Dish Network 2003 Annual Report Download - page 17

12
deploying some new products and technologies because of the substantial costs we would be required to incur to
make new products or technologies available across our installed base of over 9 million subscribers.
VHF/UHF Broadcasters. Most areas of the United States can receive traditional terrestrial VHF/UHF television
broadcasts of between 3 and 10 channels. These broadcasters provide local, network and syndicated programming.
The local content nature of the programming may be important to the consumer, and VHF/UHF programming is
typically provided free of charge. In addition, the FCC has allocated additional digital spectrum to licensed
broadcasters. At least during a transition period, each existing television station will be able to retain its present
analog frequencies and also transmit programming on a digital channel that may permit multiple programming
services per channel. Our business could be adversely affected by continued free broadcast of local and other
programming and increased program offerings by traditional broadcasters.
New Technologies and Competitors. New technologies also could have a material adverse effect on the demand for
our DBS services. For example, new and advanced local multi-point video distribution services are currently being
implemented. In addition, entities such as regional telephone companies, which are likely to have greater resources
than we have, are implementing and supporting digital video compression over existing telephone lines and digital
“wireless cable.” These companies are also developing video-over-fiber technologies that have the potential to
dramatically increase the amount and quality of video programming distributed via the internet. Our ability to
compete successfully with these and other new technologies will be impacted by, among other things, increasing
demand for high definition television, or HDTV, programming. We may have difficulty developing competitive
HDTV-related technology and securing adequate spectrum capacity for transmission of HDTV signals.
In addition to the challenges posed by new technologies, mergers, joint ventures, and alliances among franchise,
wireless or private cable television operators, regional Bell operating companies and others may result in the
creation of new or more integrated providers capable of offering bundled cable television and telecommunications
services in competition with us. We may not be able to compete successfully with existing competitors or new
entrants in the market for subscription television services.
ECHOSTAR TECHNOLOGIES CORPORATION
EchoStar Technologies Corporation (“ETC”), one of our wholly-owned subsidiaries, internally designs and develops
EchoStar receiver systems. Our satellite receivers have won numerous awards from the Consumer Electronics
Manufacturers Association, retailers and industry trade publications. We outsource the manufacture of EchoStar
receiver systems to third parties who manufacture the receivers in accordance with our specifications.
The primary purpose of our ETC division is to support the DISH Network. However, in addition to supplying
EchoStar receiver systems for the DISH Network, ETC also sells similar digital satellite receivers internationally,
either directly to television service operators or to our independent distributors worldwide. This has created a source
of additional business for us and synergies that directly benefit DISH Network. For example, our satellite receivers
are designed around the Digital Video Broadcasting standard, which is widely used in Europe and Asia. The same
employees who design EchoStar receiver systems for the DISH Network are also involved in designing set-top
boxes sold to international TV customers. Consequently, we benefit from the possibility that ETC’s international
projects may result in improvements in design and economies of scale in the production of EchoStar receiver
systems for the DISH Network.
We believe that direct-to-home satellite service is particularly well-suited for countries without extensive cable
infrastructure, and we are actively soliciting new business for ETC. However, there can be no assurance that ETC
will be able to develop additional international business or maintain its existing customers.
Through 2003, our primary international customer was Bell ExpressVu, a subsidiary of Bell Canada, Canada’s
national telephone company. We currently have certain binding purchase orders from Bell ExpressVu, and we are
actively trying to secure new orders from other potential international customers. However, we cannot guarantee at
this time that those negotiations will be successful. Our future international revenue depends largely on the success of
these and other international operators, which in turn, depends on other factors, such as the level of consumer
acceptance of direct-to-home satellite TV products and the increasing intensity of competition for international
subscription television subscribers.