Dish Network 2000 Annual Report Download - page 7

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Customer Service Centers. We currently own and operate customer service centers in Thornton, Colorado,
Littleton, Colorado, McKeesport, Pennsylvania, El Paso, Texas, Christiansburg, Virginia and Bluefield, West
Virginia. 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. Due to rapid
subscriber growth and recent marketing promotions, some customers are currently experiencing longer than desired
wait times. We continue to work to automate simple phone responses, and intend to increase internet based
customer assistance in the future, in order to better manage customer service costs.
Digital Broadcast Operations Centers. Our principal digital broadcast operations center is located in
Cheyenne, Wyoming. In 1999, we acquired a second digital broadcast operations center in Gilbert, Arizona.
During 2000, we completed the “build-out” of the Gilbert facility for use as a back up for our main digital broadcast
operations center in Cheyenne. Upon commercial operation of EchoStar VII and EchoStar VIII, we plan to also
begin utilizing the Gilbert facility as a primary digital broadcast operations center. 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. Equipment at our digital
broadcast operations center performs all compression and encryption of the DISH Network’s programming signals.
Subscriber Management. We presently use, and are dependent on, CSG Systems Incorporated’s software
system, for all DISH Network subscriber management and billing functions.
Sales and Marketing. Independent dealers and distributors, retailers and consumer electronics stores
currently sell EchoStar receiver systems and DISH Network programming services. While we also sell receiver
systems and programming directly, independent dealers are responsible for most of our sales. These independent
dealers are primarily local retailers who specialize in TV and home entertainment systems.
We intend to enhance consumer awareness of our products by continuing to form alliances with nationally
recognized distributors of other consumer electronics products. We have formed a strategic alliance with JVC to
distribute our receiver systems under its label through certain of its nationwide retailers.
We offer our distributors and retailers a competitive residual commission program. The program pays
qualified distributors and retailers an activation bonus, and pays active retailers a fixed monthly residual commission
dependent on continued consumer subscription to programming.
We use regional and national broadcast and print advertising to promote the DISH Network. We also offer
point-of-sale literature, product displays, demonstration kiosks and signage for retail outlets. We provide guides to
our dealers and distributors at nationwide educational seminars and directly by mail, that describe DISH Network
products and services. Our mobile sales and marketing team visits retail outlets regularly to reinforce training and
ensure that these outlets quickly fulfill point-of-sale needs. Additionally, we dedicate one DISH Network channel
and provide a retailer specific website to provide information about special services and promotions that we offer
from time to time.
Our future success in the subscription television industry depends on our ability to acquire and retain DISH
Network subscribers, among other factors. Beginning in 1996, to stimulate subscriber growth we reduced the retail
price charged to consumers for EchoStar receiver systems. Accordingly, since August 1996, we have subsidized the
cost of our receiver systems to DISH Network subscribers. The amount of the subsidy varies depending on many
factors. Periodically we also provide varying levels of other subsidies and incentives to attract customers, including
free or subsidized installations, antennas, programming and other items. We developed this marketing strategy to
rapidly build our subscriber base, expand retail distribution of our products, and build consumer awareness of the
DISH Network brand. This marketing strategy emphasizes our long-term business strategy of maximizing future
revenue by selling DISH Network programming to the largest possible subscriber base and rapidly increasing the
size of that subscriber base. Since we subsidize the consumer up-front costs, we incur significant costs each time we
acquire a new subscriber. Although there can be no assurance, we believe that we will be able to fully recoup the
up-front costs of subscriber acquisition from future subscription television services revenue.