EchoStar Hits Grand Slam with 4th Launch

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The EchoStar IV satellite broke through the early-morning
dawn last Friday as a Proton rocket launched it on its way into geosynchronous orbit from
the Baikonur Cosmodrome in Kazakhstan.

The event, aired lived on EchoStar Communications
Corp.'s Dish Network Thursday evening for the benefit of its U.S.-based subscribers,
marked the company's fourth successful direct-broadcast satellite launch in a row.

"This is the most advanced, most powerful DBS
satellite launched to date," said EchoStar chairman and CEO Charlie Ergen in an
interview one week before the launch.

The high-power DBS satellite was launched into the
full-CONUS (Continental U.S.) orbital spectrum at 119 degrees west longitude, where
EchoStar I and II currently reside. Once EchoStar IV is fully operational, the company
plans to reposition EchoStar I into its new home at 148 degrees west, where it will
service the western half of the U.S.

EchoStar III, launched last October, is parked at 61.5
degrees west, and services the eastern half of the country. EchoStar launched the
satellite at 61.5 -- and designated the one for 148 -- to allow Dish Network to expand its
service offerings to include local-broadcast channels (in limited markets), as well as
ethnic, educational, business and data services.

Dish Network subscribers would need a second dish to access
programming from either of those two satellites (EchoStar I and III) in addition to the
more mainstream fare delivered from the birds at 119.

Designed by Lockheed Martin, EchoStar IV has 32 high-power
transponders. EchoStar is currently licensed to operate 21 transponders at 119. PrimeStar
Inc. may be prodded to divest of the remaining 11 frequencies there soon, but it's
too early to say whether EchoStar would ultimately gain access to those rights.

Ergen said EchoStar IV has been designed so that it could
use all 32 frequencies at 119 if necessary.

"It's got a lot of flexibility," Ergen said.
"We can do 32, or we can make the 21 more efficient, or we can do 16 at high-power
mode."

EchoStar IV could also provide backup to the satellites at
61.5 degrees and 148 degrees west, Ergen said, "so our customers are protected"
in the unlikely event one of the birds is damaged in space.

Whether viewed as a primary or backup satellite, EchoStar
IV doesn't come cheap. Ergen said he is looking at a price tag of close to $250
million when the cost of the satellite's construction, launch, insurance and interest
are added up.

That's no small figure for a company that's
heavily in debt and for a CEO who is widely reputed for his frugality when it comes to
business expenses.

Yet to hear Ergen tell it, the last two satellite launches
had less to do with making money and more to do with fostering multichannel competition.

"Although it's risky and it's not
economical, we believe it's not something the American public can wait for,"
Ergen said of his plan to deliver local-broadcast signals via satellite to as many as 20
markets later this year.

Without the ability to deliver local channels, Ergen said,
DBS will remain a niche business and won't offer true competition to cable.

"We, as the smallest DBS company, have bet our company
on doing this," Ergen said. He added he's well aware of the risk that if he
loses that wager, "we may end up as roadkill on the information superhighway."

But Ergen claimed he is not put off by the possibility that
his local-to-local broadcast plan might fail.

"It's only embarrassing to us if we don't
try," he said. "We would be ashamed if we went to bed every night and we
didn't try to give the American public a choice."

Ergen said he won't wait for Washington to give him an
okay before he launches his local-to-local service in additional markets.

The company already has such a service in six markets, but
limits availability to customers in so-called "white areas" beyond the reach of
an acceptable off-air signal.

"It would make our lives easier if we could get
legislation that allows us to go beyond those areas," Ergen admitted. But as long as
the law remains as it is today, Ergen said, "we're prepared to go forward"
with additional markets.

If laws were written to impose full must-carry requirements
on DBS, however, "we'd have to abandon any local-to-local plans," Ergen
said.

If EchoStar is forced to scrap its local-broadcast plans,
however, the company could still have a viable business, Ergen insisted, saying EchoStar
could fill its transponders at 61.5 and 148 degrees west with more data, niche and ethnic
programming.

"That would be more economical for us," Ergen
admitted. "But it doesn't provide the kind of competition to cable that the
American public and the FCC [Federal Communications Commission] have in mind."

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