Dish Network 2008 Annual Report Download - page 14

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x Over-the-Air Broadcasters. In most areas of the United States, consumers can receive over-the-air
terrestrial video broadcasts typically ranging from four to fifteen channels. These broadcasters provide
local, network and syndicated programming free of charge. The upcoming transition from analog to digital
delivery will allow broadcasters to provide improved signal quality, offer additional channels including
content broadcast in HD, and explore new business opportunities such as mobile video.
Acquisition of New Subscribers
We incur significant up-front costs to acquire subscribers, including advertising, retailer incentives, equipment,
installation, and new customer promotions. While we attempt to recoup these up-front costs over the lives of their
subscription, there can be no assurance that we will. We deploy business rules such as higher credit requirements
and contractual commitments, and we strive to provide outstanding customer service, to increase the likelihood of
customers keeping their DISH Network service over longer periods of time. Our subscriber acquisition costs may
vary significantly from period to period.
Advertising. We use print, radio and television media, on a local and national basis to motivate potential subscribers
to call DISH Network or visit our website.
Retailer Incentives. We pay retailers an upfront incentive for each new subscriber they bring to DISH Network and,
for certain retailers, we pay small monthly incentives for up to 60 months provided, among other things, the
customer continuously subscribes to qualified programming.
Equipment. We incur significant upfront costs to provide our new subscribers with in-home equipment, including
advanced HD and DVR receivers, which most of our new subscribers lease from us. While we seek to recoup such
upfront equipment costs mostly through monthly fees, there can be no assurance that we will be successful in
achieving that objective. In addition, upon deactivation of a subscriber we may refurbish and redeploy their
equipment which lowers future upfront costs. However, our ability to capitalize on these cost savings may be
limited as technological advances and consumer demand for new features may result in the returned equipment
becoming obsolete.
Installation. We incur significant upfront costs to install satellite dishes and receivers in the homes of our new
customers.
New Customer Promotions. We often offer free programming and/or promotional pricing during introductory
periods for new subscribers. While such promotional activities have an economic cost and reduce our subscriber-
related revenue, they are not included in our definitions of subscriber acquisition costs or the SAC metric.
Customer Retention
We incur significant costs to retain our existing customers, mostly by upgrading their equipment to HD and DVR
receivers. As with our subscriber acquisition costs, our retention spending includes the cost of equipment and
installation. We also offer free programming and/or promotional pricing for limited periods for existing customers
in exchange for a commitment. A major component of our retention efforts includes the installation of equipment
for customers who move. Our subscriber retention costs may vary significantly from period to period.
Customer Service
Customer Service Centers. We use both internally-operated and outsourced customer service centers to handle calls
from prospective and existing customers. We strive to answer customer calls promptly and to resolve issues
effectively on the first call. We intend to better use the internet and other applications to provide our customers
with more self-service capabilities over time.
Installation and Other In-Home Service. High quality installations, upgrades, and in-home repairs are critical to
providing good customer service. Such in-home service is performed by both DISH Network employees and a large
network of our independent contractors.