Dish Network 2006 Annual Report Download - page 36

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deem commercially reasonable, and a significant launch failure were to occur, it could have a material adverse effect
on our ability to generate revenues and fund future satellite procurement and launch opportunities.
In addition, the occurrence of future launch failures may materially and adversely affect our ability to insure the
launch of our satellites at commercially reasonable premiums, if at all. Please see further discussion under the
caption “We currently have no commercial insurance coverage on our satellites” above.
Our satellites are subject to significant operational risks.
Satellites are subject to significant operational risks while in orbit. These risks include malfunctions, commonly
referred to as anomalies, that have occurred in our satellites and the satellites of other operators as a result of various
factors, such as satellite manufacturers’ errors, problems with the power systems or control systems of the satellites
and general failures resulting from operating satellites in the harsh environment of space.
Although we work closely with the satellite manufacturers to determine and eliminate the cause of anomalies in new
satellites and provide for redundancies of many critical components in the satellites, we may experience anomalies
in the future, whether of the types described above or arising from the failure of other systems or components.
Any single anomaly or series of anomalies could materially and adversely affect our operations and revenues and
our relationship with current customers, as well as our ability to attract new customers for our direct broadcast
satellites and other satellite services. In particular, future anomalies may result in the loss of individual transponders
on a satellite, a group of transponders on that satellite or the entire satellite, depending on the nature of the anomaly.
Anomalies may also reduce the expected useful life of a satellite, thereby reducing the revenue that could be
generated by that satellite, or create additional expenses due to the need to provide replacement or back-up satellites.
Finally, the occurrence of anomalies may materially and adversely affect our ability to insure our satellites at
commercially reasonable premiums, if at all. You should review the disclosures relating to satellite anomalies set
forth under Note 4 in the Notes to the Consolidated Financial Statements in Item 15 of this Annual Report on Form
10-K.
Meteoroid events pose a potential threat to all in-orbit satellites. The probability that meteoroids will damage those
satellites increases significantly when the Earth passes through the particulate stream left behind by comets.
Occasionally, increased solar activity also poses a potential threat to all in-orbit satellites.
Some decommissioned spacecraft are in uncontrolled orbits which pass through the geostationary belt at various
points, and present hazards to operational spacecraft, including our satellites. We may be required to perform
maneuvers to avoid collisions and these maneuvers may prove unsuccessful or could reduce the useful life of the
satellite through the expenditure of fuel to perform these maneuvers. The loss, damage or destruction of any of our
satellites as a result of an electrostatic storm, collision with space debris, malfunction or other event could have a
material adverse effect on our business, financial condition and results of operations.
Our satellites have minimum design lives of 12 years, but could fail or suffer reduced capacity before then.
Our ability to earn revenue depends on the usefulness of our satellites. Each satellite has a limited useful life. A
number of factors affect the useful lives of the satellites, including, among other things, the quality of their
construction, the durability of their component parts, the ability to continue to maintain proper orbit and control over
the satellite’s functions, the efficiency of the launch vehicle used, and the remaining on-board fuel following orbit
insertion. Generally, the minimum design life of each of our satellites is 12 years. We can provide no assurance,
however, as to the actual useful lives of the satellites.
In the event of a failure or loss of any of our satellites, we may relocate another satellite and use it as a replacement
for the failed or lost satellite, which could have a material adverse effect on our business, financial condition and
results of operations. Such a relocation would require FCC approval and, among other things, a showing to the FCC
that the replacement satellite would not cause additional interference compared to the failed or lost satellite. We
cannot be certain that we could obtain such FCC approval. If we choose to use a satellite in this manner, this use
could adversely affect our ability to meet the operation deadlines associated with our authorizations. Failure to meet