Dish Network 2003 Annual Report Download - page 20

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Opposition and other Risks to our Licenses and Authorizations. Several third parties have opposed, and we
expect them to continue to oppose, some of our FCC satellite authorizations and pending requests to the FCC for
extensions, modifications, waivers and approvals of our licenses. In addition, we have not filed, or have not timely
filed, certain reports required in connection with our satellite authorizations. Because of this opposition and our
failure to comply with certain requirements of our authorizations, it is possible the FCC could revoke, terminate,
condition or decline to extend or renew certain of our authorizations or licenses.
On January 16, 2004, the Court of Appeals for the D.C. Circuit heard arguments in a challenge brought by
Advanced Communications Corporation (“Advanced”), the former holder of DBS permits at the 110 degrees and
148 degrees west orbital locations, against the FCC’s 1995 cancellation of its permits. While previous appeals by
Advanced have failed, we cannot be certain that Advanced will not ultimately be successful. If it is successful,
certain of our licenses to operate core DBS satellites from those orbital locations may be at risk in further FCC
proceedings.
Our FSS Licenses. In addition to our DBS licenses and authorizations, we have received conditional licenses from
the FCC to operate Fixed-Satellite Service (“FSS”) satellites in the Ka-band and the Ku-band, including licenses to
operate EchoStar IX (a hybrid Ka/Ku-band satellite) at the 121 degree orbital location. EchoStar also recently
received Ka-band licenses at the 97 and 123 degree orbital locations. Use of these licenses and conditional
authorizations is subject to certain technical and due diligence requirements, including the requirement to construct
and launch satellites according to specific milestones and deadlines. Our projects to construct and launch Ku-band,
extended Ku-band and Ka-band satellites are in various stages of development.
Risks to our Ka-Band and Ku-Band Authorizations. On March 15, 2004, we relinquished our license for a Ku-band
satellite at the 83 degree orbital location and declined our license for a Ka-band satellite at the 125 degree orbital
location. With respect to our license for a Ka-band system at the 83 degree orbital location, the FCC requires
construction, launch and operation of the satellite system to be completed by June 25, 2005. The FCC has stated that it
may cancel our corresponding authorizations if we fail to file adequate reports or to demonstrate progress in the
construction of that satellite system. In addition, some companies with interests adverse to ours are challenging our
licenses. Our Ka-band licenses at the 83 and 121 degree orbital locations allow us to use only 500 MHz of Ka-band
spectrum in each direction, while certain other licensees have been authorized to use 1000 MHz in each direction. Our
Ka-band licenses at the 123 and 97 degree orbital locations are for the full 1000 MHz in each direction. With respect to
these licenses, the FCC requires construction, launch and operation of the satellites to be completed by December of
2008 and March 2009 respectively. ITU deadlines, however, require satellites to be operating at those slots by June of
2005. There can be no assurance that we will develop acceptable plans to meet these deadlines, or that we will be able
to utilize the orbital slot.
VisionStar. We also own a 90% interest in VisionStar, Inc. (“VisionStar”), which holds a Ka-band license at the
113 degree orbital location. VisionStar did not complete construction or launch of the satellite by the required
milestone deadlines and has requested an extension of those milestones from the FCC. Failure to receive an
extension would render the license invalid.
Recent FCC Rulemaking Affecting our Licenses and Applications. The FCC has recently changed its system for
processing applications to a “first-come, first-served” process. Since that change became effective, we have filed or
refiled, and have pending before the FCC, new applications for as many as nine satellites in several different
frequency bands. Several of our direct or indirect competitors have filed petitions to deny or dismiss certain of our
pending applications or have requested that conditions be placed on authorizations we requested. We have received
Ka-band licenses for the 97, 123 and 125 degree orbital locations, while a number of other applications have been
dismissed without prejudice by the FCC. We cannot be sure that the FCC will grant any of our outstanding
applications, or that the authorizations, if granted, will not be subject to onerous conditions. Moreover, the cost of
building, launching and insuring a satellite can be as much as $250 million or more, and we cannot be sure that we
will be able to construct and launch all of satellites for which we have requested authorizations. The FCC has also
imposed a $5 million bond requirement for all future satellite licenses, which would be forfeited by a licensee that
does not meet its diligence milestones for a particular satellite. We have already posted a bond for the Ka-band
license we recently received at the 123 degree orbital location and must post a bond for our Ka-band licenses at the
97 degree orbital location or forfeit our license for that location.