Dish Network 2014 Annual Report Download - page 30

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On December 20, 2013, the FCC issued a further order that, among other things, extended the AWS-4 Final Build-
Out Requirement by one year to March 2021 (the “Modified AWS-4 Final Build-Out Requirement”). If we fail to
meet the AWS-4 Interim Build-Out Requirement, the Modified AWS-4 Final Build-Out Requirement may be
accelerated by one year, from March 2021 to March 2020. If we fail to meet the Modified AWS-4 Final Build-Out
Requirement, our terrestrial authorization for each license area in which we fail to meet the requirement may
terminate. The FCC’s December 20, 2013 order also conditionally waived certain FCC rules for our AWS-4
licenses to allow us to repurpose all 20 MHz of our uplink spectrum (2000-2020 MHz) for downlink (the “AWS-4
Downlink Waiver”). If we fail to notify the FCC that we intend to use our uplink spectrum for downlink by June 20,
2016, the AWS-4 Downlink Waiver will terminate, and the Modified AWS-4 Final Build-Out Requirement will
revert back to the AWS-4 Final Build-Out Requirement.
H Block Licenses. The auction of wireless spectrum known as the H Block commenced on January 22, 2014 and
concluded on February 27, 2014. We were the winning bidder for all 176 wireless spectrum licenses in the H Block
auction with an aggregate bid of $1.564 billion. On December 17, 2013, we paid approximately $328 million to the
FCC as a deposit for the H Block auction. We paid the remaining balance of our winning bid of approximately
$1.236 billion for the H Block licenses on March 28, 2014. On April 29, 2014, the FCC issued an order granting our
application to acquire these H Block licenses. As a result, during May 2014, we also paid approximately $13
million to UTAM, Inc. for clearance costs associated with the lower H Block spectrum and approximately $95
million to Sprint for clearance costs associated with the upper H Block spectrum in connection with the issuance of
the H Block licenses. The H Block licenses are subject to certain interim and final build-out requirements. By April
2018, we must provide reliable signal coverage and offer service to at least 40% of the population in each area
covered by an individual H Block license (the “H Block Interim Build-Out Requirement”). By April 2024, we must
provide reliable signal coverage and offer service to at least 75% of the population in each area covered by an
individual H Block license (the “H Block Final Build-Out Requirement”). If we fail to meet the H Block Interim
Build-Out Requirement, the H Block license term and the H Block Final Build-Out Requirement may be accelerated
by two years (from April 2024 to April 2022) for each H Block license area in which we fail to meet the
requirement. If we fail to meet the H Block Final Build-Out Requirement, our authorization for each H Block
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.