Dish Network 1997 Annual Report Download - page 7

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5
Customer Service Center. EchoStar currently maintains customer service centers in Thornton, Colorado and
Harrisburg, Pennsylvania. Potential and existing subscribers can call a single telephone number to receive assistance
for hardware, programming, installation and technical support. The customer service center in Thornton, Colorado is
owned and operated by EchoStar. The Pennsylvania facility is operated by a third-party. EchoStar presently intends to
open an additional owned and operated customer service center during the second quarter of 1998, and a third by the
end of 1998. EchoStar anticipates that it will expand its customer service operations as its DISH Network subscriber
base demands.
Digital Broadcast Operations Center. EchoStar’s Digital Broadcast Operations Center is located in
Cheyenne, Wyoming. The Digital Broadcast Operations Center uplinks programming content to EchoStar’s DBS
satellites. Uplink is the process by which signals are received from either the programming originator or distributor and
transmitted to one of EchoStar’s DBS satellites. The Digital Broadcast Operations Center uses fiber optic lines and
downlink antennas to receive programming and other data at the center. The Digital Broadcast Operations Center also
maintains a number of large uplink antennas and other equipment necessary to modulate and demodulate the
programming and data signals. All compression and encryption of the DISH Network’s programming signals are
performed by equipment at EchoStar’s Digital Broadcast Operations Center.
Conditional Access System. EchoStar has contracted with a third-party for the provision of access control
systems, including “ smart cards” used with each EchoStar Receiver System. The smart cards contain the authorization
codes necessary to receive DISH Network programming. The access control system is central to the security network
that prevents unauthorized viewing of programming. Access control systems of other DBS providers have been
commercially pirated. To date, the Company is unaware of any compromises of its access control system. While there
can be no assurance that breaches of EchoStar’s access control system will not occur in the future, the Company
believes its access control system will adequately prevent commercially viable unauthorized access to programming.
Further, there are a number of corrective measures which EchoStar could take in the event of a breach of its conditional
access system including, as a last resort, a complete replacement of the access control system. Any security breach
could result in a material reduction of DISH Network revenue until repaired, and in material unanticipated costs for
smart-card or system replacement.
Subscriber Management. EchoStar utilizes third-party software to perform subscriber management and
billing functions related to its DISH Network business. EchoStar has the ability to extract data from the subscriber
management system maintained by the third-party.
DBS Sales and Marketing
EchoStar primarily utilizes its existing nationwide network of over 10,000 independent distribution and retail
stores and outlets to market and distribute EchoStar Receiver Systems and DISH Network programming services to its
target markets. EchoStar intends to enhance consumer awareness of its product relative to other providers of DTH
services by forming alliances with nationally recognized distributors of other consumer electronics products. During
1997, EchoStar entered into a strategic alliance with JVC pursuant to which JVC distributes EchoStar Receiver
Systems under the JVC label through certain of its nationwide retailers. During February 1998, EchoStar also executed
agreements with Phillips and VTech pursuant to which those entities will distribute privately labeled EchoStar Receiver
Systems through certain of their nationwide retailers. EchoStar believes, but can give no assurance, that these
additional distribution channels will further enhance EchoStar’s ability to attract subscribers to the DISH Network.
To a lesser extent, EchoStar also maintains a direct sales channel. Customers can call a single telephone
number (1-800-333-DISH) 24 hours a day, seven days a week, to order EchoStar Receiver Systems, activate
programming services, schedule installation and obtain technical support. EchoStar believes it is the only DBS
provider to offer a comprehensive single-point customer service function. EchoStar also is expanding into other
less-traditional means of distribution such as alliances with electric and other utilities, multi-level marketing firms, and
other non-consumer electronic retail businesses.
EchoStar offers a residual (commission) program that it believes is competitive with that offered by other
DBS operators. The program pays qualified distributors and retailers an activation allowance, along with a monthly
fixed residual for programming services provided over the period that the respective DISH Network subscriber remains
active. Thus, residuals may be earned by distributors and retailers over an extended period.