Dish Network 2001 Annual Report Download - page 9

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7
viewing by that consumer. The set-top box then decompresses the programming and sends it to the consumer’s
television.
The delivery of subscription programming requires the use of encryption technology to assure that only
those who pay can receive the programming. It is illegal to create, sell or otherwise distribute mechanisms or
devices to circumvent that encryption. Theft of subscription television programming has been widely reported and
our signal encryption has been pirated and could be further compromised in the future. Theft of our programming
reduces future potential revenue and increases our net subscriber acquisition costs. We continue to respond to
compromises of our encryption system with measures intended to make signal theft of our programming
commercially uneconomical. We utilize a variety of tools to continue to accomplish this goal. If we cannot promptly
correct a compromise in our encryption technology, it would adversely affect our ability to contract for video and
audio services provided by programmers.
Programming. We use a “value-based” strategy in structuring the content and pricing of programming
packages available from the DISH Network. For example, we currently sell our entry-level “America’s Top 50”
programming package, which includes 50 of the most popular video channels, to consumers in digital format for
$22.99 per month. We estimate cable operators charge over $30 per month, on average, for their entry-level
expanded basic service that typically consists of approximately 55 analog channels. We believe that our “America’s
Top 100 CD” programming package, which we currently sell for $31.99 per month, also compares favorably to
similar cable television programming. We believe that our America’s Top 100 CD package is similar to an
expanded basic cable package plus a digital music service. Based on cable industry statistics, we estimate that cable
operators would typically charge in excess of $40 per month for a similar package. In addition to the above
mentioned programming packages, we also offer our “America’s Top 150” programming package for $40.99 per
month and our America’s “Everything” Pak, which combines our America’s Top 150 programming package and all
four premium movie packages for $72.99 per month.
For an additional $5.99 per month, we can add satellite-delivered local channels to any of the above
packages for consumers in 36 of the largest markets in the continental United States. The use of spot-beam
technology on EchoStar VII, in conjunction with the operation of EchoStar VIII, which is expected to launch this
summer, would enable us to increase the number of markets where we provide local channels by satellite, but will
reduce the number of channels that could otherwise be offered ubiquitously across the United States.
We currently offer four premium movie packages which include up to ten movie channels per package.
Currently consumers can subscribe to a single premium movie package including ten movie channels for only
$11.99 per month. We believe we offer more premium movie channels than cable typically offers at a comparable
price.
Currently, we offer more than 50 foreign-language channels including Spanish, Arabic, French, Hindi,
Russian, Greek and others. We also offer foreign-language programming packages. For example, we believe that
our “DISH Latino” package, which includes more than 20 Spanish-language programming channels for $20.99 per
month, is the most complete Spanish-language package available in the United States. We also offer “DISH Latino
Dos”, our bilingual programming package, which includes more than 20 English and more than 20 Spanish-
language programming channels for $31.99 per month. In addition, during January 2002, we introduced “DISH
Latino Max”, which includes more than 60 English and more than 20 Spanish-language programming channels for
$39.99 per month. We believe we deliver the most popular foreign-language programming to customers in the
United States at the best value. We also believe foreign-language programming is a valuable niche product that
attracts a number of new subscribers who are unable to get similar programming elsewhere.
EchoStar Receiver Systems. EchoStar receiver systems include a small satellite dish, a digital satellite
receiver that unscrambles signals for television viewing, a remote control, and other related components. We offer a
number of set-top box models. Our standard system comes with an infrared universal remote control, an on-screen
interactive program guide and V-chip type technology for parental control. Our premium model includes a hard
disk drive enabling additional features such as personal video recording of up to 35 hours of programming, an
infrared, UHF universal remote, and an expansion port for future upgradeability. We also offer a variety of
specialized products such as HDTV receivers. DISH Network reception equipment is incompatible with
competitors’ systems in the United States.