Dish Network 2011 Annual Report Download - page 33

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We rely on EchoStar, to design and develop all of our new set-top boxes and certain related components, and to
provide transponder capacity, digital broadcast operations and other services to us. Our business would be
adversely affected if EchoStar ceases to provide these products and services to us and we are unable to obtain
suitable replacement products and services from third parties.
EchoStar is our sole supplier of digital set-top boxes and digital broadcast operations. In addition, EchoStar is a key
supplier of transponder capacity and related services to us. We purchase digital set-top boxes from EchoStar
pursuant to a contract that expires on December 31, 2014. EchoStar provides digital broadcast operations to us
pursuant to a contract that expires on December 31, 2016. EchoStar has no obligation to supply digital set-top boxes
or digital broadcast operations to us after these dates. We may be unable to renew agreements for digital set-top
boxes or digital broadcast operations with EchoStar on acceptable terms or at all. Equipment, transponder leasing
and digital broadcast operation costs may increase beyond our current expectations. EchoStar’s inability to develop
and produce, or our inability to obtain, equipment with the latest technology, or our inability to obtain transponder
capacity and digital broadcast operations and other services from third parties, could affect our subscriber
acquisition and churn and cause related revenue to decline.
Furthermore, due to the lack of compatibility of our infrastructure with the set-top boxes of a provider other than
EchoStar, any transition to a new supplier of set-top boxes could take a significant period of time to complete, cause
us to incur significant costs and negatively affect our gross new subscriber activations and subscriber churn. For
example, the proprietary nature of the Sling technology and certain other technology used in EchoStar’s set-top
boxes may significantly limit our ability to obtain set-top boxes with the same or similar features from any other
provider of set-top boxes.
If we were to switch to another provider of set-top boxes, we may have to implement additional infrastructure to
support the set-top boxes purchased from such new provider, which could significantly increase our costs. In
addition, differences in, among other things, the user interface between set-top boxes provided by EchoStar and
those of any other provider could cause subscriber confusion, which could increase our costs and have a material
adverse effect on our gross new subscriber activations and subscriber churn. Furthermore, switching to a new
provider of set-top boxes may cause a reduction in our supply of set-top boxes and thus delay our ability to ship set-
top boxes, which could have a material adverse effect on our gross new subscriber activations and subscriber churn
rate.
We operate in an extremely competitive environment and our success may depend in part on our timely
introduction and implementation of, and effective investment in, new competitive products and services, the
failure of which could negatively impact our business.
Our operating results are dependent to a significant extent upon our ability to continue to introduce new products
and services and to upgrade existing products and services on a timely basis, and to reduce costs of our existing
products and services. We may not be able to successfully identify new product or service opportunities or develop
and market these opportunities in a timely or cost-effective manner. The research and development of new,
technologically advanced products is a complex and uncertain process requiring high levels of innovation and
investment. The success of new product and service development depends on many factors, including among
others, the following:
x difficulties and delays in the development, production, timely completion, testing and marketing
of products and services;
x the cost of the products and services;
x proper identification of customer need and customer acceptance of products;
x the development of, approval of and compliance with industry standards;
x the significant amount of resources we must devote to the development of new technologies; and
x the ability to differentiate our products and services and compete with other companies in the
same markets.