Dish Network satellite failure hurts HD rollout; TiVo suit reopened

In a major blow to the struggling satellite TV provider, a new EchoStar satellite destined to expand the HD lineup of Dish Network failed to reach proper orbit over the weekend. Meanwhile, the company asked a judge to rehear its patent dispute with TiVo.

HD is the new competitive battleground, as cable, satellite and IPTV operators vie to attract more customers by offering the most high-definition channels. Most companies, including Dish Network, are playing catch-up to DirecTV, which has over 90 HD channels.

Verizon FiOS TV, Cablevision, Comcast and others have all ramped up their HD offerings as consumers migrate to HDTVs and the low quality of standard broadcasts becomes immediately apparent. DirecTV originally hoped to offer 150 HD channels by the end of 2007, although that figure was lowered to 100, and Verizon is aiming for similar numbers this year.

Dish Network claims it offers over 70 HD channels nationwide, although only 40 are available through the company's all-encompassing dishHD package. The new satellite, launched by SES Americom aboard a Russian Proton Breeze-M launch vehicle on Saturday, was supposed to increase those numbers.

But an "anomaly" during the second burn of the fourth stage of the rocket prevented the satellite from reaching its intended orbit. In turn, the lower orbit means the satellite can deliver less channels to Dish Network, although EchoStar is still evaluating the full impact of the failure. The company reported the problem in a Securities and Exchange Commission filing.

EchoStar now has two options: utilize the satellite to deliver a smaller number of HD channels, or use the onboard fuel to move it to the planned orbit. If the company uses up fuel for this purpose, however, it will have less to keep the satellite in proper orbit, which reduces its service life. Either option will likely have a great financial impact on Dish Network.

Separately, EchoStar is attempting to reopen a patent dispute with TiVo by claiming that a key TiVo witness contradicted himself. The company was found guilty of infringing on TiVo's DVR technology and ordered to pay $94 million in damages. On appeal, a judge found that two lines of Dish Network digital video recorders did not infringe on TiVo's patents, but upheld that its software had.

EchoStar filed a petition with the Court of Appeals for the Federal Circuit Monday asking it to rehear the case based on the alleged inaccurate testimony from TiVo's expert witness. TiVo has not commented on the filing.

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