Dish Network 2007 Annual Report Download - page 48

Table of Contents
Reduce costs.
We believe that our low cost structure is one of our key competitive advantages and we continue to work aggressively to retain
this position. We are attempting to control costs by improving the quality of the initial installation of subscriber equipment, improving the
reliability of our equipment, providing better subscriber education in the use of our products and services, and enhancing our training and
quality assurance programs for our in-
home service and call center representatives. We believe that further standardization of EchoStar receiver
systems, introduction of new installation technology and the migration away from relatively expensive and complex subscriber equipment
installations may reduce in-home service and customer service calls. In addition, we hope to further reduce our customer service calls by
simplifying processes such as billing and non-technical equipment issues. However, these initiatives may not be sufficient to maintain or
increase our operational efficiencies and we may not be able to continue to grow our operations cost effectively.
We also attempt to reduce subscriber acquisition and retention costs by lowering the overall cost of subsidized equipment we provide to new
and existing customers and improving the cost effectiveness of our sales efforts. Our principal method for reducing the cost of subscriber
equipment is to lease our receiver systems to new and existing subscribers rather than selling systems to them at little or no cost. Leasing
enables us to, among other things, reduce our future subscriber acquisition costs by redeploying equipment returned by disconnected lease
subscribers. We are further reducing the cost of subscriber equipment through our design and deployment of EchoStar receivers with multiple
tuners that allow the subscriber to receive our DISH Network services in multiple rooms using a single receiver, thereby reducing the number
of EchoStar receivers we deploy to each subscriber household.
However, our overall costs to retain existing subscribers and acquire new subscribers, including amounts expensed and capitalized, both in the
aggregate and on a per subscriber basis, may materially increase in the future to the extent that we introduce more aggressive promotions or
newer, more expensive consumer electronics products in response to new promotions and products offered by our competitors or for other
reasons. In addition, expanded use of new compression technologies, such as MPEG-4 and 8PSK, will inevitably render some portion of our
current and future EchoStar receivers obsolete, and we will incur additional costs, which may be substantial, to upgrade or replace these
receivers. While we may be able to generate increased revenue from such conversions, the deployment of equipment including new
technologies will increase the cost of our consumer equipment, at least in the short term. Our subscriber acquisition and retention costs will
increase to the extent we subsidize those costs for new and existing subscribers.
Domestic and international expansion.
Finally, we are actively involved in pursuing strategic investment and other new business opportunities
both domestically and abroad. These initiatives include, among other things, our recently announced investments in satellite-delivered mobile
video ventures in China and Korea, as well as investments we make domestically in companies whose products and services complement our
core businesses or may be a strategic fit with our new business initiatives. These investments are intended to provide new markets for future
revenue and long term strategic growth, as well as opportunities to leverage the introduction of new products and services for the benefit of our
core business. However, these investments involve a high degree of risk. They could expose us to significant financial losses if the underlying
ventures are not successful.
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Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS —
Continued