EchoStar Rebuts Expert's Claims

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EchoStar Communications Corp. is denying claims by a satellite-technology
expert that the company could easily serve every local TV market without having
to acquire additional spectrum.

A key reason why EchoStar is seeking to merge with DirecTV Inc. is to free up
spectrum to expand local TV service from about 40 markets currently to some 100
markets. The merger would release spectrum that would no longer be used by both
companies to provide the same TV stations in the same markets.

In a Feb. 5 letter to the House Judiciary Committee, EchoStar chairman and
CEO Charlie Ergen said the technology does not exist today to allow EchoStar on
its own to provide all local TV stations in every market in a commercially
feasible manner.

Ergen said that if a satellite could serve every market today, he 'would have
every reason to build it.' Such a 'super satellite,' he added, is possible only
in theory and 'with enough time and money, almost anything is possible on
paper.'

Ergen was addressing a May 2001 study prepared by Roger J. Rusch, president
of TelAstra Inc., a management-consulting firm in Palos Verdes, Calif.

Rusch, a satellite-design expert since 1965, was retained by the Department
of Justice during EchoStar's legal challenge to a 1999 law that required
direct-broadcast satellite carriers to carry all local TV signals in markets
where they provide any local TV signals effective Jan. 1, 2002.

In his report, Rusch said he was asked to determine whether a DBS system
could be built 'using currently available technology' that would allow the
carriage of all eligible local TV stations -- 1,475 in all -- in every
market.

'I have concluded,' Rusch said, 'that such a system is not only possible, but
also could be operated using only 12 DBS frequencies, which is less than the
number currently utilized by DirecTV and EchoStar for local television
broadcasts.'

Each DBS satellite capable of transmitting service to the lower 48 states has
32 frequencies. If EchoStar and DirecTV merge, the combined company would
control all of the frequencies available -- 96 -- that cover the continental
United States.

In his response, Ergen told Congress the Rusch report failed to take into
account several 'real-world' factors.

He said EchoStar would have to build a satellite with technology that does
not exist, provide on-board computing power that has never been deployed and
outfit the satellite with a 'supersize antenna' that would represent a
significant advance in design and deployment.

He added that he wasn't even sure such a high-risk satellite could be
insured.

The Rusch report, Ergen added, also failed to take into account other cost
considerations, such as the construction of six new facilities to uplink
TV-station signals. He said those facilities could equal or exceed the cost of
the satellite.

'Even if implemented . Rusch's proposal would not eliminate the current
wasteful duplication of spectrum use, thus denying substantial benefits to
consumers,' Ergen said in a three-page response.

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