Dish Network 2014 Annual Report Download - page 18

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AWS-4 Licenses. On March 2, 2012, the FCC approved the transfer of 40 MHz of wireless spectrum licenses held
by DBSD North America, Inc. (“DBSD North America”) and TerreStar Networks, Inc. (“TerreStar”) to us. On
March 9, 2012, we completed the acquisitions of 100% of the equity of reorganized DBSD North America and
substantially all of the assets of TerreStar, pursuant to which we acquired, among other things, certain satellite assets
and 40 MHz of spectrum licenses held by DBSD North America (the “DBSD Transaction”) and TerreStar (the
“TerreStar Transaction”), which licenses the FCC modified in March 2013 to add AWS-4 authority (“AWS-4”).
The total consideration to acquire the DBSD North America and TerreStar assets was approximately $2.860 billion.
Our consolidated FCC applications for approval of the license transfers from DBSD North America and TerreStar
were accompanied by requests for waiver of the FCC’s Mobile Satellite Service (“MSS”) “integrated service” and
spare satellite requirements and various technical provisions. On March 21, 2012, the FCC released a Notice of
Proposed Rule Making proposing the elimination of the integrated service, spare satellite and various technical
requirements associated with these licenses. On December 11, 2012, the FCC approved rules that eliminated these
requirements and gave notice of its proposed modification of our authorizations to, among other things, allow us to
offer single-mode terrestrial terminals to customers who do not desire satellite functionality. On February 15, 2013,
the FCC issued an order, which became effective on March 7, 2013, modifying our licenses to expand our terrestrial
operating authority with AWS-4 authority. That order imposed certain limitations on the use of a portion of this
spectrum, including interference protections for other spectrum users and power and emission limits that we
presently believe could render 5 MHz of our uplink spectrum (2000-2005 MHz) effectively unusable for terrestrial
services and limit our ability to fully utilize the remaining 15 MHz of our uplink spectrum (2005-2020 MHz) for
terrestrial services. These limitations could, among other things, impact the ongoing development of technical
standards associated with our wireless business, and may have a material adverse effect on our ability to
commercialize our AWS-4 licenses. That order also mandated certain interim and final build-out requirements for
the licenses. By March 2017, we must provide terrestrial signal coverage and offer terrestrial service to at least 40%
of the aggregate population represented by all of the areas covered by the licenses (the “AWS-4 Interim Build-Out
Requirement”). By March 2020, we were required to provide terrestrial signal coverage and offer terrestrial service
to at least 70% of the population in each area covered by an individual license (the “AWS-4 Final Build-Out
Requirement”).
On December 20, 2013, the FCC issued a further order that, among other things, extended the AWS-4 Final Build-
Out Requirement by one year to March 2021 (the “Modified AWS-4 Final Build-Out Requirement”). If we fail to
meet the AWS-4 Interim Build-Out Requirement, the Modified AWS-4 Final Build-Out Requirement may be
accelerated by one year, from March 2021 to March 2020. If we fail to meet the Modified AWS-4 Final Build-Out
Requirement, our terrestrial authorization for each license area in which we fail to meet the requirement may
terminate. The FCC’s December 20, 2013 order also conditionally waived certain FCC rules for our AWS-4
licenses to allow us to repurpose all 20 MHz of our uplink spectrum (2000-2020 MHz) for downlink (the “AWS-4
Downlink Waiver”). If we fail to notify the FCC that we intend to use our uplink spectrum for downlink by June 20,
2016, the AWS-4 Downlink Waiver will terminate, and the Modified AWS-4 Final Build-Out Requirement will
revert back to the AWS-4 Final Build-Out Requirement.
H Block Licenses. The auction of wireless spectrum known as the H Block commenced on January 22, 2014 and
concluded on February 27, 2014. We were the winning bidder for all 176 wireless spectrum licenses in the H Block
auction with an aggregate bid of $1.564 billion. On December 17, 2013, we paid approximately $328 million to the
FCC as a deposit for the H Block auction. We paid the remaining balance of our winning bid of approximately
$1.236 billion for the H Block licenses on March 28, 2014. On April 29, 2014, the FCC issued an order granting our
application to acquire these H Block licenses. As a result, during May 2014, we also paid approximately $13
million to UTAM, Inc. for clearance costs associated with the lower H Block spectrum and approximately $95
million to Sprint for clearance costs associated with the upper H Block spectrum in connection with the issuance of
the H Block licenses. The H Block licenses are subject to certain interim and final build-out requirements. By April
2018, we must provide reliable signal coverage and offer service to at least 40% of the population in each area
covered by an individual H Block license (the “H Block Interim Build-Out Requirement”). By April 2024, we must
provide reliable signal coverage and offer service to at least 75% of the population in each area covered by an
individual H Block license (the “H Block Final Build-Out Requirement”). If we fail to meet the H Block Interim
Build-Out Requirement, the H Block license term and the H Block Final Build-Out Requirement may be accelerated
by two years (from April 2024 to April 2022) for each H Block license area in which we fail to meet the
requirement. If we fail to meet the H Block Final Build-Out Requirement, our authorization for each H Block