has advised us that it believes it has identified the root cause of the failures,
and that while further transponder failures are possible, based upon the root cause and the operating configuration of
the satellite, Lockheed Martin does not believe it is likely that the operational capacity of EchoStar III will be
reduced below 32 transponders. Lockheed Martin also believes it is unlikely that our ability to operate at least the 11
licensed frequencies, and the six leased transponders, on the satellite will be affected. We will continue to evaluate
the performance of EchoStar III and may be required to modify our loss assessment as new events or circumstances
develop.
EchoStar V
EchoStar V is equipped with a total of 48 transponders, including 16 spares. Two transponders on the
satellite have failed, the most recent loss occurring during July 2000. While the failures have not impacted the
operational capacity of the satellite and the satellite manufacturer has advised that the anomalies are probably
unrelated, until the root cause of the most recent anomaly is finally determined, there can be no assurance future
similar anomalies will not cause further transponder losses which could reduce operational capacity.