Dish Network 2012 Annual Report Download - page 10

8
8
SATELLITES
DBS Satellites. Most of our programming is currently delivered using DBS satellites. We continue to explore
opportunities to expand our available satellite capacity through the use of other available spectrum. Increasing our
available spectrum is particularly important as more bandwidth intensive HD programming is produced and to address
new video and data applications consumers may desire in the future. We currently utilize satellites in geostationary
orbit approximately 22,300 miles above the equator detailed in the table below.
Degree Estimated
Launch Orbital Useful Life
Satellites Date Location (Years)
Owned:
EchoStar I (1).................................. December 1995 77 12
EchoStar VII (2)............................. February 2002 119 15
EchoStar X (2)................................ February 2006 110 15
EchoStar XI (2)............................... July 2008 110 15
EchoStar XIV.................................. March 2010 119 15
EchoStar XV................................... July 2010 61.5 15
Leased from EchoStar:
EchoStar VI (1)(4).......................... July 2000 77 NA
EchoStar VIII (1)(3)(4)................... August 2002 77 NA
EchoStar IX (1)(3).......................... August 2003 121 NA
EchoStar XII (1)(4)......................... July 2003 61.5 NA
Nimiq 5 (1)(3)................................. September 2009 72.7 NA
EchoStar XVI (1)............................ November 2012 61.5 NA
QuetzSat-1 (1)(3)............................ September 2011 77 NA
Leased from Other Third Party:
Anik F3........................................... April 2007 118.7 NA
Ciel II.............................................. December 2008 129 NA
Under Construction:
EchoStar XVIII............................... 2015 110 15
(1) See Note 20 in the Notes to our Consolidated Financial Statements in Item 15 of this Annual Report on Form
10-K for further discussion of our Related Party Transactions with EchoStar.
(2) During the fourth quarter 2012, the estimated useful life of these satellites was extended from 12 years to
15 years on a prospective basis based on management’s assessment of, among other things, these satellites’
useful lives, technological obsolescence risk, estimated remaining fuel life and estimated useful lives of our
other owned and leased DBS satellites. This increase in the estimated useful life of these satellites had an
immaterial effect on our results of operations.
(3) We lease a portion of the capacity on these satellites.
(4) We generally have the option to renew each lease on a year-to-year basis through the end of the respective
satellite’s useful life.
Recent Developments
Recent developments with respect to certain of our satellites are discussed below.
QuetzSat-1. During 2008, we entered into a transponder service agreement with EchoStar expiring in November 2021
for the lease of 24 DBS transponders on QuetzSat-1. QuetzSat-1 was launched on September 29, 2011 and was placed
into service during the fourth quarter 2011 by EchoStar. During the third quarter 2012, we and EchoStar entered into
an agreement pursuant to which we sublease back to EchoStar five of the 24 DBS transponders on the QuetzSat-1
satellite. During January 2013, QuetzSat-1 was moved to the 77 degree orbital location, and we commenced
commercial operations at that location in February 2013. See Note 20 in the Notes to our Consolidated Financial
Statements in Item 15 of this Annual Report on Form 10-K.
9
9
EchoStar XVI. During December 2009, we entered into a transponder service agreement with EchoStar to lease all
of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar XVI was launched
during November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is currently in service. Under
the original transponder service agreement, the initial term generally expired upon the earlier of: (i) the end-of-life
or replacement of the satellite; (ii) the date the satellite failed; (iii) the date the transponder(s) on which service was
being provided under the agreement failed; or (iv) ten years following the actual service commencement date. Prior
to expiration of the initial term, we also had the option to renew on a year-to-year basis through the end-of-life of the
satellite. Effective December 21, 2012, we and EchoStar amended the transponder service agreement to, among
other things, change the initial term to generally expire 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) four years following the actual service commencement date. Prior to expiration of the initial
term, we have the option to renew for an additional six-year period. Prior to expiration of the initial term, EchoStar
also has the right, upon certain conditions, to renew for an additional six-year period. If either we or EchoStar
exercise our respective six-year renewal options, then we have the option to renew for an additional five-year period
prior to expiration of the then-current term.
2 GHz Satellites. As a result of the DBSD Transaction and the TerreStar Transaction, three 2 GHz satellites were
added to our satellite fleet, including two in-orbit satellites and one satellite under construction, discussed below.
While the FCC’s recently issued rules applicable to our 2 GHz authorizations no longer require an integrated
satellite component, we may use these satellites in our commercialization of wireless spectrum or for other
commercial purposes. In addition, T1, which we acquired through the TerreStar Transaction, is subject to certain
Canadian satellite regulations, including, among other things, an integrated satellite component requirement. We are
evaluating our options for these satellites and depending on our eventual use of these satellites, we may need to
impair them in the future.
D1. D1, formerly known as EchoStar G1, was launched in April 2008 by DBSD North America and is
currently located at the 92.85 degree orbital location. D1 was designed to meet a minimum 15-year useful life.
This satellite has currently not been placed into its intended commercial service as we evaluate our options for
future uses.
T1. T1, formerly known as EchoStar T1, was launched in July 2009 by TerreStar and currently operates at the
111.1 degree orbital location. T1 was designed to meet a minimum 15-year useful life. Prior to the TerreStar
Transaction, this satellite experienced certain solar array anomalies. During the fourth quarter 2012, the
primary attitude control electronics unit, which controls the orientation of the satellite, experienced certain
anomalous behavior. This anomaly is currently under investigation by the manufacturer. The redundant
attitude control electronics unit is currently being used for operations while the investigation continues. While
this most recent and prior anomalies did not reduce the estimated useful life of the satellite to less than 15 years
or impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce
its useful life or impact its commercial operation. This satellite, which is being depreciated, carries a nominal
amount of traffic to support a service for a limited number of customers. During 2012, this service experienced
certain intermittent outages. We are evaluating our options for this satellite and its associated operations.
T2. In December 2007, TerreStar entered into an agreement with Space Systems/Loral, Inc. (“SS/L”) for the
design and manufacture of T2, formerly known as EchoStar T2. Since the construction of T2 is almost finished,
the satellite could be completed during 2013. We do not currently have an expected launch date for T2.
Satellites Under Construction
EchoStar XVIII. On September 7, 2012, we entered into a contract with SS/L for the construction of EchoStar
XVIII, a DBS satellite with spot beam technology designed for, among other things, HD programming. This
satellite is expected to be launched during 2015.