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EchoStar Retailers Summoned for Questioning


Attorneys Drill Dealers on Business Performance, Opinions

As reported in SkyREPORT.com yesterday, a group of independent
retailers is suing EchoStar. The case was filed in October 2000
and has been amended three times, as recently as Aug. 9. Lately,
it has seen some action.

A number of EchoStar dealers and members of the DishRetailer.com
private, member-only forums have been or will be summoned for
deposition. David Nopanen, director of operations with Alpine
Satellite (an EchoStar retailer based in South Daytona, Fla.)
was one of those involved. For almost six hours, Nopanen said
he was questioned about his business and his opinions about
the satellite TV industry by a team of EchoStar attorneys
and an attorney representing the retailers in the lawsuit.

"I was annoyed at first to be included in this litigation
because I was not involved in the retailer lawsuit and I did
not want to get in the middle of a fight between EchoStar and
its retailers," said Nopanen. "But, I went in 'eyes wide-open'.
I didn't draw any conclusions as to who was right and wrong,
but I came out of the deposition with some serious concerns
about what this might do to EchoStar."

According to information from sources, the retailers being
questioned are recognized as individuals who can help make the
"retailer versus EchoStar" relationship clearer. However,
according to some retailers, EchoStar has continued to assess
chargebacks and other so-called "unfair" charges to satellite
dealers.

"The thing that I learned and the thing that offended me the
most as I sat through the deposition was that it's clear to me
that EchoStar is financing its SAC (subscriber acquisition
costs) on the backs of its satellite retailers," said Nopanen.
"Now, there are expenses on my expense reports for this company
that clearly don't belong there, they belong on the reports of
EchoStar." The expenses, according to Nopanen, are a collection
of charges related to EchoStar's credit scoring agreements.

Because of these costs, said Nopanen, it's become extremely
difficult for retailers to be profitable in the satellite
industry. The current business model for selling satellite TV
systems, from an independent retailer's point-of-view, is no
longer working. Mixed with the current bad economy, the
"growth business model," as some retailers describe it, is not
helping retailers make money.

"The attitude among most retailers is the same: If something
doesn't give soon, there's no need to continue on in this
business," said Nopanen. "There's no one in the satellite
industry, that I'm aware of, that's making money right now."

Reposted with Permission of SkyRetailer

For comment, EchoStar directed SkyRETAILER to its 10-Q filing,
which stated, "EchoStar intends to vigorously defend against
the suits and to assert a variety of counterclaims. It is too
early to make an assessment of the probable outcome of the
litigation or to determine the extent of any potential
liability or damages."
 
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