Dish Network 2015 Annual Report Download - page 175

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-71
“Subscriber-related expenses”
During the years ended December 31, 2015, 2014 and 2013, we incurred $98 million, $80 million and $38 million,
respectively, for subscriber-related expenses from EchoStar. These amounts are recorded in “Subscriber-related
expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements
pertaining to these expenses are discussed below.
Hughes Broadband Distribution Agreement. Effective October 1, 2012, dishNET Satellite Broadband L.L.C.
(“dishNET Satellite Broadband”), our indirect wholly-owned subsidiary, and HNS entered into a Distribution
Agreement (the “Distribution Agreement”) pursuant to which dishNET Satellite Broadband has the right, but not the
obligation, to market, sell and distribute the HNS satellite Internet service (the “Service”). dishNET Satellite
Broadband pays HNS a monthly per subscriber wholesale service fee for the Service based upon the subscriber’s
service level, and, beginning January 1, 2014, certain volume subscription thresholds. The Distribution Agreement
also provides that dishNET Satellite Broadband has the right, but not the obligation, to purchase certain broadband
equipment from HNS to support the sale of the Service. As part of the Satellite and Tracking Stock Transaction, on
February 20, 2014, dishNET Satellite Broadband and HNS amended the Distribution Agreement which, among
other things, extended the initial term of the Distribution Agreement through March 1, 2024. Thereafter, the
Distribution Agreement automatically renews for successive one year terms unless either party gives written notice
of its intent not to renew to the other party at least 180 days before the expiration of the then-current term. Upon
expiration or termination of the Distribution Agreement, the parties will continue to provide the Service to the then-
current dishNET subscribers pursuant to the terms and conditions of the Distribution Agreement.
For the years ended December 31, 2015, 2014 and 2013, we purchased broadband equipment from HNS of $11
million, $24 million and $59 million, respectively. These amounts are initially included in “Inventory” and are
subsequently capitalized as “Property and equipment, net” on our Consolidated Balance Sheets or expensed as
“Subscriber acquisition costs” or “Subscriber-related expenses” on our Consolidated Statements of Operations and
Comprehensive Income (Loss) when the equipment is deployed. We also purchase certain broadband equipment
from EchoStar under the 2012 Receiver Agreement, discussed below.
SlingService Services Agreement. Effective February 23, 2010, we entered into an agreement with EchoStar
pursuant to which we receive certain services related to placeshifting, which is used for, among other things, the
DISH Anywhere mobile application. The fees for the services provided under this services agreement depend,
among other things, upon the cost to develop and operate such services. This agreement had an initial term of five
years with automatic renewal for successive one year terms. This agreement will renew on February 23, 2016 for an
additional one-year period until February 23, 2017. This agreement may be terminated for any reason upon at least
120 days notice to EchoStar.
DISH Remote Access Services Agreement. Effective February 23, 2010, we entered into an agreement with
EchoStar pursuant to which we receive, among other things, certain remote DVR management services. The fees
for the services provided under this services agreement depend, among other things, upon the cost to develop and
operate such services. This agreement had an initial term of five years with automatic renewal for successive one
year terms. This agreement will renew on February 23, 2016 for an additional one-year period until February 23,
2017. This agreement may be terminated for any reason upon at least 120 days notice to EchoStar.
“Satellite and transmission expenses”
During the years ended December 31, 2015, 2014 and 2013, we incurred $723 million, $653 million and $494
million, respectively, for satellite and transmission expenses from EchoStar. These amounts are recorded in
“Satellite and transmission expenses” on our Consolidated Statements of Operations and Comprehensive Income
(Loss). The agreements pertaining to these expenses are discussed below.