Dish Network 2015 Annual Report Download - page 177

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-73
XVI was launched during November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is
currently in service. Effective December 21, 2012, we and EchoStar amended the transponder service
agreement to, among other things, change the initial term to generally expire upon the earlier of: (i) the
end-of-life or replacement of the satellite; (ii) the date the satellite fails; (iii) the date the transponder(s) on
which service is being provided under the agreement fails; or (iv) four years following the actual service
commencement date. Prior to expiration of the initial term, we have the option to renew for an additional
six-year period. Prior to expiration of the initial term, EchoStar also has the right, upon certain conditions,
to renew for an additional six-year period. If either we or EchoStar exercise our respective six-year
renewal options, then we have the option to renew for an additional five-year period prior to expiration of
the then-current term. There can be no assurance that any options to renew this agreement will be
exercised.
Nimiq 5 Agreement. During 2009, EchoStar entered into a fifteen-year satellite service agreement with Telesat
Canada (“Telesat”) to receive service on all 32 DBS transponders on the Nimiq 5 satellite at the 72.7 degree orbital
location (the “Telesat Transponder Agreement”). During 2009, EchoStar also entered into a satellite service
agreement (the “DISH Nimiq 5 Agreement”) with us, pursuant to which we currently receive service from EchoStar
on all 32 of the DBS transponders covered by the Telesat Transponder Agreement. We have also guaranteed certain
obligations of EchoStar under the Telesat Transponder Agreement. See discussion under “Guarantees” in Note 15.
Under the terms of the DISH Nimiq 5 Agreement, we make certain monthly payments to EchoStar that commenced
in September 2009 when the Nimiq 5 satellite was placed into service and continue through the service term. Unless
earlier terminated under the terms and conditions of the DISH Nimiq 5 Agreement, the service term will expire ten
years following the date the Nimiq 5 satellite was placed into service. Upon expiration of the initial term, we have
the option to renew the DISH Nimiq 5 Agreement on a year-to-year basis through the end-of-life of the Nimiq 5
satellite. Upon in-orbit failure or end-of-life of the Nimiq 5 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 any
options to renew the DISH Nimiq 5 Agreement will be exercised or that we will exercise our option to receive
service on a replacement satellite.
QuetzSat-1 Lease Agreement. During 2008, EchoStar entered into a ten-year satellite service agreement with SES
Latin America S.A. (“SES”), which provides, among other things, for the provision by SES to EchoStar of service
on 32 DBS transponders on the QuetzSat-1 satellite. During 2008, EchoStar also entered into a transponder service
agreement (“QuetzSat-1 Transponder Agreement”) with us pursuant to which we receive service from EchoStar on
24 DBS transponders. QuetzSat-1 was launched on September 29, 2011 and was placed into service during the
fourth quarter 2011 at the 67.1 degree orbital location while we and EchoStar explored alternative uses for the
QuetzSat-1 satellite. In the interim, EchoStar provided us with alternate capacity at the 77 degree orbital location.
During the first quarter 2013, we and EchoStar entered into an agreement pursuant to which we sublease five DBS
transponders back to EchoStar. During January 2013, QuetzSat-1 was moved to the 77 degree orbital location and
we commenced commercial operations at that location in February 2013.
Unless earlier terminated under the terms and conditions of the QuetzSat-1 Transponder Agreement, the initial
service term will expire in November 2021. Upon expiration of the initial term, we have the option to renew the
QuetzSat-1 Transponder Agreement on a year-to-year basis through the end-of-life of the QuetzSat-1 satellite.
Upon an in-orbit failure or end-of-life of the QuetzSat-1 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 any options to
renew the QuetzSat-1 Transponder Agreement will be exercised or that we will exercise our option to receive
service on a replacement satellite.
103 Degree Orbital Location/SES-3. During May 2012, EchoStar entered into a spectrum development agreement
(the “103 Spectrum Development Agreement”) with Ciel Satellite Holdings Inc. (“Ciel”) to develop certain
spectrum rights at the 103 degree orbital location (the “103 Spectrum Rights”). During June 2013, we and EchoStar
entered into a spectrum development agreement (the “DISH 103 Spectrum Development Agreement”) pursuant to
which we may use and develop the 103 Spectrum Rights. During the third quarter 2013, we made a $23 million
payment to EchoStar in exchange for its rights under the 103 Spectrum Development Agreement. In accordance