Dish Network 2014 Annual Report Download - page 177

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-71
ten years following the actual service commencement date. Upon in-orbit failure or end of life of the SES-3
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 we will exercise our option to receive service on a
replacement satellite.
TT&C Agreement. Effective January 1, 2012, we entered into a telemetry, tracking and control (“TT&C”)
agreement pursuant to which we receive TT&C services from EchoStar for a period ending on December 31, 2016
(the “2012 TT&C Agreement”). The fees for services provided under the 2012 TT&C Agreement are calculated at
either: (i) a fixed fee; or (ii) cost plus a fixed margin, which will vary depending on the nature of the services
provided. We are able to terminate the 2012 TT&C Agreement for any reason upon 60 days notice.
As part of the Satellite and Tracking Stock Transaction, on February 20, 2014, we amended the 2012 TT&C
Agreement to cease the provision of TT&C services from EchoStar for the EchoStar I, EchoStar VII, EchoStar X,
EchoStar XI and EchoStar XIV satellites. As of March 1, 2014, EchoStar is providing us TT&C services for the
EchoStar XV, D1 and T1 satellites.
DBSD North America Agreement. On March 9, 2012, we completed the DBSD Transaction. During the second
quarter 2011, EchoStar acquired Hughes. Prior to our acquisition of DBSD North America and EchoStar’s
acquisition of Hughes, DBSD North America and HNS entered into an agreement pursuant to which HNS provides,
among other things, hosting, operations and maintenance services for DBSD North America’s satellite gateway and
associated ground infrastructure. This agreement renewed for a one-year period ending on February 15, 2016, and
renews for one additional one-year period unless terminated by DBSD North America upon at least 30 days notice
prior to the expiration of any renewal term.
TerreStar Agreement. On March 9, 2012, we completed the TerreStar Transaction. Prior to our acquisition of
substantially all the assets of TerreStar and EchoStar’s acquisition of Hughes, TerreStar and HNS entered into
various agreements pursuant to which HNS provides, among other things, hosting, operations and maintenance
services for TerreStar’s satellite gateway and associated ground infrastructure. These agreements generally may be
terminated by us at any time for convenience.
“General and administrative expenses”
During the years ended December 31, 2014, 2013 and 2012, we incurred $108 million, $90 million and $67 million,
respectively, for general and administrative expenses from EchoStar. These amounts are recorded in “General and
administrative expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss). The
agreements pertaining to these expenses are discussed below. In addition, the expenses incurred pursuant to the
Commercial Agreement discussed in “Sling TV,” under “Other Agreements – EchoStar” below, are also included in
these amounts.
Product Support Agreement. In connection with the Spin-off, we entered into a product support agreement pursuant
to which we have the right, but not the obligation, to receive product support from EchoStar (including certain
engineering and technical support services) for all set-top boxes and related accessories that EchoStar has
previously sold and in the future may sell to us. The fees for the services provided under the product support
agreement are calculated at cost plus a fixed margin, which varies depending on the nature of the services provided.
The term of the product support agreement is the economic life of such receivers and related accessories, unless
terminated earlier. We may terminate the product support agreement for any reason upon at least 60 days notice. In
the event of an early termination of this agreement, we are entitled to a refund of any unearned fees paid to EchoStar
for the services.