Dish Network 2015 Annual Report Download - page 70

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Operations and Customer Service
While competitive factors have impacted the entire pay-TV industry, our relative performance has also been driven by
issues specific to us. In the past, our subscriber growth has been adversely affected by signal theft and other forms of
fraud and by our operational inefficiencies. To combat signal theft and improve the security of our broadcast system, we
use microchips embedded in credit card sized access cards, called “smart cards,” or security chips in our DBS receiver
systems to control access to authorized programming content (“Security Access Devices”). We expect that future
replacements of these devices will be necessary to keep our system secure. To combat other forms of fraud, among other
things, we monitor our independent distributors’ and independent retailers’ adherence to our business rules.
While we have made improvements in responding to and dealing with customer service issues, we continue to focus on
the prevention of these issues, which is critical to our business, financial condition and results of operations. To improve
our operational performance, we continue to make investments in staffing, training, information systems, and other
initiatives, primarily in our call center and in-home service operations. These investments are intended to help combat
inefficiencies introduced by the increasing complexity of our business, improve customer satisfaction, reduce churn,
increase productivity, and allow us to scale better over the long run. We cannot be certain, however, that our spending
will ultimately be successful in improving our operational performance.
Changes in our Technology
We have been deploying DBS receivers that utilize 8PSK modulation technology with MPEG-4 compression technology
for several years. These technologies, when fully deployed, will allow improved broadcast efficiency, and therefore
allow increased programming capacity. Many of our customers today, however, do not have DBS receivers that use
MPEG-4 compression technology. In addition, given that all of our HD content is broadcast in MPEG-4, any growth in
HD penetration will naturally accelerate our transition to these newer technologies and may increase our subscriber
acquisition and retention costs. All new DBS receivers that we purchase from EchoStar have MPEG-4 compression with
8PSK modulation technology.
In addition, from time to time, we change equipment for certain subscribers to make more efficient use of transponder
capacity in support of HD and other initiatives. We believe that the benefit from the increase in available transponder
capacity outweighs the short-term cost of these equipment changes.
EXPLANATION OF KEY METRICS AND OTHER ITEMS
Subscriber-related revenue. “Subscriber-related revenue” consists principally of revenue from basic, premium movie,
local, HD programming, pay-per-view, Latino and international subscriptions; broadband services; equipment rental fees
and other hardware related fees, including fees for DVRs, fees for broadband equipment, equipment upgrade fees and
additional outlet fees; advertising services; fees earned from our in-home service operations and other subscriber
revenue. Certain of the amounts included in “Subscriber-related revenue” are not recurring on a monthly basis.
Equipment sales and other revenue. “Equipment sales and other revenue” principally includes the non-subsidized sales
of DBS accessories to independent retailers and other independent distributors of our equipment.
Equipment sales, services and other revenue — EchoStar. “Equipment sales, services and other revenue — EchoStar”
includes revenue related to equipment sales, services, and other agreements with EchoStar.
Subscriber-related expenses. “Subscriber-related expenses” principally include programming expenses, which represent
a substantial majority of these expenses. “Subscriber-related expenses” also include costs for Pay-TV and broadband
services incurred in connection with our in-home service and call center operations, billing costs, refurbishment and
repair costs related to DBS receiver systems and broadband equipment, subscriber retention, other variable subscriber
expenses and monthly wholesale fees paid to broadband providers.