Dish Network 2014 Annual Report Download - page 50

40
40
Acquisition and Capital Structure Risks Affecting our Business
We have made substantial investments to acquire certain wireless spectrum licenses and other related assets. In
addition, we have made substantial non-controlling investments in the Northstar Entities and the SNR Entities
related to the AWS-3 Auction.
DISH Spectrum
We have invested over $5.0 billion since 2008 to acquire certain wireless spectrum licenses and related assets.
700 MHz Licenses. In 2008, we paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which
were granted to us by the FCC in February 2009. At the time they were granted, these licenses were subject to
certain interim and final build-out requirements. By June 2013, we were required to provide signal coverage and
offer service to at least 35% of the geographic area in each area covered by each individual license (the “700 MHz
Interim Build-Out Requirement”). By June 2019, we were required to provide signal coverage and offer service to
at least 70% of the geographic area in each area covered by each individual license (the “700 MHz Final Build-Out
Requirement”). As discussed below, these requirements have since been modified by the FCC.
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, 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, 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 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.
AWS-4 Licenses. On March 2, 2012, the FCC approved the transfer of 40 MHz of wireless spectrum licenses held
by DBSD North America and TerreStar to us. On March 9, 2012, we completed the DBSD Transaction and the
TerreStar Transaction, pursuant to which we acquired, among other things, certain satellite assets and wireless
spectrum licenses held by DBSD North America and TerreStar. The total consideration to acquire the DBSD North
America and TerreStar assets was approximately $2.860 billion.
Our consolidated FCC applications for approval of the license transfers from DBSD North America and TerreStar
were accompanied by requests for waiver of the FCC’s MSS “integrated service” and spare satellite requirements
and various technical provisions. On March 21, 2012, the FCC released a Notice of Proposed Rule Making
proposing the elimination of the integrated service, spare satellite and various technical requirements associated with
these licenses. On December 11, 2012, the FCC approved rules that eliminated these requirements and gave notice
of its proposed modification of our authorizations to, among other things, allow us to offer single-mode terrestrial
terminals to customers who do not desire satellite functionality. On February 15, 2013, the FCC issued an order,
which became effective on March 7, 2013, modifying our licenses to expand our terrestrial operating authority with
AWS-4 authority. That order imposed certain limitations on the use of a portion of this spectrum, including
interference protections for other spectrum users and power and emission limits that we presently believe could
render 5 MHz of our uplink spectrum (2000-2005 MHz) effectively unusable for terrestrial services and limit our
ability to fully utilize the remaining 15 MHz of our uplink spectrum (2005-2020 MHz) for terrestrial services.
These limitations could, among other things, impact the ongoing development of technical standards associated with
our wireless business, and may have a material adverse effect on our ability to commercialize our AWS-4 licenses.
That order also mandated certain interim and final build-out requirements for the licenses. By March 2017, we must