Dish Network 2013 Annual Report Download - page 161

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-51
On September 9, 2013, we filed a letter with the FCC in support of a voluntary industry solution to resolve certain
interoperability issues affecting the lower 700 MHz spectrum band (the “Interoperability Solution”). On October
29, 2013, the FCC issued an order approving the Interoperability Solution (the “Interoperability Solution Order”),
which requires us to reduce power emissions on our 700 MHz licenses. As part of the Interoperability Solution
Order, the FCC, among other things, approved our request to modify the 700 MHz Interim Build-Out Requirement
so that by March 2017 (rather than the previous deadline of June 2013), we must provide signal coverage and offer
service to at least 40% of our total E Block population (the “Modified 700 MHz Interim Build-Out Requirement”).
The FCC also approved our request to modify the 700 MHz Final Build-Out Requirement so that by March 2021
(rather than the previous deadline of June 2019), we must provide signal coverage and offer service to at least 70%
of the population in each of our E Block license areas (the “Modified 700 MHz Final Build-Out Requirement”).
These requirements replaced the previous build-out requirements associated with our 700 MHz licenses. While the
modifications to our 700 MHz licenses would provide us additional time to complete the build-out requirements, the
reduction in power emissions could have an adverse impact on our ability to fully utilize our 700 MHz licenses. If
we fail to meet the Modified 700 MHz Interim Build-Out Requirement, the Modified 700 MHz Final Build-Out
Requirement may be accelerated by one year, from March 2021 to March 2020, and we could face the reduction of
license area(s). If we fail to meet the Modified 700 MHz Final Build-Out Requirement, our authorization may
terminate for the geographic portion of each license in which we are not providing service.
We will need to make significant additional investments or partner with others to, among other things, finance the
commercialization and build-out requirements of these licenses and our integration efforts, including compliance
with regulations applicable to the acquired licenses. Depending on the nature and scope of such commercialization,
build-out, and integration efforts, any such investment or partnership could vary significantly. There can be no
assurance that we will be able to develop and implement a business model that will realize a return on these
spectrum licenses or that we will be able to profitably deploy the assets represented by these spectrum licenses,
which may affect the carrying value of these assets and our future financial condition or results of operations.
Guarantees
In connection with the Spin-off, we distributed certain satellite lease agreements to EchoStar and remained the
guarantor under those capital leases for payments totaling approximately $50 million over approximately the next 14
months.
During the third quarter 2009, EchoStar entered into a new satellite transponder service agreement for Nimiq 5 through
2024. We sublease this capacity from EchoStar and also guarantee a certain portion of EchoStar’s obligation under its
satellite transponder service agreement through 2019. As of December 31, 2013, the remaining obligation of our
guarantee was $375 million.
As of December 31, 2013, we have not recorded a liability on the balance sheet for any of these guarantees.
Purchase Obligations
Our 2014 purchase obligations primarily consist of binding purchase orders for receiver systems and related
equipment, digital broadcast operations, satellite and transponder leases, engineering services, and products and
services related to the operation of our DISH branded pay-TV service. Our purchase obligations also include
certain fixed contractual commitments to purchase programming content. Our purchase obligations can fluctuate
significantly from period to period due to, among other things, management’s control of inventory levels, and can
materially impact our future operating asset and liability balances, and our future working capital requirements.