Dish Network 2014 Annual Report Download - page 19

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license area in which we fail to meet the requirement may terminate. The FCC has adopted rules for the H Block
spectrum band that is adjacent to our AWS-4 licenses. Depending on the outcome of the standard-setting process
for the H Block and our ultimate decision regarding the AWS-4 Downlink Waiver, the rules that the FCC adopted
for the H Block could further impact 15 MHz of our AWS-4 uplink spectrum (2005-2020 MHz), which may have a
material adverse effect on our ability to commercialize the AWS-4 licenses.
Commercialization of Our Wireless Spectrum Licenses and Related Assets. We have made substantial investments
to acquire certain wireless spectrum licenses and related assets. We may also determine that additional wireless
spectrum licenses may be required to commercialize our wireless business and to compete with other wireless
service providers. We will need to make significant additional investments or partner with others to, among other
things, commercialize, build-out, and integrate these licenses and related assets, and any additional acquired licenses
and related assets; and comply with regulations applicable to such licenses. Depending on the nature and scope of
such commercialization, build-out, integration efforts, and regulatory compliance, any such investments or
partnerships could vary significantly. We may need to raise significant additional capital in the future to fund these
efforts, which may not be available on acceptable terms or at all. There can be no assurance that we will be able to
develop and implement a business model that will realize a return on these wireless spectrum licenses or that we will
be able to profitably deploy the assets represented by these wireless spectrum licenses, which may affect the
carrying value of these assets and our future financial condition or results of operations.
AWS-3 Auction
The AWS-3 Auction commenced on November 13, 2014 and concluded on January 29, 2015. The FCC’s
prohibition on certain communications related to the AWS-3 Auction expired on February 13, 2015. Also, on
February 13, 2015, Northstar Wireless and SNR Wireless each filed applications with the FCC to acquire certain
AWS-3 Licenses for which it was named as winning bidder and had made the required down payments. Each of
Northstar Wireless and SNR Wireless has applied as a Designated Entity that is entitled to receive a bidding credit
of 25% in the AWS-3 Auction, as defined by FCC regulations.
Northstar Wireless was the winning bidder for certain AWS-3 Licenses (the “Northstar Licenses”) with gross
winning bids totaling approximately $7.845 billion, which after taking into account a 25% bidding credit, equals net
winning bids totaling approximately $5.884 billion. Northstar Wireless is a wholly-owned subsidiary of Northstar
Spectrum. Through our wholly-owned subsidiary, American AWS-3 Wireless II L.L.C. (“American II”), we own an
85% non-controlling interest in Northstar Spectrum. Northstar Manager, LLC (“Northstar Manager” and
collectively with Northstar Spectrum and Northstar Wireless, the “Northstar Entities”) owns a 15% controlling
interest in, and is the sole manager of, Northstar Spectrum. Northstar Spectrum is governed by a limited liability
company agreement by and between American II and Northstar Manager (the “Northstar Spectrum LLC
Agreement”). Pursuant to the Northstar Spectrum LLC Agreement, American II and Northstar Manager agreed to
make pro-rata equity contributions in Northstar Spectrum equal to approximately 15% of the net purchase price of
the Northstar Licenses. American II also entered into a Credit Agreement by and among American II, as Lender,
Northstar Wireless, as Borrower, and Northstar Spectrum, as Guarantor (the “Northstar Credit Agreement”).
Pursuant to the Northstar Credit Agreement, American II agreed to make loans to Northstar Wireless for
approximately 85% of the net purchase price of the Northstar Licenses. American II made equity contributions to
Northstar Spectrum of approximately $633 million and a loan to Northstar Wireless of approximately $432 million
for Northstar Wireless to make the upfront payment for the AWS-3 Auction and the down payment required for the
Northstar Licenses. American II is also required to make an equity contribution to Northstar Spectrum of
approximately $117 million and a loan to Northstar Wireless of approximately $4.569 billion for Northstar Wireless
to make the final payment required for the Northstar Licenses, which is due to the FCC by March 2, 2015.
Consequently, as of March 2, 2015, the total equity contributions from American II to Northstar Spectrum will be
approximately $750 million and the total loans from American II to Northstar Wireless will be approximately
$5.001 billion.
SNR Wireless was the winning bidder for certain AWS-3 Licenses (the “SNR Licenses”) with gross winning bids
totaling approximately $5.482 billion, which after taking into account a 25% bidding credit, equals net winning bids
totaling approximately $4.112 billion. In addition to the net winning bids, SNR Wireless is obligated to make a bid
withdrawal payment of approximately $8 million to the FCC. SNR Wireless is a wholly-owned subsidiary of SNR
Holdco. Through our wholly-owned subsidiary, American AWS-3 Wireless III L.L.C. (“American III”), we own an