Dish Network 2011 Annual Report Download - page 156

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-62
Satellite Capacity Leased from EchoStar. Since the Spin-off, we entered into certain satellite capacity agreements
pursuant to which we lease certain satellite capacity on certain satellites owned or leased by EchoStar. The fees for
the services provided under these satellite capacity agreements depend, among other things, upon the orbital
location of the applicable satellite and the length of the lease. The term of each lease is set forth below:
EchoStar III, VI, VIII and XII. We lease certain satellite capacity from EchoStar on EchoStar VI, VIII and XII.
The leases generally terminate upon the earlier of: (i) the end of life or replacement of the satellite (unless we
determine to renew on a year-to-year basis); (ii) the date the satellite fails; (iii) the date the transponders on
which service is being provided fails; or (iv) a certain date, which depends upon, among other things, the
estimated useful life of the satellite, whether the replacement satellite fails at launch or in orbit prior to being
placed into service and the exercise of certain renewal options. We generally have the option to renew each
lease on a year-to-year basis through the end of the respective satellite’s life. There can be no assurance that
any options to renew such agreements will be exercised. In August 2010, our lease of EchoStar III terminated
when it was replaced by EchoStar XV.
EchoStar IX. We lease certain satellite capacity from EchoStar on EchoStar IX. Subject to availability, we
generally have the right to continue to lease satellite capacity from EchoStar on EchoStar IX on a month-to-
month basis.
EchoStar XVI. We will lease certain satellite capacity from EchoStar on EchoStar XVI after its service
commencement date and this lease generally terminates upon the earlier of: (i) the end of life or replacement of
the satellite; (ii) the date the satellite fails; (iii) the date the transponder(s) on which service is being provided
under the agreement fails; or (iv) ten years following the actual service commencement date. Upon expiration
of the initial term, we have the option to renew on a year-to-year basis through the end of life of the satellite.
There can be no assurance that any options to renew this agreement will be exercised. EchoStar XVI is
expected to be launched during the second half of 2012.
EchoStar XV. EchoStar XV is owned by us and is operated at the 61.5 degree orbital location. The FCC has
granted EchoStar an authorization to operate the satellite at the 61.5 degree orbital location. For so long as
EchoStar XV remains in service at the 61.5 degree orbital location, we are obligated to pay EchoStar a fee, which
varies depending on the number of frequencies being used by EchoStar XV.
Nimiq 5 Agreement. During 2009, EchoStar entered into a fifteen-year satellite service agreement with Telesat
Canada (“Telesat”) to receive service on all 32 DBS transponders on the Nimiq 5 satellite at the 72.7 degree orbital
location (the “Telesat Transponder Agreement”). During 2009, EchoStar also entered into a satellite service
agreement (the “DISH Telesat Agreement”) with us, pursuant to which we currently receive service from EchoStar
on all 32 of the DBS transponders covered by the Telesat Transponder Agreement. We have also guaranteed
certain obligations of EchoStar under the Telesat Transponder Agreement. See discussion under “Guarantees” in
Note 16.
Under the terms of the DISH Telesat Agreement, we make certain monthly payments to EchoStar that commenced
in 2009 when the Nimiq 5 satellite was placed into service and continue through the service term. Unless earlier
terminated under the terms and conditions of the DISH Telesat Agreement, the service term will expire ten years
following the date it was placed into service. Upon expiration of the initial term we have the option to renew the
DISH Telesat Agreement on a year-to-year basis through the end of life of the Nimiq 5 satellite. Upon in-orbit
failure or end of life of the Nimiq 5 satellite, and in certain other circumstances, we have certain rights to receive
service from EchoStar on a replacement satellite. There can be no assurance that any options to renew the DISH
Telesat Agreement will be exercised or that we will exercise our option to receive service on a replacement satellite.