dish network annual reports 2005

ANNUAL REPORT
Year ended December 31, 2005

April 7, 2006

To our Shareholders and Bondholders,

We recently celebrated the 10th anniversary of DISH Network, and as we look back on those 10
years we should consider for a moment all that we have achieved during that time. We activated our first
DISH Network customer in March 1996 and ended that year with about $200 million of revenue. During
2005, we produced over $8.4 billion of revenue, $1.5 billion of earnings, and grew to serve more than 12
million customers. Approximately one in every 10 American households now receives DISH Network
service. I am pleased and very proud that our continued investment in the business over the past 10 years
has produced these truly impressive results.

Due to intense competition from cable along with other factors, our stock price has remained
relatively static over the past several years, even as we repurchased approximately 12 million additional
shares of EchoStar stock during 2005. Nevertheless, we continue to enhance the inherent value of our
Company as we add new subscribers. I am pleased we were able to increase our net subscriber base by over
1.1 million customers during 2005. We remain the clear leader in international programming, and we are
well positioned as the low-cost provider in the pay-TV industry. We now lease rather than sell most of our
set top boxes, which allows us to partially offset new subscriber acquisition costs since we can re-deploy
equipment when customers disconnect. As others focus heavily on high-end – and increasingly expensive –
services, we continue to explore growth opportunities with attractive margins in the lower end of the
market as well. Our recently introduced prepay program, and our $19.99 DishFAMILY package, are good
examples.

Technological advances will continue to create increased opportunity as well as increased
competition. Satellite has historically been the most cost-efficient point to multipoint video distribution
system. I believe this advantage can become more pronounced as the market evolves toward more high
definition content. Today, we are a leader in HD content, offering 25 nationwide HD channels – more than
any of our major competitors. With the commercial operation of EchoStar X expected to commence soon,
we will be able to offer local HD channels in up to 30 markets, reaching almost 50 percent of all U.S. TV
households by year end. Combined with leading-edge high definition DVR receivers and other strategies, I
am optimistic we can continue as an HD leader.

We also solidified our position as the largest U.S. provider of interactive TV programs and the
world leader in the number of ITV-enabled homes. Among other things, our DishHOME format provides
consumers the ability to watch six core TV channels simultaneously, and use an interactive menu at the
same time. Finally, we will continue to evaluate additional ways to further grow our business strategically.
For example, our PocketDISH and similar products may offer mass market video portability, and we are
also exploring improved mobile video and data distribution technologies.

I am excited that we are well positioned to capitalize on these and other opportunities. I hope you
share that excitement and appreciate your continued support and confidence.

Sincerely,

Charles W. Ergen
Chairman and Chief Executive Officer

9601 S. Meridian Blvd. • Englewood, Colorado 80112 • Tel: (303) 723-1000 • Fax: (303) 723-1999

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from _______________ to ________________.

Commission file number: 0-26176

EchoStar Communications Corporation
(Exact name of registrant as specified in its charter)

Nevada 88-0336997
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

9601 South Meridian Boulevard
Englewood, Colorado 80112
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (303) 723-1000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Class A common stock, $0.01 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes _X_ No __

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes __ No _X_
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition
of “accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer _X_ Accelerated filer ____ Non-accelerated filer ____

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes __ No _X_

As of June 30, 2005, the aggregate market value of Class A common stock held by non-affiliates* of the Registrant was
approximately $6.1 billion based upon the closing price of the Class A common stock as reported on the Nasdaq National Market
as of the close of business on that date.

As of March 8, 2006, the Registrant’s outstanding common stock consisted of 205,942,275 shares of Class A common stock and
238,435,208 shares of Class B common stock, each $0.01 par value.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated into this Form 10-K by reference:

Portions of the Registrant’s definitive Proxy Statement to be filed in connection with its 2006 Annual Meeting of
Shareholders are incorporated by reference in Part III.

* Without acknowledging that any individual director or executive officer of the Company is an affiliate, the shares
over which they have voting control have been included as owned by affiliates solely for purposes of this
computation.

TABLE OF CONTENTS

PART I

Disclosure regarding forward-looking statements........................................................................................... i
Item 1. Business........................................................................................................................................... 1
Item 1A. Risk Factors..................................................................................................................................... 24
Item 1B. Unresolved Staff Comments............................................................................................................ 35
Item 2. Properties......................................................................................................................................... 36
Item 3. Legal Proceedings ........................................................................................................................... 36
Item 4. Submission of Matters to a Vote of Security Holders ..................................................................... 42

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities ....................................................................................... 43
Item 6. Selected Financial Data ................................................................................................................... 44
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .......... 46
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.......................................................... 77
Item 8. Financial Statements and Supplementary Data ............................................................................... 79
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .......... 79
Item 9A. Controls and Procedures.................................................................................................................. 79
Item 9B. Other Information............................................................................................................................ 80

PART III

Item 10. Directors and Executive Officers of the Registrant ......................................................................... 82
Item 11. Executive Compensation ................................................................................................................. 82
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters............................................................................................................................................. 82
Item 13. Certain Relationships and Related Transactions ............................................................................. 82
Item 14. Principal Accountant Fees and Services.......................................................................................... 82

PART IV

Item 15. Exhibits and Financial Statement Schedules ................................................................................... 82

Signatures ........................................................................................................................................ 88
Index to Consolidated Financial Statements.................................................................................... F-1

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

We make “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995
throughout this document. Whenever you read a statement that is not simply a statement of historical fact (such as
when we describe what we “believe,” “intend,” “plan,” “estimate,” “expect” or “anticipate” will occur and other
similar statements), you must remember that our expectations may not be correct, even though we believe they are
reasonable. We do not guarantee that any future transactions or events described herein will happen as described or
that they will happen at all. You should read this document completely and with the understanding that actual future
results may be materially different from what we expect. Whether actual events or results will conform with our
expectations and predictions is subject to a number of risks and uncertainties. For further discussion see Item 1A.
Risk Factors. The risks and uncertainties include, but are not limited to, the following:

• we face intense and increasing competition from satellite and cable television providers; new competitors,
including telephone companies, are entering the subscription television business, and new technologies,
including video over the internet, are likely to further increase competition;
• as technology changes, and in order to remain competitive, we will have to upgrade or replace some, or all,
subscriber equipment periodically. We will not be able to pass on to our customers the entire cost of these
upgrades;
• DISH Network subscriber growth may decrease, subscriber turnover may increase and subscriber
acquisition costs may increase;
• satellite programming signals have been subject to theft and will continue to be subject to theft in the
future; theft of service could increase and cause us to lose subscribers and revenue, and result in higher
costs to us;
• we depend on others to produce programming; programming costs may increase beyond our current
expectations; we may be unable to obtain or renew programming agreements on acceptable terms or at all;
existing programming agreements could be subject to cancellation; foreign programming is increasingly
offered on other platforms which could cause our subscriber additions and related revenue to decline and
could cause our subscriber turnover to increase;
• we depend on the Telecommunications Act of 1996 as Amended (“Communications Act”) and Federal
Communications Commission (“FCC”) program access rules to secure nondiscriminatory access to
programming produced by others, neither of which assure that we have fair access to all programming that
we need to remain competitive;
• the regulations governing our industry may change;
• certain provisions of the Satellite Home Viewer Extension and Reauthorization Act of 2004, or SHVERA,
may force us to stop offering local channels in certain markets or may force us to incur additional costs to
continue offering local channels in certain markets;
• our satellite launches may be delayed or fail, or our satellites may fail in orbit prior to the end of their
scheduled lives causing extended interruptions of some of the channels we offer;
• we currently do not have commercial insurance covering losses incurred from the failure of satellite
launches and/or in-orbit satellites we own;
• service interruptions arising from technical anomalies on satellites or on-ground components of our direct
broadcast satellite (“DBS”) system, or caused by war, terrorist activities or natural disasters, may cause
customer cancellations or otherwise harm our business;
• we are heavily dependent on complex information technologies; weaknesses in our information technology
systems could have an adverse impact on our business; we may have difficulty attracting and retaining
qualified personnel to maintain our information technology infrastructure;
• we rely on key personnel including Charles W. Ergen, our chairman and chief executive officer, and other
executives;
• we may be unable to obtain needed retransmission consents, FCC authorizations or export licenses, and we
may lose our current or future authorizations;
• we are party to various lawsuits which, if adversely decided, could have a significant adverse impact on our
business;

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• we may be unable to obtain patent licenses from holders of intellectual property or redesign our products to
avoid patent infringement;
• sales of digital equipment and related services to international direct-to-home service providers may
decrease;
• we are highly leveraged and subject to numerous constraints on our ability to raise additional debt;
• we may pursue acquisitions, business combinations, strategic partnerships, divestitures and other
significant transactions that involve uncertainties;
• weakness in the global or U.S. economy may harm our business generally, and adverse political or
economic developments may occur in some of our markets;
• terrorist attacks, the possibility of war or other hostilities, natural and man-made disasters, and changes in
political and economic conditions as a result of these events may continue to affect the U.S. and the global
economy and may increase other risks;
• we periodically evaluate and test our internal control over financial reporting in order to satisfy the
requirements of Section 404 of the Sarbanes-Oxley Act. Although our management concluded that our
internal control over financial reporting was effective as of December 31, 2005, if in the future we are
unable to report that our internal control over financial reporting is effective (or if our auditors do not agree
with our assessment of the effectiveness of, or are unable to express an opinion on, our internal control over
financial reporting), we could lose investor confidence in our financial reports, which could have a material
adverse effect on our stock price and our business; and
• we may face other risks described from time to time in periodic and current reports we file with the
Securities and Exchange Commission (“SEC”).

All cautionary statements made herein should be read as being applicable to all forward-looking statements
wherever they appear. In this connection, investors should consider the risks described herein and should not place
undue reliance on any forward-looking statements.

We assume no responsibility for updating forward-looking information contained or incorporated by reference
herein or in other reports we file with the SEC.

In this document, the words “EchoStar,” the “Company,” “we,” “our” and “us” refer to EchoStar Communications
Corporation and its subsidiaries, unless the context otherwise requires. “EDBS” refers to EchoStar DBS
Corporation and its subsidiaries.

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PART I

Item 1. BUSINESS

OVERVIEW

Our Business

EchoStar Communications Corporation, through its DISH Network, is a leading provider of satellite delivered
digital television to customers across the United States. DISH Network services include hundreds of video, audio
and data channels, interactive television channels, digital video recording, high definition television, international
programming, professional installation and 24-hour customer service.

We started offering subscription television services on the DISH Network in March 1996. As of December 31,
2005, the DISH Network had approximately 12.040 million subscribers. We currently have 14 owned or leased in-
orbit satellites which enable us to offer over 2,300 video and audio channels to consumers across the United States.
Since we use many of these channels for local programming, no particular consumer could subscribe to all channels,
but all are available using small consumer satellite antennae, or dishes. We believe that the DISH Network offers
programming packages that have a better “price-to-value” relationship than packages currently offered by most
other subscription television providers. As of December 31, 2005, there were over 27.0 million subscribers to direct
broadcast satellite services in the United States. We believe that there are more than 94.2 million pay television
subscribers in the United States, and there continues to be unsatisfied demand for high quality, reasonably priced
television programming services.

DISH Network and EchoStar Technologies Corporation

EchoStar Communications Corporation (“ECC”) is a holding company. Its subsidiaries (which together with ECC
are referred to as “EchoStar,” the “Company,” “we,” “us” and/or “our”) operate two interrelated business units:

• The DISH Network – which provides a direct broadcast satellite (“DBS”) subscription television service in
the United States; and

• EchoStar Technologies Corporation (“ETC”) – which designs and develops DBS set-top boxes, antennae
and other digital equipment for the DISH Network. We refer to this equipment collectively as “EchoStar
receiver systems.” ETC also designs, develops and distributes similar equipment for international satellite
service providers.

We have deployed substantial resources to develop the “EchoStar DBS System.” The EchoStar DBS System
consists of our FCC allocated DBS spectrum, our owned and leased satellites, EchoStar receiver systems, digital
broadcast operations centers, customer service facilities, and certain other assets utilized in our operations. Our
principal business strategy is to continue developing our subscription television service in the United States to
provide consumers with a competitive alternative to cable television service.

Other Information

We were organized in 1995 as a corporation under the laws of the State of Nevada. Our common stock is publicly
traded on the Nasdaq National Market under the symbol “DISH.” Our principal executive offices are located at
9601 South Meridian Boulevard, Englewood, Colorado 80112 and our telephone number is (303) 723-1000.

Recent Developments

EchoStar X. EchoStar X, a DBS satellite which can operate up to 49 spot beams using up to 42 active 140 watt
TWTAs, was launched on February 15, 2006. Assuming successful completion of in-orbit testing, the satellite is
expected to commence commercial operations during the second quarter of 2006 at the 110 degree orbital location.
The spot beams on EchoStar X are designed to increase the number of markets where we can offer local channels by
satellite, including high definition local channels.

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$1.5 Billion Senior Notes Offering. On February 2, 2006, we sold $1.5 billion aggregate principal amount of our
ten-year, 7 1/8% Senior Notes due February 1, 2016 in a private placement. The proceeds from the sale of the notes
were used to redeem our outstanding 9 1/8% Senior Notes due 2009 and are also intended to be used for other
general corporate purposes.

9 1/8% Senior Notes Redemption. Effective February 17, 2006, we redeemed the balance of our outstanding 9
1/8% Senior Notes due 2009. In accordance with the terms of the indenture governing the notes, the remaining
principal amount of the notes of approximately $442.0 million was redeemed at 104.563% of the principal amount,
for a total of approximately $462.1 million. The premium paid of approximately $20.1 million, along with
unamortized debt issuance costs of approximately $2.8 million, were recorded as charges to earnings in February
2006.

DISH NETWORK

Programming

Basic Programming Packages. We use a “value-based” strategy in structuring the content and pricing of
programming packages available from the DISH Network. For example, we currently sell our “America’s Top 60”
package for $29.99 per month. This package includes 60 of our most popular video channels in digital format. We
estimate that cable operators would typically charge over $40.00 per month, on average, for comparable expanded
basic service.

Our “America’s Top 120” package currently sells for $39.99 per month and is similar to an expanded basic cable
package plus more than 30 commercial-free, CD-quality music channels. We estimate that cable operators would
typically charge over $50.00 per month, on average, for a similar package.

Our “America’s Top 180” currently sells for $49.99 per month, and our “America’s Everything Pak,” which
combines our “America’s Top 180” package and more than 30 commercial-free premium movie channels including
HBO, Cinemax, Showtime and Starz, currently sells for $84.99 per month.

We also offer satellite-delivered local broadcast channels for an additional $5.99 per month in 164 markets in the
United States, representing over 95% of all of U.S. television households. Cable operators typically include local
channels in their programming packages at no additional cost. In addition, generally, subscribers to any of our basic
packages may add a digital video recorder to their system for an additional cost of only $5.98 per month.

High Definition Programming Packages. We offer high definition (“HD”) programming in our DishHD Bronze
($49.99), DishHD Silver ($59.99), DishHD Gold ($69.99) and DishHD Platinum ($99.99) packages which include
from 60 to 180 of our most popular video channels in digital format and 23 channels in HD. The 23 HD channel
package may be purchased for $29.99. In addition, HBO and Showtime are offered in HD for those customers who
subscribe to these channels. We also currently offer satellite delivered HD local channels in 13 markets and expect
to reach more than 50 percent of U.S. households with local HD channels by the end of 2006.

Family-Friendly Programming Package. We recently added a new programming tier, DishFAMILY, which offers
40 “family- friendly” channels including sports, news, children’s programming, lifestyle, hobbies, shopping and
public interest, for $19.99 per month, or $24.99 including local channels where available. Comparatively, the
family tier prices announced by most pay TV providers are more than $30 per month, and often more than $35 per
month.

DISH Latino Programming Packages. We also offer a variety of Spanish-language programming packages. Our
“DISH Latino” package includes more than 35 Spanish-language programming channels for $24.99 per month. We
also offer “DISH Latino Dos,” which includes over 150 English and Spanish-language programming channels for
$34.99 per month. Our “DISH Latino Max” includes more than 175 Spanish and English-language channels for
$44.99 per month.

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Prepaid Programming Card. During the fourth quarter of 2005, we began test marketing a prepay program, “DISH
Now.” This program allows consumers who might not be attracted by our existing promotions to purchase a satellite
receiver system and a prepaid card which can be refreshed periodically through additional prepayments. We have
not yet determined whether this program will be offered broadly. Certain of our business metrics could be impacted
to the extent we ultimately acquire a significant number of subscribers through “DISH Now.” For example, while
“DISH Now” may attract subscribers more likely to churn than our traditional customers, our subscriber acquisition
costs under this program will also be substantially lower.

Movie Packages. We offer five premium movie packages starting at $11.99 per month and including as many as 10
channels. We believe our movie packages are a better value than similar packages offered by most other multi-
channel video providers.

International Programming. We offer over 115 foreign-language channels including Arabic, South Asian, Hindi,
Russian, Chinese, Greek and many others. DISH Network remains the pay-TV leader in delivering foreign-
language programming to customers in the United States, and our foreign-language programming contributes
significantly to our subscriber growth. We believe foreign-language programming is a valuable niche product that
attracts new subscribers to DISH Network who are unable to get similar programming elsewhere, and we will
continue to explore opportunities to add foreign language programming.

Sales, Marketing and Distribution

Sales Channels. We currently distribute EchoStar receiver systems and solicit orders for DISH Network
programming services through direct marketers, independent retailers, consumer electronics stores, independent
distributors and telecommunication providers. We also offer receiver systems and programming through our own
direct sales channels. Independent retailers are primarily local retailers who specialize in TV and home
entertainment systems. We also acquire customers through nationwide retailers such as Costco, Sears and certain
regional consumer electronic chains. In addition, RadioShack Corporation offers EchoStar receiver systems and
markets DISH Network programming services through approximately 5,200 corporate stores, in approximately
1,000 dealer franchise stores nationwide and in over 500 kiosks located throughout the United States primarily in
Sam's Clubs.

We generally pay distributors, direct marketers and other retailers a fee upon activation of each new subscriber they
acquire for us. We also typically make a small monthly payment for as long as the customer continues to subscribe
to our programming.

Marketing. We use print, radio and television, on a local and national basis, to advertise and promote the DISH
Network. We also offer point-of-sale literature, product displays, demonstration kiosks and signage for retail
outlets. We provide guides that describe DISH Network products and services to our retailers and distributors and
conduct periodic educational seminars. Our mobile sales and marketing team visits retail outlets regularly to
reinforce training and ensure that these outlets have proper point-of-sale materials for our current promotions.
Additionally, we dedicate a DISH Network television channel and websites to provide retailers and customers with
information about special services and promotions that we offer from time to time.

Promotional Subsidies. Our future success in the subscription television industry depends on, among other factors,
our ability to acquire and retain DISH Network subscribers. We provide varying levels of subsidies and incentives
to attract customers, including leased, free or subsidized receiver systems, installations, programming and other
items. This marketing strategy emphasizes our long-term business strategy of maximizing future revenue by selling
DISH Network programming to a large potential subscriber base and rapidly increasing our subscriber base. Since
we subsidize consumer up-front costs, we incur significant costs each time we acquire a new subscriber. Although
there can be no assurance, we believe that, on average, 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. Our
current equipment lease program, the DHA promotion, offers new customers the ability to lease receivers serving up
to four rooms, including various premium models such as advanced digital video recorders and HD receivers, when

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they subscribe to one of several qualifying programming packages. Although there can be no assurance, we expect
this marketing strategy will reduce the cost of acquiring future subscribers because we retain ownership of the
receiver systems. Upon termination of service, DHA subscribers are required to return the receiver and certain other
equipment to us. While we do not recover all of the equipment upon termination of service, equipment that is
recovered after deactivation is reconditioned and re-deployed at a lower cost than new equipment. The effectiveness
of our plan to reduce subscriber acquisition costs through redeployment of leased equipment is dependent on our
ability to retrieve and cost-effectively recondition leased equipment from subscribers who terminate service. Our
ability to realize reduced equipment costs from redeploying reconditioned equipment will be negatively impacted by
new compression and other technologies that will inevitably render some portion of our current and future EchoStar
receivers obsolete. We will incur additional costs, which may be substantial, to upgrade or replace these set-top boxes.

We base our marketing promotions, among other things, on current competitive conditions. In some cases, if
competition increases, or we determine for any other reason that it is necessary to increase our subscriber acquisition
costs to attract new customers, our profitability and costs of operation would be adversely affected.

Digital Video Recording and Interactive Service

We continue to expand our offerings to include advanced products such as digital video recorders, or “DVRs” and
interactive programming services. DISH Network customers can purchase or lease receivers with built-in hard disk
drives that permit viewers to pause and record live programs, including programming in HD, without the need for
videotape. We now offer receivers capable of storing more than 210 hours of standard definition programming and
expect to increase storage capacity on future receiver models. We also currently offer receivers that provide a wide
variety of innovative interactive television services and applications, including shopping and weather channels and
interactive games.

Bundling Alliances

We have agreements to allow our partners, such as AT&T, Inc. (“AT&T”), formerly known as SBC
Communications, Inc., to offer a bundled package of services combining DISH Network satellite television with
voice and data services.

Beginning in the first quarter of 2004, AT&T commenced sales of a co-branded service featuring our DISH
Network service bundled together with AT&T’s telephony, high-speed data and other communications services.
AT&T markets the bundled service and is responsible for certain integrated order-entry, customer service and
billing. Initially, AT&T also purchased set-top box equipment from us to lease to bundled service customers.
AT&T out-sourced installation and certain customer service functions to us for a fee. As part of the agreement,
AT&T paid us certain development and implementation fees during 2003 and 2004.

During the first half of 2005, AT&T shifted its DISH Network marketing and sales efforts to focus on limited
geographic areas and customer segments. As a result of AT&T’s de-emphasized sales of DISH Network services, a
decreasing percentage of our new subscriber additions were derived from our relationship with AT&T. During
fourth quarter 2005, we modified and extended our distribution and sales agency agreement with AT&T. We
believe our overall economic return will be similar under both arrangements.

While we expect to continue to pursue opportunities to bundle our DISH Network satellite television service with
the voice and data services of AT&T and other telecommunications providers, AT&T has begun deployment of
fiber-optic networks that will allow it to offer video services directly to millions of homes as early as the second half
of 2006. Other telecommunications companies have announced similar plans. While it is possible that the fourth
quarter 2005 revision to our AT&T agreement may drive increased subscriber growth, our net new subscriber
additions and certain of our other key operating metrics could continue to be adversely affected to the extent AT&T
further de-emphasizes, or discontinues altogether, its efforts to acquire DISH Network subscribers, and as a result of
competition from video services offered by AT&T or other telecommunications companies. Moreover, there can be no
assurance that we will be successful in developing significant new bundling opportunities with other
telecommunications companies.

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Our Satellites

Our satellites operate in the “Ku” and “Ka” band portions of the microwave radio spectrum used for satellite
communications. The FCC has split the Ku-band spectrum into two segments. The 11.7 to 12.2 GHz downlink
band, which is the low and medium power portion of the Ku-band, is known as the Fixed Satellite Service (“FSS”)
band. The high power portion of the Ku-band within the 12.2 to 12.7 GHz downlink band is known as the
Broadcast Satellite Service (“BSS”) band, which is also referred to as Direct Broadcast Satellite or the “DBS” band.

Unlike the DBS spectrum, the FSS spectrum has no predefined frequency plan such that the number and bandwidth
of each individual channel can vary and satellite orbital locations are routinely as close together as two degrees. In
addition, there are more severe power limitations placed on FSS spectrum. The result of these differences generally
means that, while FSS spectrum can be satisfactorily used for delivery of direct-to-home (“DTH”) services, it can
carry somewhat less capacity and generally requires a slightly larger user antenna or consumer dish to adequately
receive signals from a satellite.

Ka-band is a higher frequency band than Ku-band and roughly ranges from 18 to 40 GHz. For commercial users,
the downlink spectrum is generally considered to consist of frequencies between 18.3 – 18.8 GHz and 19.7 – 20.2
GHz. This part of the Ka-band is also considered to be FSS spectrum, and therefore Ka-band orbital locations can
routinely be as close together as two degrees. The higher frequency and closer spacing generally make Ka-band
spectrum transmissions more susceptible to various types of signal interference, including interference caused by
rain and snow. While several companies in the satellite communications industry have business plans for the use of
Ka-band spectrum for video, data and broadband services, the use of Ka-band spectrum for commercial satellite
communication services is still in the developmental stage.

Most of our programming is currently transmitted to our customers on DBS frequencies within the Ku-band
spectrum. However, we continue to explore other opportunities including partnerships and investments to expand
our capacity through the use of other available spectrum, such as FSS services in the Ku and Ka-bands.

Overview of Our Satellites and FCC Authorizations. Our satellites are located in orbital positions, or slots, that are
designated by their western longitude. An orbital position describes both a physical location and an assignment of
spectrum in the applicable frequency band. The FCC has divided each DBS orbital position into 32 frequency
channels. Each transponder on our satellites typically exploits one frequency channel. Through digital compression
technology, we can currently transmit between nine and 13 digital video channels from each transponder. Several of
our satellites also include spot-beam technology which enables us to increase the number of markets where we
provide local channels, but reduces the number of video channels that could otherwise be offered across the entire
United States.

The FCC has licensed us to operate 104 direct broadcast satellite frequencies at various orbital positions including:

• 21 frequencies at the 119 degree orbital location and 29 frequencies at the 110 degree orbital
location, both capable of providing service to the entire continental United States (“CONUS”);

• 22 frequencies at the 61.5 degree orbital location, capable of providing service to the Eastern and
Central United States;

• 32 frequencies at the 148 degree orbital location, capable of providing service to the Western
United States.

In addition, we currently have the right to use 32 frequencies at a Canadian DBS slot at the 129 degree orbital
location, capable of providing service to most of CONUS. A new 32 transponder Canadian satellite, Ciel 2, is being
constructed for operation at that location. We will have the right to at least 50% of the capacity of that satellite, with
the remaining 50% required by Canadian regulations to be offered for use by Canadians until the time of launch of
the satellite. Consequently, until Ciel 2 is launched, we will not know the exact amount of capacity available to us
on that satellite.

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We also hold licenses or have entered into agreements to lease capacity on satellites at three FSS orbital locations
including:

• 500 MHz of Ku spectrum divided into 32 frequencies at the 121 degree orbital location, capable of
providing CONUS service, plus 500 MHz of Ka spectrum at the 121 degree orbital location
capable of providing service into select spot beams;

• 500 MHz of Ku spectrum divided into 24 frequencies at the 105 degree orbital location, currently
capable of providing service to CONUS, Alaska and Hawaii, plus approximately 720 MHz of Ka
spectrum capable of providing service through spot beams to CONUS, Alaska and Hawaii; and

• 500 MHz of Ku spectrum divided into 24 frequencies at the 85 degree orbital location, currently
capable of providing service to CONUS, plus approximately 720 MHz of Ka spectrum capable of
providing service through spot beams to CONUS.

In addition, we were the winning bidder for the remaining 29 DBS frequencies at the 157 degree orbital location at
an FCC auction conducted in July 2004. However, the Washington, D.C. Court of Appeals overturned the auction
and the FCC has not yet decided how it will allocate those orbital slots and frequencies. We have also applied for
the two remaining frequencies at the 61.5 slot. We cannot be certain that the FCC will ultimately grant us the
licenses for the additional frequencies at the 61.5 or 157 degree orbital locations.

We currently broadcast the majority of our programming from the 110 and 119 degree orbital locations. Almost all
of our customers have satellite receiver systems that are equipped to receive signals from both of these locations.

Satellite Fleet

We presently have 14 owned or leased satellites in geostationary orbit approximately 22,300 miles above the equator.
Each of the satellites we own had an original minimum design life of at least 12 years. Our satellite fleet is a major
component of our EchoStar DBS System. While we believe that overall our satellite fleet is generally in good
condition, during 2005 and prior periods, certain satellites within our fleet have experienced various anomalies,
some of which have had a significant adverse impact on their commercial operation.

Owned Satellites

We currently own 11 in-orbit satellites.

EchoStar I and II. EchoStar I and II currently operate at the 148 degree orbital location. Each of these Series 7000
class satellites, designed and manufactured by Lockheed Martin Corporation (“Lockheed”), has 16 transponders that
operate at approximately 130 watts of power. While both satellites are currently functioning properly in orbit,
similar Lockheed Series 7000 class satellites owned by third parties have experienced total in-orbit failure. While
no telemetry or other data indicates EchoStar I or EchoStar II would be expected to experience a similar failure,
Lockheed has been unable to conclude these and other Series 7000 satellites will not experience similar failures.
EchoStar I and II are each equipped with 24 Traveling Wave Tube Amplifiers (“TWTA”), of which 16 are required
to support full operation on each satellite. Prior to 2005, anomalies left each satellite with 23 usable TWTAs. While
we do not expect a large number of additional TWTAs to fail in any year, it is likely that additional TWTA failures
will occur from time to time in the future, and that those failures may impact commercial operation of the satellites.
The TWTA failures have not reduced the remaining estimated useful life of the satellite.

EchoStar III. Our EchoStar III satellite operates at the 61.5 degree orbital location. While originally designed to
operate a maximum of 32 transponders at approximately 120 watts per channel, switchable to 16 transponders
operating at over 230 watts per channel, the satellite was equipped with a total of 44 TWTAs to provide redundancy.
As of January 8, 2006, this satellite has experienced 11 transponder pair (22 TWTA) failures. As a result, EchoStar
III can now operate a maximum of 22 transponders, but due to redundancy switching limitations and specific
channel authorizations, it currently can only operate 17 of the 19 FCC authorized frequencies we utilize at the 61.5
degree west orbital location for this spacecraft. While we don’t expect a large number of additional TWTAs to fail
in any year, it is likely that additional TWTA failures will occur from time to time in the future, and that those

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failures will further impact commercial operation of the satellite. The TWTA failures have not reduced the
remaining estimated useful life of the satellite.

EchoStar IV. Our EchoStar IV satellite was originally designed to operate a maximum of 32 transponders at
approximately 120 watts per channel, switchable to 16 transponders operating at over 230 watts per channel. During
July 2005, we relocated our EchoStar IV satellite from our 157 degree orbital location to a third party Mexican DBS
orbital slot located at 77 degrees. During the relocation, EchoStar IV experienced a thruster anomaly which has not
impacted commercial operation of the satellite. Prior to 2004, this satellite experienced failures with the deployment
of its solar arrays and with 38 of its 44 transponders (including spares), and further experienced anomalies affecting its
thermal systems and propulsion systems. Several years ago, we filed an insurance claim for a total loss under the
launch insurance policies covering this satellite. During March 2005, we settled this insurance claim and related claims
for accrued interest and bad faith with the insurers for a net amount of $240.0 million (see Note 3 in the Notes to the
Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K). During September 2004, the
south solar array on EchoStar IV deployed fully and appears to be producing nominal current. There can be no
assurance that further material degradation, or total loss of use, of EchoStar IV will not occur in the immediate future.
As discussed above, EchoStar IV is only capable of operating six of its 44 transponders and is fully depreciated.

EchoStar V. EchoStar V, which is currently located at the 129 degree orbital location, was designed to operate a
maximum of 32 transponders at approximately 110 watts per channel, switchable to 16 transponders operating at
over 220 watts per channel. Momentum wheel failures on this satellite in prior years resulted in increased fuel
consumption and caused a minor reduction of spacecraft life. During 2005, we determined those anomalies will reduce
the life of EchoStar V more than previously estimated, and as a result, we reduced the estimated remaining useful life
of the satellite from approximately seven years to approximately six years effective January 2005. EchoStar V has
been utilized as an in-orbit spare since February 2003. On June 30, 2005, the FCC approved our request to use this
satellite to provide service to the United States from a third party Canadian DBS orbital slot located at the129 degree
orbital location. Due to the increase in fuel consumption resulting from the relocation of EchoStar V from the 119
degree orbital location to the 129 degree orbital location, effective July 1, 2005, we further reduced the satellite’s
estimated remaining useful life from approximately six years to approximately 40 months. These reductions in
estimated remaining useful life during 2005 increased our depreciation expense related to the satellite by
approximately $9.2 million in 2005 and will increase it by approximately $15.3 million annually thereafter. Prior to
2005, EchoStar V experienced anomalies resulting in the loss of five solar array strings out of a total of 96 available,
reducing solar array power to approximately 95% of its original capacity. During August 2005, EchoStar V lost an
additional solar array string. The loss is not expected to impact commercial operation of the satellite or its
remaining useful life. There can be no assurance that future anomalies will not further impact the useful life or
commercial operation of the satellite.

EchoStar VI. EchoStar VI, which currently operates at the 110 degree orbital location, was designed to operate 32
transponders at approximately 125 watts per channel, switchable to 16 transponders operating at approximately 225
watts per channel. This satellite has a total of 108 solar array strings. Approximately 102 are required to assure full
power availability for the estimated 12-year estimated useful life of the satellite. Prior to 2005, EchoStar VI lost a
total of five solar array strings. During 2005, EchoStar VI experienced anomalies resulting in the loss of 11
additional solar array strings bringing the total number of string losses to 16, and reducing the number of functional
solar array strings available to 92. The solar array anomalies will prevent the use of some of those transponders for
the full 12-year estimated useful life of the satellite. See discussion of evaluation of impairment in Note 4 in the
Notes to the Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K. However, the solar
array anomalies have not impacted commercial operation of the satellite or reduced its estimated useful life below
12 years. There can be no assurance future anomalies will not cause further losses which could impact commercial
operation of the satellite.

EchoStar VII. EchoStar VII, which currently operates at the 119 degree orbital location, was designed to operate 32
transponders that operate at approximately 120 watts per channel, switchable to 16 transponders operating at
approximately 240 watts per channel. Each transponder can transmit multiple digital video, audio and data
channels. EchoStar VII also includes spot beam technology. During 2004, our EchoStar VII satellite lost a solar
array circuit. EchoStar VII was designed with 24 solar array circuits and needs 23 for the spacecraft to be fully
operational at end of life. While this anomaly is not expected to reduce the estimated useful life of the satellite to
less than 12 years and has not impacted commercial operation of the satellite to date, an investigation of the anomaly

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is continuing. Until the root causes are finally determined, there can be no assurance future anomalies will not cause
further losses which could impact commercial operation of the satellite.

EchoStar VIII. EchoStar VIII, which currently operates at the 110 degree orbital location, was designed to operate 32
transponders at approximately 120 watts per channel, switchable to 16 transponders operating at approximately 240
watts per channel. EchoStar VIII also includes spot-beam technology. During January 2005, one of the computer
components in its control electronics experienced an anomaly. The processors were successfully reset during April
2005, restoring full redundancy in the spacecraft control electronics. During July 2005, a thruster experienced a
“bubble” event in a propellant line which caused improper pointing of the satellite resulting in a loss of service.
Service was restored within several hours and the thruster is currently operating normally. During February 2005,
EchoStar VIII lost a solar array string, reducing solar array power to approximately 99% of its original capacity.
Until the root cause of these anomalies are determined, there can be no assurance that a repeat of the July 2005
anomaly, or other anomalies, will not cause further losses which could materially impact its commercial operation, or
result in a total loss of the satellite. These and other anomalies previously disclosed have not reduced the 12-year
estimated useful life of the satellite. We depend on EchoStar VIII to provide local channels to over 40 markets at least
until such time as our EchoStar X satellite has commenced commercial operation, which is currently expected during
second quarter 2006. In the event that EchoStar VIII experienced a total or substantial failure, we could transmit many,
but not all, of those channels from other in-orbit satellites.

EchoStar IX. EchoStar IX, which currently operates at the 121 degree orbital location, was designed to operate 32
Ku-band transponders at approximately 110 watts per channel, along with transponders that can provide services in
Ka-Band (a “Ka-band payload”). EchoStar IX provides expanded video and audio channels to DISH Network
subscribers who install a specially-designed dish. The Ka-band spectrum is being used to test and verify potential
future broadband initiatives and to implement those services. The satellite also includes a C-band payload which is
owned by a third party.

EchoStar X. EchoStar X, a DBS satellite which can operate up to 49 spot beams using up to 42 active 140 watt
TWTAs, was launched on February 15, 2006. Assuming successful completion of in-orbit testing, the satellite is
expected to commence commercial operations during the second quarter of 2006 at the 110 degree orbital location.
The spot beams on EchoStar X are designed to increase the number of markets where we can offer local channels by
satellite, including high definition local channels.

EchoStar XII. EchoStar XII, previously known as Rainbow 1, currently operates at the 61.5 degree orbital location.
This direct broadcast satellite, which was purchased in November 2005 from Rainbow DBS Co., a subsidiary of
Cablevision Systems Corporation, was designed to provide all CONUS, all Spot Beam, or a mixture of CONUS and
Spot Beam coverage. In the all CONUS configuration, the spacecraft can operate 13 transponders (26 TWTAs) at
270 watts per channel. In the all Spot Beam mode, the spacecraft can operate up to 22 spot beams using a
combination of 135 and 65 watt TWTAs. We are currently using the payload in the all CONUS configuration.

EchoStar XII experienced one north solar array circuit failure during May 2005 and one south solar array circuit
failure during September 2004. The south solar array circuit has since partially recovered. The reason for the
failures is unknown, but believed to be caused by an internal electrical short circuit. While this anomaly is not
expected to reduce the remaining useful life of the satellite to less than 10 years and has not impacted commercial
operation of the satellite to date, an investigation of the anomaly is continuing. Until the root causes are finally
determined, there can be no assurance future anomalies will not cause further losses, which could impact commercial
operation of the satellite.

Leased Satellites

We currently lease three in-orbit satellites.

AMC-2. AMC-2 currently operates at the 85 degree orbital location. This SES Americom FSS satellite is equipped
with 24 medium power Ku FSS transponders. Our lease of this satellite is scheduled to continue through 2006.

AMC-15. AMC-15 currently operates at the 105 degree orbital location. This SES Americom FSS satellite is
equipped with 24 Ku FSS transponders that operate at approximately 120 watts per channel and a Ka FSS payload

8

consisting of 12 spot beams. We currently use the capacity on AMC-15 to offer a combination of programming
including local channels. This programming is expected to be transferred to our EchoStar X satellite following
completion of in-orbit testing. We currently do not have a plan to utilize the capacity of AMC-15 once this
programming is transferred to EchoStar X. We could use this satellite to offer local network channels in additional
markets, together with satellite-delivered high-speed internet services.

AMC-16. AMC-16 is currently located at the 85 degree orbital location. This SES Americom FSS satellite is
virtually identical to AMC-15 and is equipped with 24 Ku FSS transponders that operate at approximately 120 watts
per channel and a Ka FSS payload consisting of 12 spot beams capable of covering CONUS from the 85 degree
orbital location. We could use this satellite to offer local network channels in additional markets, together with
satellite-delivered high-speed internet services. We have applied to the FCC for permission to use the AMC-16
satellite at the 118.7 degree orbital location.

Satellites under Construction

We have entered into contracts to construct six new satellites.

• EchoStar XI, a Space Systems/Loral, Inc. (“SSL”) DBS satellite, is expected to be completed during 2007.
EchoStar XI will enable better bandwidth utilization, provide back-up protection for our existing offerings,
and could allow DISH Network to offer other value-added services.

• Five additional SSL Ka and/or Ku expanded band satellites are contractually scheduled to be completed
during 2008 and 2009 and will enable better bandwidth utilization and could allow DISH Network to offer
other value-added services including 2-way broadband and video.

We have also entered into satellite service agreements to lease capacity on three additional satellites currently under
construction.

• An SES Americom DBS satellite (AMC-14) expected to launch during late 2006 and commence
commercial operation at an orbital location to be determined at a future date. This satellite could be used as
additional backup capacity and to offer other value-added services.

• The Telesat Anik F3 FSS satellite expected to launch during 2006 and commence commercial operation at
the 118.7 degree orbital location. This satellite could allow DISH Network to offer other value-added
services.

• A Canadian DBS satellite, Ciel 2, which is currently scheduled to be launched during 2008 and is expected
to be located at the 129 degree orbital location.

We are significantly increasing our satellite capacity as a result of the agreements discussed above and other satellite
service agreements currently under negotiation. While we are currently evaluating various opportunities to make
profitable use of this capacity (including, but not limited to, launching satellite two-way and wireless broadband,
increasing our international programming and other services, and expanding our local and HD programming), we do
not have firm plans to utilize all of the additional satellite capacity we expect to acquire. In addition, there can be no
assurance that we can successfully develop the business opportunities we currently plan to pursue with this
additional capacity. Future costs associated with this additional capacity will negatively impact our margins if we
do not have sufficient growth in subscribers or in demand for new programming or services to generate revenue to
offset the costs of this increased capacity.

9

Components of a DBS System

Overview. In order to provide programming services to DISH Network subscribers, we have entered into agreements
with video, audio and data programmers who generally make their programming content available to our digital
broadcast operations centers via commercial satellites or fiber optic networks. We monitor those signals for quality,
and can add promotional messages, public service programming, advertising, and other information. Equipment at
our digital broadcast operations centers then digitizes, compresses, encrypts and combines the signal with other
necessary data, such as conditional access information. We then “uplink” or transmit the signals to one or more of
our satellites and broadcast directly to DISH Network subscribers.

In order to receive DISH Network programming, a subscriber needs:

• a satellite antenna, which people sometimes refer to as a “dish,” and related components;
• a “satellite receiver” or “set-top box”; and
• a television.

EchoStar Receiver Systems. EchoStar receiver systems include a small satellite dish, a digital satellite receiver that
decrypts and decompresses signals for television viewing, a remote control and other related components. We offer
a number of set-top box models. Our standard system comes with an infrared universal remote control, an on-screen
interactive program guide and V-chip type technology for parental control. Our premium models include a hard
disk drive enabling additional features such as digital video recording of more than 210 hours of programming and a
UHF/infrared universal remote. Certain of our standard and premium systems allow independent satellite TV
viewing on two separate televisions. We also offer a variety of specialized products including HD receivers. Set-
top boxes communicate with our authorization center through telephone lines to, among other things, report the
purchase of pay-per-view movies and other events. DISH Network reception equipment is incompatible with our
competitors’ systems.

Although we internally design and engineer our receiver systems, we out-source manufacturing to high-volume
contract electronics manufacturers. Sanmina-SCI Corporation is the primary manufacturer of our receiver systems.
JVC and Celetronix USA, Inc. also manufacture some of our receiver systems.

We depend on a few manufacturers, and in some cases a single manufacturer, for the production of our receivers and
many components of our EchoStar receiver systems that we provide to subscribers. Although there can be no
assurance, we do not believe that the loss of any single manufacturer would materially impact our business.

Conditional Access System. We use conditional access technology to encrypt our programming so only those who
pay can receive it. We use microchips embedded in credit card-sized access cards, called “smart cards,” or in
security chips in the satellite receiver, together referred to as “security access devices,” to control access to
authorized programming content. We own 50% of NagraStar L.L.C., a joint venture that provides us with security
access devices. Nagra USA, a subsidiary of the Kudelski Group, owns the other 50% of NagraStar. NagraStar
purchases these security access devices from NagraCard SA, a Swiss company which is also a subsidiary of the
Kudelski Group. These security access devices, certain aspects of which we can upgrade over the air or replace
periodically, are a key element in preserving the security of our conditional access system. When a consumer orders
a particular channel, we send a message by satellite that instructs the security access devices to permit decryption of
the programming for viewing by that consumer. The set-top box then decompresses the programming and sends it
to the consumer’s television.

It is illegal to create, sell or otherwise distribute mechanisms or devices to circumvent that encryption. Our signal
encryption has been compromised by theft of service and could be further compromised in the future. Theft of our
programming reduces future potential revenue and increases our net subscriber acquisition costs. In addition, theft
of our competitors’ programming can also increase our churn. Compromises of our encryption technology could
also adversely affect our ability to contract for video and audio services provided by programmers. We continue to
respond to compromises of our encryption system with security measures intended to make signal theft of our
programming more difficult. In order to combat theft of our service and maintain the functionality of active set-top
boxes, we recently replaced the majority of our older generation smart cards with newer generation smart cards.
These existing smart cards have been compromised, and we are implementing software patches and other security

10

measures to help secure our service. However, there can be no assurance that our security measures will be effective
in reducing theft of our programming signals. If we are required to replace existing smart cards, the cost of card
replacements could have a material adverse effect on our financial condition, profitability and cash flows.
Furthermore, other illegal methods that compromise satellite programming signals may be developed in the future.
If we cannot control compromises of our encryption technology, our revenue, net subscriber acquisition costs, churn
and our ability to contract for video and audio services provided by programmers could be materially adversely
affected.

Installation. While some consumers have the skills necessary to install our equipment in their homes, we believe
that most installations are best performed by professionals, and that on time, quality installations are important to
our success. Consequently, we are continuing to expand our installation business, which is conducted through our
DISH Network Service L.L.C. subsidiary. We use both employees and independent contractors for professional
installations. Independent installers are held to DISH Network Service L.L.C. service standards to attempt to ensure
each DISH Network customer receives the same quality installation and service. Our offices and independent
installers are strategically located throughout the continental United States. Although there can be no assurance, we
believe that our internal installation business helps to improve quality control, decrease wait time on service calls
and new installations and helps us better accommodate anticipated subscriber growth.

Digital Broadcast Operations Centers. Our principal digital broadcast operations centers are located in Cheyenne,
Wyoming and Gilbert, Arizona. Almost all of the functions necessary to provide satellite-delivered services occur at
those locations. The digital broadcast operations centers use fiber optic lines and downlink antennas to receive
programming and other data from content providers. For most local channels, the programming signals are encoded
in the originating city and then backhauled via fiber to our digital broadcast operation centers. These centers then
uplink programming content to our direct broadcast satellites. Equipment at our digital broadcast operations centers
performs substantially all compression and encryption of DISH Network’s programming signals. We have also built
five new regional digital broadcast operations centers that will allow us to better utilize the spot beam capabilities of
our satellites.

Customer Service Centers. We currently operate 11 owned or out-sourced customer service centers fielding most of
our customer service calls. Potential and existing subscribers can call a single telephone number to receive
assistance for hardware, programming, billing, installation and technical support. We continue to work to automate
simple phone responses and to increase Internet-based customer assistance in order to better manage customer
service costs and improve the customer’s self-service experience.

Subscriber Management. We presently use, and are dependent on, CSG Systems International, Inc.’s software
system for the majority of DISH Network subscriber billing and related functions.

Competition for our Dish Network Business

We compete in the subscription television service industry against other DBS television providers, cable television
and other system operators offering video, audio and data programming and entertainment services. Many of these
competitors have substantially greater financial, marketing and other resources than we have. Our earnings and
other operating metrics could be materially adversely affected if we are unable to compete successfully with these
and other new providers of multi-channel video programming services.

Cable Television. Cable television operators have a large, established customer base, and many cable operators
have significant investments in, and access to, programming. Of the total U.S. households in which cable television
service was available as of June 30, 2005 approximately 60% subscribed to cable. Cable television operators
continue to leverage their advantages relative to satellite operators by, among other things, bundling their analog
video service with expanded digital video services, 2-way high speed internet access, and telephone services. Cable
television operators with analog systems are also able to provide service to multiple television sets within the same
household at a lesser incremental cost to the consumer, and they are able to provide local and other programming in
a larger number of geographic areas. As a result of these and other factors, we may not be able to continue to
expand our subscriber base or compete effectively against cable television operators.

11

Some digital cable platforms currently offer a VOD service that enables subscribers to choose from a library of
programming selections for viewing at their convenience. We are continuing to develop our own VOD service
alternative which was launched on a limited scale during 2005. There can be no assurance that our VOD service
will be successful in competing with other video providers.

DBS and Other Direct-to-Home System Operators. News Corporation owns a 34% controlling interest in the
DirecTV Group, Inc. (“DirecTV”). News Corporation’s diverse world-wide satellite, content and other related
businesses may provide competitive advantages to DirecTV with respect to the acquisition of programming, content
and other assets valuable to our industry. In addition, DirecTV’s satellite receivers are sold in a significantly greater
number of consumer electronics stores than ours. As a result of this and other factors, our services are less well
known to consumers than those of DirecTV. Due to this relative lack of consumer awareness and other factors, we
are at a competitive marketing disadvantage compared to DirecTV. We believe DirecTV continues to be in an
advantageous position relative to our Company with regard to, among other things, certain programming packages,
and possibly, volume discounts for programming offers. DirecTV recently launched two new satellites and
announced plans to launch two additional new satellites in 2007 in order to offer local and national channel
programming in HD to most of the U.S. population. Although we have recently launched our own HD initiatives, if
DirecTV fully implements these plans, we may be placed at a further competitive disadvantage compared to
DirecTV.

Furthermore, other companies in the United States have conditional permits or leased transponders for a
comparatively small number of DBS assignments that can be used to provide subscription satellite services to
portions of the United States. These new entrants may have a competitive advantage over us in deploying some new
products and technologies because of the substantial costs we may be required to incur to make new products or
technologies available across our installed base of over 12 million subscribers.

VHF/UHF Broadcasters. Most areas of the United States can receive traditional terrestrial VHF/UHF television
broadcasts of between three and 10 channels. These broadcasters provide local, network and syndicated
programming. The local content nature of the programming may be important to the consumer, and VHF/UHF
programming is typically provided free of charge. In addition, the FCC has allocated additional digital spectrum to
licensed broadcasters. At least during this transition period, each existing television station will be able to retain its
present analog frequencies and also transmit programming on a digital channel that may permit multiple
programming services per channel. Our business could be adversely affected by continued free broadcast of local
and other programming and increased program offerings by traditional broadcasters.

Impact of High Definition TV. Although we believe we currently offer more HD content than our competitors, we
may be placed at a competitive disadvantage to the extent other multi-channel video providers increase their offering
of HD programming. We could be further disadvantaged to the extent a significant number of local broadcasters
begin offering local channels in HD, unless we make substantial additional investments in infrastructure to deliver
HD programming. There can be no assurance that we will be able to effectively compete with HD program
offerings from other video providers.

New Technologies and Competitors. New technologies could also have a material adverse effect on the demand for
our DBS services. For example, we face an increasingly significant competitive threat from the build-out of
advanced fiber optic networks. Verizon Communications, Inc. (“Verizon”) and AT&T have begun deployment of
fiber-optic networks that will allow them to offer video services bundled with traditional phone and high speed
internet directly to millions of homes as early as the second half of 2006. In addition, telephone companies and
other entities are also implementing and supporting digital video compression over existing telephone lines and
digital “wireless cable” which may allow them to offer video services without having to build a new infrastructure.
We also expect to face increasing competition from content and other providers who distribute video services
directly to consumers over the internet.

With the large increase in the number of consumers with broadband service, a significant amount of video content
has become available on the Internet for users to download and view on their personal computers and other devices.
In addition, there are several initiatives by companies to make it easier to view Internet-based video on television
and personal computer screens. We also expect to face increasing competition from content and other providers
who distribute video services directly to consumers via digital air waves.

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Mergers, joint ventures, and alliances among franchise, wireless or private cable television operators, telephone
companies and others also may result in providers capable of offering television services in competition with us. In
addition, our competitors are increasingly using existing and new technologies to offer bundles of television and
telecommunications services that may prove to be more competitive than our current offerings. As a result, we may
not be able to compete successfully with existing competitors or new entrants in the market for television services.

ECHOSTAR TECHNOLOGIES CORPORATION

EchoStar Technologies Corporation (“ETC”), one of our wholly-owned subsidiaries, designs and develops EchoStar
receiver systems. Our satellite receivers have won numerous awards from the Consumer Electronics Manufacturers
Association, retailers and industry trade publications. We out-source the manufacture of EchoStar receiver systems
to third parties who manufacture the receivers in accordance with our specifications.

The primary purpose of our ETC division is to support the DISH Network. However, in addition to supplying
EchoStar receiver systems and related accessories for the DISH Network, ETC also sells similar digital satellite
receivers internationally, either directly to television service operators or to our independent distributors worldwide.
This has created a source of additional business for us and synergies that directly benefit DISH Network. For
example, our satellite receivers are designed around the Digital Video Broadcasting standard, which is widely used
in Europe and Asia. The same employees who design EchoStar receiver systems for the DISH Network are also
involved in designing set-top boxes sold to international TV customers. Consequently, we benefit from the
possibility that ETC’s international projects may result in improvements in design and economies of scale in the
production of EchoStar receiver systems for the DISH Network.

We believe that DTH satellite service is particularly well-suited for countries without extensive cable infrastructure,
and we are actively soliciting new business for ETC. However, there can be no assurance that ETC will be able to
develop additional international sales or maintain its existing business.

Through 2005, our primary international customer was Bell ExpressVu, a subsidiary of Bell Canada, Canada’s
national telephone company. We currently have certain binding purchase orders from Bell ExpressVu, and we are
actively trying to secure new orders from other potential international customers. However, we cannot guarantee at
this time that those negotiations will be successful. Our future international revenue depends largely on the success of
these and other international operators, which in turn, depends on other factors, such as the level of consumer
acceptance of DTH satellite TV products and the increasing intensity of competition for international subscription
television subscribers.

ETC’s business also includes our Atlanta-based EchoStar Data Networks Corporation and our UK-based Eldon
Technology Limited (“Eldon Technology”) subsidiaries. EchoStar Data Networks is a supplier of technology for
distributing Internet and other content over satellite networks. Eldon Technology designs and tests various software
and other technology used in digital televisions and set-top boxes, strengthening our product design capabilities for
satellite receivers and integrated televisions in both the international and United States markets.

Competition for Our ETC Business

Through ETC, we compete with a substantial number of foreign and domestic companies, many of which have
significantly greater resources, financial or otherwise, than we have. We expect new competitors to enter this
market because of rapidly changing technology. Our ability to anticipate these technological changes and introduce
enhanced products expeditiously will be a significant factor in our ability to remain competitive. We do not know if
we will be able to successfully introduce new products and technologies on a timely basis in order to remain
competitive.

13

GOVERNMENT REGULATION

We are subject to comprehensive regulation by the FCC. We are also regulated by other federal agencies, state and
local authorities and the International Telecommunication Union (“ITU”). Depending upon the circumstances,
noncompliance with legislation or regulations promulgated by these entities could result in suspension or revocation
of our licenses or authorizations, the termination or loss of contracts or the imposition of contractual damages, civil
fines or criminal penalties.

The following summary of regulatory developments and legislation is not intended to describe all present and
proposed government regulation and legislation affecting the video programming distribution industry. Government
regulations that are currently the subject of judicial or administrative proceedings, legislative hearings or
administrative proposals could change our industry to varying degrees. We cannot predict either the outcome of
these proceedings or any potential impact they might have on the industry or on our operations.

FCC Regulation under the Communications Act

FCC Jurisdiction over our Operations. The Communications Act gives the FCC broad authority to regulate the
operations of satellite companies. Specifically, the Communications Act gives the FCC regulatory jurisdiction over
the following areas relating to communications satellite operations:

• the assignment of satellite radio frequencies and orbital locations;

• licensing of satellites, earth stations, the granting of related authorizations, and evaluation of the fitness
of a company to be a licensee;

• approval for the relocation of satellites to different orbital locations or the replacement of an existing
satellite with a new satellite;

• ensuring compliance with the terms and conditions of such assignments and authorizations, including
required timetables for construction and operation of satellites and other due diligence requirements;

• avoiding interference with other radio frequency emitters; and

• ensuring compliance with other applicable provisions of the Communications Act and FCC rules and
regulations governing the operations of satellite communications providers and multi-channel video
distributors.

In order to obtain FCC satellite licenses and authorizations, satellite operators must satisfy strict legal, technical and
financial qualification requirements. Once issued, these licenses and authorizations are subject to a number of
conditions including, among other things, satisfaction of ongoing due diligence obligations, construction milestones,
and various reporting requirements.

Our Basic DBS Frequency Licenses and Authorizations. Most of our programming is transmitted to our
customers on frequencies in the 12.2 to 12.7 GHz range, which we refer to as the “DBS” frequencies. We are
licensed or authorized by the FCC to operate DBS frequencies at the following orbital locations:

22 frequencies at the 61.5 degree orbital location;
•

29 frequencies at the 110 degree orbital location;
•

21 frequencies at the 119 degree orbital location; and
•

32 frequencies at the 148 degree orbital location.
•

14

We also sublease six transponders (corresponding to six frequencies) at the 61.5 degree orbital location from
licensee Dominion Video Satellite, Inc. (“Dominion”). In addition, we were the winning bidder for the remaining
29 DBS frequencies at the 157 degree orbital location at an FCC auction conducted in July 2004. However, the
Washington, D.C. Court of Appeals overturned the auction and the FCC has not yet decided how it will allocate
those orbital slots and frequencies. We have also applied for the two remaining frequencies at the 61.5 slot. We
cannot be certain that the FCC will ultimately grant us the licenses for the additional frequencies at 61.5 or 157.

Duration of our Satellite Licenses and Authorizations. Generally speaking, all of our satellite licenses are subject
to expiration unless renewed by the FCC. While under a recent FCC rulemaking the term of certain satellite licenses
has been extended from 10 to 15 years, the term of DBS licenses remains at 10 years; our licenses are currently set
to expire at various times starting as early as November 2006. In addition, our special temporary authorizations are
granted for periods of only 180 days or less, subject again to possible renewal by the FCC.

Opposition and other Risks to our Licenses and Authorizations. Several third parties have opposed, and we expect
them to continue to oppose, some of our FCC satellite authorizations and pending requests to the FCC for
extensions, modifications, waivers and approvals of our licenses. In addition, we may not have fully complied with
all of the FCC reporting and filing requirements in connection with our satellite authorizations. Because of this
opposition and our failure to comply with certain requirements of our authorizations, it is possible the FCC could
revoke, terminate, condition or decline to extend or renew certain of our authorizations or licenses.

Our FSS Licenses. In addition to our DBS licenses and authorizations, we have received conditional licenses from
the FCC to operate FSS satellites in the Ka-band and the Ku-band, including licenses to operate EchoStar IX (a
hybrid Ka/Ku-band satellite) at the 121 degree orbital location. In addition, EchoStar holds Ka-band licenses at the
97, 113 and 117 degree orbital locations, and extended Ku-band licenses at the 109 and 121 degree orbital locations.
Use of these licenses and conditional authorizations is subject to certain technical and due diligence requirements,
including the requirement to construct and launch satellites according to specific milestones and deadlines. Our
projects to construct and launch Ku-band, extended Ku-band and Ka-band satellites are in various stages of
development.

Risks to our Ka-Band and Ku-Band Authorizations. Our Ka-band license at the 121 degree orbital locations allow
us to use only 500 MHz of Ka-band spectrum in each direction, while certain other licensees have been authorized to
use 1000 MHz in each direction. Our Ka-band licenses at the 97, 113 and 117 degree orbital locations are for the full
1000 MHz in each direction. With respect to these latter Ka-band licenses, the FCC requires construction, launch and
operation of the satellites to be completed by December 2008, October 2009 and March 2009, respectively. During
2004, we submitted satellite construction contracts to the FCC for the proposed Ka-band satellites at the 97 and117
degree orbital locations. The FCC subsequently ruled that these contracts comply with the first construction milestone
requirement. During the fourth quarter of 2005, we changed satellite vendors and submitted the revised contracts for
the Ka satellites at the 97 and 117 orbital locations and a new contract for the Ka satellite at the 113 orbital location. In
December 2005, we conducted the critical design review for the Ka satellite at the 117 orbital location as required by
the conditions of our license. In March 2006, the FCC ruled that we had successfully met the requirements for meeting
the critical design review milestone for the 117 degree orbital location contract. We cannot be sure that the FCC will
rule that these new contracts we submitted comply with their first construction milestone or critical design review
milestone requirements. Moreover, ITU deadlines required Ka-band satellites to be operating at the 97, 113 and 117
degree orbital locations by June of 2005. For our extended Ku-band satellites at the 109 and 121 degree orbital
locations, the FCC requires construction, launch and operation of the satellites to be completed by September 2009.
We recently submitted construction contracts to the FCC for these two satellites. There can be no assurance that we will
develop acceptable plans to meet all of these deadlines, or that we will be able to utilize any of these orbital slots.

Recent FCC Rulemaking Affecting our Licenses and Applications. The FCC changed its system for processing
applications to a “first-come, first-served” process. Since that change became effective, we have filed or refiled, and
have pending before the FCC, new applications for as many as five satellites in several different frequency bands.
Several of our direct or indirect competitors have filed petitions to deny or dismiss certain of our pending
applications or have requested that conditions be placed on authorizations we requested. We received conditional
Ka-band licenses for the 97, 113 and 117 degree orbital locations, and extended Ku-band licenses for the 109 and
121 degree orbital locations, while a number of our other applications have been denied or dismissed without
prejudice by the FCC. We cannot be sure that the FCC will grant any of our outstanding applications, or that the

15

authorizations, if granted, will not be subject to onerous conditions. Moreover, the cost of building, launching and
insuring a satellite can be as much as $250.0 million or more, and we cannot be sure that we will be able to construct
and launch all of the satellites for which we have requested authorizations. The FCC has also imposed a $3.0
million (previously $5.0 million) bond requirement for all future satellite licenses, which would be forfeited by a
licensee that does not meet its diligence milestones for a particular satellite. We have provided the FCC with letters
of credit, collateralized by approximately $14.2 million of our restricted cash and marketable investment securities
as of December 31, 2005, to satisfy this requirement for all of our Ka-band and extended Ku-band licenses.

Satellite License Auction Proceedings. The FCC has proposed to auction licenses for two DBS frequencies at the
61.5 degree orbital location. In 2004, the FCC ruled that DBS providers that hold DBS licenses at orbital locations
capable of serving the entire continental United States (including EchoStar) would not be eligible to bid for the
license for the two frequencies at the 61.5 degree orbital location, and would not be qualified to acquire that license
for a period of four years following grant. We have requested a reconsideration of this ruling which Dominion
subsequently opposed. As a result, we cannot be certain of a positive outcome.

Expansion DBS Spectrum. The FCC has also allocated additional expansion spectrum for DBS services
commencing in 2007. This could create significant additional competition in the market for subscription television
services. We filed applications for this additional spectrum during March 2002 but cannot predict whether the FCC
will grant these applications.

Other Services in the DBS Band. The FCC has also adopted rules that allow non-geostationary orbit fixed satellite
services to operate on a co-primary basis in the same frequency band as direct broadcast satellite and Ku-band-based
fixed satellite services. In the same rulemaking, the FCC authorized use of the DBS spectrum that we use, by
terrestrial communication services and it auctioned licenses for these terrestrial services during January 2004. There
can be no assurance that operations by non-geostationary orbit fixed satellite services or terrestrial communication
services in the DBS band will not interfere with our DBS operations and adversely affect our business.

Proposals to allow 4.5 Degree Spacing. During 2002, SES Americom, Inc. requested a declaratory ruling that it is
in the public interest for SES Americom to offer satellite capacity for third party DTH services to consumers in the
United States and certain British Overseas Territories in the Caribbean. SES Americom proposes to employ a
satellite licensed by the Government of Gibraltar to operate in the same uplink and downlink frequency bands as us,
from an orbital position located in between two orbital locations where EchoStar and DirecTV have already
positioned satellites. DirecTV, which opposes SES’s petition, has itself filed a petition for rulemaking for standards
to permit such 4.5 degree spacing. During January 2004, we filed comments in response to DirecTV’s petition for
rulemaking. The possibility that the FCC will allow service to the U.S. from closer-spaced DBS slots may permit
additional competition against us from other DBS providers.

Competition for Canadian Orbital Slots. DirecTV requested and obtained FCC authority to provide service to the
United States from a Canadian DBS orbital slot. We have also requested and subsequently received authority to do
the same from the Canadian DBS orbital slot at 129 degrees. A similar request to use an FSS orbital slot at 118.7
degrees remains pending. The possibility that the FCC will allow service to the U.S. from foreign slots may permit
additional competition against us from other DBS providers.

Rules Relating to Alaska and Hawaii. The holders of DBS authorizations issued after January 1996 must provide
DBS service to Alaska and Hawaii if such service is technically feasible from the authorized orbital location. Our
authorizations at the 110 degree and 148 degree orbital locations were received after January 1996. While we
provide service to Alaska and Hawaii from both the 110 and 119 degree orbital locations, those states have
expressed the view that our service should more closely resemble our service to the mainland United States and
otherwise needs improvement. We received temporary conditional waivers of the service requirement for the 148
degree orbital location. However, the FCC could revoke these waivers at any time.

The FCC has also concluded a rulemaking which seeks to streamline and revise its rules governing DBS operators.
In connection with this rulemaking, the FCC clarified its geographic service requirements to introduce a requirement
that we provide programming packages to residents of Hawaii and Alaska that are “reasonably comparable” to what
we offer in the contiguous 48 states. We cannot be sure that this requirement will not affect us adversely by
requiring us to devote additional resources to serving these two states.

16

A La Carte. Some Members of Congress have proposed the imposition of indecency restrictions on satellite and
cable providers. Others, together with the Chairman of the FCC, have suggested that satellite and cable providers be
required to offer some or all programming on an individual, or “a la carte” basis. We cannot predict the effect any
such obligations would have on our business.

Emergency Alert System. The Emergency Alert System (“EAS”) requires participants to interrupt programming
during nationally-declared emergencies and to pass through emergency-related information. The FCC recently
released an order requiring satellite carriers to participate in the “national” portion of EAS. It is also considering
whether to mandate that satellite carriers also interrupt programming for local emergencies and weather events. We
believe any such requirement would be difficult to implement, would require costly changes to our system and
depending on how it is implemented, could inconvenience or confuse our viewers.

Other Communications Act Provisions

Rules Relating to Broadcast Services. The FCC imposes different rules for “subscription” and “broadcast”
services. We believe that because we offer a subscription programming service, we are not subject to many of the
regulatory obligations imposed upon broadcast licensees. However, we cannot be certain whether the FCC will find
in the future that we must comply with regulatory obligations as a broadcast licensee, and certain parties have
requested that we be treated as a broadcaster. If the FCC determines that we are a broadcast licensee, it could
require us to comply with all regulatory obligations imposed upon broadcast licensees, which are generally subject
to more burdensome regulation than subscription television service providers.

Public Interest Requirements. Under a requirement of the Cable Act, the FCC imposed public interest
requirements on DBS licensees. These rules require us to set aside four percent of our channel capacity exclusively
for noncommercial programming for which we must charge programmers below-cost rates and for which we may
not impose additional charges on subscribers. This could displace programming for which we could earn
commercial rates and could adversely affect our financial results. The FCC has generally not reviewed all aspects of
our methodology for processing public interest carriage requests, computing the channel capacity we must set aside
or determining the rates that we charge public interest programmers. We cannot be sure that if the FCC were to
review these methodologies it would find them in compliance with the public interest requirements.

Moreover, certain parties have challenged certain aspects of our methodology for processing public interest carriage
requests in a pending proceeding, and we received a letter from the FCC’s Enforcement Bureau regarding these
issues. We cannot be sure that the Commission will not take enforcement action against us, which may result in
fines and/or changes to our methodology for compliance with these rules. The FCC’s Enforcement Bureau is also
investigating the public interest qualifications of a programmer that at one time occupied a channel of public interest
capacity on our system.

Other Open Access Requirements. The FCC has also commenced an open access proceeding regarding distribution
of high-speed Internet access services and interactive television services. We cannot be sure that the FCC will not
ultimately impose open access obligations on us, which could be very onerous, and could create a significant strain
on our capacity and ability to provide other services.

Plug and Play. The FCC adopted the so-called “plug and play” standard for compatibility between digital television
sets and cable systems. That standard was developed through negotiations involving the cable and consumer
electronics industries, but not us, and we are concerned that it may impose certain onerous “encoding rules” on all
multi-channel video programming distributors, including us, and that the standard and its implementation process
favor cable systems. We have filed a petition for review of the FCC’s “plug and play” order with the federal Court
of Appeals for the District of Columbia Circuit on various grounds, but we cannot be sure that the court will not
uphold the FCC’s decision.

17

dish network annual reports 2005

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