Dish Network 2013 Annual Report Download - page 15

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Acquisition of New Subscribers
We incur significant upfront costs to acquire subscribers, including advertising, retailer incentives, equipment
subsidies and installation. In addition, certain customer promotions to acquire new subscribers result in less
programming revenue to us over the promotional period. While we attempt to recoup these upfront costs over the
lives of their subscriptions, there can be no assurance that we will be successful in achieving that objective. We
employ business rules such as credit requirements and contractual commitments, and we strive to provide
outstanding customer service, to increase the likelihood of customers keeping their DISH service over longer
periods of time. Our subscriber acquisition costs may vary significantly from period to period.
Advertising. We use print, radio, television and Internet media, on a local and national basis to motivate potential
subscribers to call DISH, visit our website or contact independent third party retailers.
Retailer Incentives. In general, we pay retailers an upfront incentive for each new subscriber they bring to DISH
that results in the activation of qualified programming and generally pay retailers small monthly incentives for up to
60 months; provided, among other things: (i) the retailer continuously markets, promotes and solicits orders for
DISH products and services; (ii) the retailer continuously provides customer service to DISH Pay-TV subscribers;
and (iii) 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 these
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 render the returned equipment
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 programming at no additional charge 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 Pay-TV
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 upgrade spending includes the cost of equipment
and installation. In certain circumstances, we also offer programming at no additional charge and/or promotional
pricing for limited periods for existing customers in exchange for a contractual commitment. A 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. During the first quarter 2012, we implemented new sales and customer care
systems to improve the customer experience. In addition, during 2011, we implemented a new interactive voice
response system.