Dish Network 2001 Annual Report Download - page 11

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9
We offer our distributors and retailers a competitive residual commission program. The program pays
qualified distributors and retailers an activation bonus, and pays active retailers a fixed monthly residual commission
dependent on continued consumer subscription to programming.
We use regional and national broadcast and print advertising to promote the DISH Network. We also offer
point-of-sale literature, product displays, demonstration kiosks and signage for retail outlets. We provide guides to
our dealers and distributors at nationwide educational seminars and directly by mail, that describe DISH Network
products and services. Our mobile sales and marketing team visits retail outlets regularly to reinforce training and
ensure that these outlets quickly fulfill point-of-sale needs. Additionally, we dedicate one DISH Network channel
and provide a retailer specific website to provide information about special services and promotions that we offer
from time to time.
Our future success in the subscription television industry depends on our ability to acquire and retain DISH
Network subscribers, among other factors. Beginning in 1996, to stimulate subscriber growth, expand retail
distribution of our products, and build consumer awareness of the DISH Network brand, we reduced the retail price
charged to consumers for EchoStar receiver systems. Accordingly, since August 1996, we have provided varying
levels of subsidies and incentives to attract customers, including free or subsidized receiver systems, installations,
antenna, programming and other items. The amount of the subsidy varies depending on many factors. This
marketing strategy emphasizes our long-term business strategy of maximizing future revenue by selling DISH
Network programming to the largest possible subscriber base and rapidly increasing the size of that subscriber base.
Since we subsidize certain consumer up-front costs, we incur significant costs each time we acquire a new
subscriber. Although there can be no assurance, we believe that we will be able to fully recoup the up-front costs of
subscriber acquisition from future subscription television services revenue.
During July 2000, we began offering our DISH Network subscribers the option to lease receiver systems
under our Digital Home Plan promotion. The Digital Home Plan offers consumers the ability to lease from one to
four receiver systems with a one-year commitment to one of several qualifying programming packages. With each
plan, consumers receive in-home service and pay a one-time set-up fee. We expect this marketing strategy will
reduce the cost of acquiring future subscribers by maintaining ownership of the receiver systems. Upon termination
of the Digital Home Plan, subscribers are required to return the receiver to us. While we do not recover all of
equipment upon termination of service, receivers that are recovered after deactivation are refurbished and re-
deployed at a much lower cost to us.
Internet and Interactive Services. We are continuing to expand our offerings to include interactive and two-
way high-speed Internet access. During 2001, we began offering DISH Network customers an interactive digital
receiver with a built-in hard disk drive that permits viewers to pause and record live programs without the need for
videotape. We now offer receivers capable of storing up to 35 hours of programming, and expect to increase storage
capacity on future models to over 100 hours. We also are offering set-top boxes that can provide a wide variety of
innovative interactive television services and applications.
Through our strategic investment in StarBand Communications, we offer consumers two-way, high-speed
satellite Internet access along with DISH Network satellite television programming via a single dish. We believe
this technology is particularly well-suited for areas without cable or DSL infrastructure. Two-way satellite Internet
service offers significant benefits for consumers, including an “always on” connection that saves time over dial-up
methods and eliminates the need for a second phone line. DISH Network customers need an oblong dish,
approximately 24 inches by 36 inches, and other equipment to take advantage of two-way satellite Internet service.
We currently offer consumers a complete hardware and services solution for broadband Internet access combined
with DISH Network programming. For new customers who subscribe to a qualifying DISH Network programming
package and commit to one year of StarBand Internet service, the StarBand hardware is currently offered for $549
and a standard professional installation starts at $199. We currently offer a bundled price of $100.99 per month for
customers who subscribe to both DISH Network’s America’s Top 150 programming package and the StarBand
Internet service. See “– Liquidity and Capital Resources.”