EchoStar IV is expected to begin providing local, educational, foreign language, data and other niche services to the Western United States by September 1, 1998.

The DBS satellite, launched on May 8, 1998, had originally been expected to be located at 119 degrees W.L. EchoStar I was then slated to move from its current location at 119 degrees W.L., to the 148 degrees W.L. location. However, as the company previously announced, the south solar array on EchoStar IV did not properly deploy, resulting in a reduction of power available to operate certain transponders on the satellite. An additional unrelated anomaly discovered this week has resulted in the failure of one primary and one spare transponder.

EchoStar Chairman Charlie Ergen stated that: "EchoStar I and EchoStar II will remain in their current positions at 119 degrees W.L. and will continue to provide the high quality service of over 200 channels we have today without interruption or change. By placing EchoStar IV at the 148 W.L. location, we will have the capacity to provide more than 150 additional channels of local and other niche services to the Western United States. Unfortunately, the failures we have experienced and the fact that we share the 119 degrees W.L. orbital slot with Primestar, means that we don't have the flexibility to operate some of the back up capacity built into the satellite if we positioned EchoStar IV at 119 degrees W.L. The new plan announced today will allow us to best utilize the significant capacity of our four DBS satellites."

With four operational satellites, EchoStar has more capacity in space than any other DBS provider.

EchoStar, which is licensed to used 24 frequencies at 148 degrees W.L., will initially have at least 22 transponders of capacity available on EchoStar IV at 148 degrees W.L. The number of available transponders will decrease over time, but at least 16 transponders should be available for the full planned 12 year life of the satellite.

EchoStar intends to file an insurance claim with respect to EchoStar IV in the near future. The company expects to use insurance proceeds, together with other funds, to launch a new DBS satellite to the 119 degrees W.L. location in approximately three years. EchoStar I could then be moved to one of the company's other DBS orbital locations and would provide in-orbit back-up.

EchoStar also expects to file an insurance claim with respect to its EchoStar III satellite, which was launched October 5, 1997. As previously announced, certain of the electric power converters (EPCs) on EchoStar III are operating at higher than expected temperatures. The high EPC temperatures may require certain transponders on EchoStar III to be turned off for several weeks during summer and winter solstice seasons to avoid overheating.

As a result, EchoStar III will be operated at 120 watts per channel, which is typical for 18-inch dish service to the continental United States. In that mode, tests indicate substantially all of the satellite's 32 transponders could be available for the full life of the satellite notwithstanding the anomalies. EchoStar is currently licensed to operate only 11 transponders at the 61.5 degrees W.L. location. If the satellite were operated at a "super high" 230 watts per channel, approximately half of its 16 channel capacity would be unavailable during solstice seasons by the end of the satellite's planned life.

The insurance claims will be filed through EchoStar's insurance broker, J&H Marsh & McLennan. Total losses claimed are expected to exceed $200 million. The company expects to discuss resolution of the claims with its insurers over the next few months. No assurance can be provided as to the ultimate amount that will be paid on the claims. EchoStar does not maintain insurance for lost profit opportunity.

While causes for the anomalies have not been definitively established, it appears that the problems relate to design and construction of the satellites, and not to any problems during launch. The anomalies appear to be unique to each satellite. There is no indication that anomalies experienced by either satellite are likely to be repeated on the other. Both satellites are an A2100AX design built by Lockheed Martin. While Lockheed has advised the company that further losses of capacity on EchoStar III and EchoStar IV beyond those described above are not expected, as with all satellites there can be no assurance that additional anomalies will not be experienced.

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