Dish Network 2015 Annual Report Download - page 154

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-50
AWS-4 Licenses. On March 2, 2012, the FCC approved the transfer of 40 MHz of wireless spectrum licenses held
by DBSD North America and TerreStar to us. On March 9, 2012, we completed the DBSD Transaction and the
TerreStar Transaction, pursuant to which we acquired, among other things, certain satellite assets and wireless
spectrum licenses held by DBSD North America and TerreStar. The total consideration to acquire the DBSD North
America and TerreStar assets was approximately $2.860 billion.
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. On April 29, 2014, the FCC issued an order granting our application to acquire all 176 wireless
spectrum licenses in the H Block auction. We paid approximately $1.672 billion to acquire these H Block licenses,
including clearance costs associated with the lower H Block spectrum. 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 license area in which we fail to meet the requirement may terminate. The FCC has
adopted rules for the H Block spectrum band that is adjacent to our AWS-4 licenses. Depending on the outcome of
the standard-setting process for the H Block and our ultimate decision regarding the AWS-4 Downlink Waiver, the
rules that the FCC adopted for the H Block could further impact 15 MHz of our AWS-4 uplink spectrum (2005-2020
MHz), which may have a material adverse effect on our ability to commercialize the AWS-4 licenses.
Commercialization of Our Wireless Spectrum Licenses and Related Assets. We have made substantial investments
to acquire certain wireless spectrum licenses and related assets. We will need to make significant additional
investments or partner with others to, among other things, commercialize, build-out, and integrate these licenses and
related assets, and any additional acquired licenses and related assets; and comply with regulations applicable to
such licenses. Depending on the nature and scope of such commercialization, build-out, integration efforts, and
regulatory compliance, any such investments or partnerships could vary significantly. We may also determine that
additional wireless spectrum licenses may be required to commercialize our wireless business and to compete with