Filed by General Motors Corporation
                                   Subject Company - General Motors Corporation
                                             and Hughes Electronics Corporation
                          Pursuant to Rule 425 under the Securities Act of 1933
                                       and Deemed Filed Pursuant to Rule 14a-12
                                      under the Securities Exchange Act of 1934
                                                 Commission File No.: 001-00143


The following was filed with the Federal Communications Commission on December
3, 2001, and posted on Hughes Electronics Corporation's and General Motors
Corporation's respective websites on December 4, 2001:


                                     SUMMARY


         The merger of EchoStar and Hughes to create New EchoStar presents
consumers with numerous benefits: more services; more choices; competitive
pricing; and a viable alternative to entrenched cable companies. The merger
implicates no Commission rule, is consistent with the Communications Act, and
will serve the public interest.

         THE MERGER WILL "FREE UP" SPECTRUM CURRENTLY USED BY THE TWO COMPANIES
BECAUSE DUPLICATIVE PROGRAMMING WILL BE ELIMINATED. As a result:

     o    New EchoStar will offer significantly more local-into-local
          programming, up from a total of 42 major metropolitan areas now served
          by one or the other company (36 served by ECC and 41 served by
          DIRECTV, with 35 areas overlapping) to 100 or more, accounting for at
          least 85 percent of American households. This will significantly
          increase competition with cable companies in those areas.

     o    The reclaimed spectrum will enable New EchoStar to offer greatly
          expanded high-definition television programming, pay-per-view and
          video-on-demand services, educational, specialty, and foreign language
          programming and other new and improved product offerings, including
          interactive services. DBS will have the ability to go head-to-head in
          competition with cable companies.

     o    The merger will allow New EchoStar to provide meaningful broadband
          competition with cable and telephone companies as a virtual third line
          into the home for a bundle of video/data/Internet services.
          Competitively priced, high-speed Internet access via satellite will
          particularly benefit those in rural areas without access to cable
          modem service or DSL.

         CONSUMERS WILL HAVE A REAL, FULLY COMPETITIVE ALTERNATIVE TO CABLE.
Although DBS has historically offered a price/quality package that was superior
to cable's packages, it has not been able to restrain cable's regular price
increases because of its inability to offer many local broadcast stations and
other desirable programming resulting from limited capacity. The current
duplicative use of the DBS spectrum has become a debilitating handicap due to
recent

                                      -i-






developments, including the advent of digital cable and satellite
must-carry. By eliminating these disadvantages, the merger will force cable
firms to react competitively to DBS in ways that they have not had to in the
past. Competition will translate into further benefits to consumers:

     o    BENEFITS FOR RURAL AMERICANS. In addition to enhanced broadband
          options, rural consumers will benefit from the vigorous competition
          between New EchoStar and cable systems in urban areas because DBS
          prices will be the same throughout the U.S., whether the market is
          urban or rural. This will transmit urban competitive dynamics into
          rural areas.

     o    BENEFITS FOR CABLE CUSTOMERS. With the increase in competition from
          DBS, cable will be forced to improve its own products, pricing service
          and overall quality. Thus, even cable customers will benefit from the
          enhanced competition among multi-channel television and Internet
          access providers.

         THE MERGER WILL ALSO CONTRIBUTE TO THE DIVERSITY OF INDEPENDENT
PROGRAMMING VOICES, as it will create a significant multi-channel distributor
that has no strategy of vertical integration with programmers. With the spectrum
that will be freed up by the combination, New EchoStar can serve as an
attractive potential outlet for independent programmers.



                                  -ii-





                                TABLE OF CONTENTS

                                                                            Page


SUMMARY ....................................................................i

I.   INTRODUCTION ..........................................................3

     A.   Description of the Parties .......................................9

          1.   ECC and its Present Affiliates ..............................9

          2.   The GM and Hughes Parties ...................................12

          3.   New EchoStar ................................................15

     B.   Description of the Transactions ..................................17

II.  PUBLIC INTEREST STATEMENT .............................................19

     A.   The Transaction Will Comply With the Requirements of the
          Communications Act, All Other Applicable Statutes, and With
          the Commission's Rules ...........................................21

     B.   The Transaction Will Not Impair Any Statutory Objectives and
          Will Yield Substantial Affirmative Public Interest Benefits ......22

          1.   The Transaction Will Promote Competition With Cable by
               Allowing Increased Spectrum and Satellite Resource
               Efficiency ..................................................22

               (a)   More Local Channels to More Areas .....................28

               (b)   More Programming Choices, Including HDTV Channels
                     and More Pay-Per-View .................................29

               (c)   Expanded Product Offerings to Meet Competition from
                     Digital Cable .........................................30

               (d)   Better Service to Rural Areas, Alaska and Hawaii ......32

               (e)   More Ethnic, Foreign Language and Niche Programming ...34

               (f)   More Educational Programming ..........................34

               (g)   Other Efficiencies That Will Result From the Merger ...35

          2.   The Merger Will Have Other Significant Pro-Competitive
               Effects and Will Not Have An Anti-Competitive Impact In
               Any of the Relevant Markets .................................36





          3.   The Merger Will Promote Deployment of Advanced Broadband
               Services to All Americans ...................................42

          4.   The PanAmSat Purchase Is In The Public Interest .............48

III. WAIVER REQUESTS:  APPLICATION CUT-OFF RULES AND ADDITIONAL
     APPLICATIONS ..........................................................49


IV.  SECTION 304 WAIVER ....................................................51


V.   CONCLUSION ............................................................51





                                     - 2 -



                                ATTACHMENT INDEX

                                    VOLUME I

A.   Declaration of Dr. Robert D. Willig on behalf of EchoStar Communications
     Corporation, General Motors Corporation and Hughes Electronics Corporation

B.   Joint Engineering Statement in Support of Transfer of Control Application

C.   List of FCC Licenses and Authorizations

D.   EchoStar Communications Corporation Ownership Structure (Pre-Merger),
     Principle Ownership List and List of Subsidiaries

E.   GM/Hughes Ownership Structure Chart (Pre-Merger), Principle Ownership List
     and List of Subsidiaries

F.   New EchoStar Ownership Chart

G.   List of Pending FCC Applications

H.   List of Enforcement Actions (Pending or Resolved)

                                    VOLUME II

Agreement and Plan of Merger by and between EchoStar Communications Corporation
and Hughes Electronics Corporation (October 28, 2001)

Implementation Agreement by and among General Motors Corporation, Hughes
Electronics Corporation and EchoStar Communications Corporation (October 28,
2001)

Separation Agreement by and between General Motors Corporation and Hughes
Electronics Corporation (October 28, 2001)

Stock Purchase Agreement Among EchoStar Communications Corporation, Hughes
Electronics Corporation, Hughes Communications Galaxy, Inc., Hughes
Communications Satellite Services, Inc. and Hughes Communications, Inc. (October
28, 2001)

                                   VOLUME III

Transfer of Control Applications for Licenses Controlled by EchoStar
Communications Corporation

                                    VOLUME IV

Transfer of Control Applications for Licenses Controlled by Hughes Electronics
Corporation


                                   BEFORE THE
                       FEDERAL COMMUNICATIONS COMMISSION
                             WASHINGTON, D.C. 20554


------------------------------------------
                                          )
Application of                            )
                                          )
ECHOSTAR COMMUNICATIONS CORPORATION,      )
GENERAL MOTORS CORPORATION,               )
HUGHES ELECTRONICS CORPORATION,           )
                                          )
         Transferors,                     )        File Nos. _____________
                                          )
and                                       )
                                          )
ECHOSTAR COMMUNICATIONS CORPORATION,      )
                                          )
Transferee,                               )
                                          )
For Authority to Transfer Control.        )
------------------------------------------)


                     CONSOLIDATED APPLICATION FOR AUTHORITY
                              TO TRANSFER CONTROL




Gary M. Epstein                             Pantelis Michalopoulos
James H. Barker                             Philip L. Malet
Arthur S. Landerholm                        Rhonda M. Bolton
Latham & Watkins                            STEPTOE & JOHNSON LLP
555 11th Street, N.W.                       1330 Connecticut Avenue, N.W.
Suite 1000                                  Washington, D.C.  20036-1795
Washington, DC  20004                       202-429-3000
202-637-2200
Counsel for General Motors Corporation      Counsel for EchoStar
and Hughes Electronics Corporation          Communications Corporation





                                   BEFORE THE
                       FEDERAL COMMUNICATIONS COMMISSION
                             WASHINGTON, D.C. 20554

------------------------------------------
                                          )
Application of                            )
                                          )
ECHOSTAR COMMUNICATIONS CORPORATION       )
GENERAL MOTORS CORPORATION                )
HUGHES ELECTRONICS CORPORATION,           )
                                          )
         Transferors,                     )        File Nos. _____________
                                          )
and                                       )
                                          )
ECHOSTAR COMMUNICATIONS CORPORATION,      )
                                          )
Transferee,                               )
                                          )
For Authority to Transfer Control.        )
------------------------------------------)

                     CONSOLIDATED APPLICATION FOR AUTHORITY
                              TO TRANSFER CONTROL

         EchoStar Communications Corporation ("ECC"), General Motors Corporation
("GM") and Hughes Electronics Corporation ("Hughes"), a subsidiary of GM
(collectively, the "Merger Parties" or "Applicants"), have agreed to a merger
and series of related transactions that will create an integrated, full-service
satellite company better able to compete effectively with dominant cable
operators in the multichannel video programming distribution ("MVPD") market.
The Merger Parties hereby request the Commission's consent, in accordance with
Sections 214 and 310 of the Communications Act of 1934, as amended,1 to transfer
control of the satellite, earth station, and other related authorizations held
by their wholly- or majority-owned

--------------------
         1 47 U.S.C. SS.214, 310 (1994 & Supp. V 1999).



subsidiaries to Hughes (or a newly formed holding company above Hughes that will
hold all of the capital stock of Hughes, also referred to as "Hughes").2 The
merged entity will have a new ownership structure and will be renamed EchoStar
Communications Corporation ("New EchoStar").3 The proposed license transfers
will result from the split-off of Hughes from GM, the merger of ECC into Hughes,
and the transfer of Hughes' indirect majority equity stake in PanAmSat
Corporation ("PanAmSat"), either to New EchoStar through the merger, or to ECC
through a separate purchase of Hughes' indirect stake in PanAmSat in the event
the merger agreement is terminated under certain circumstances (the "PanAmSat
Purchase").4 The Merger Parties request that approval of these transfers be
granted expeditiously.

--------------------
         2 Although the Implementation Agreement and Merger Agreement (as
defined below) call for ECC to merge with and into Hughes Electronics
Corporation and for Hughes Electronics Corporation (renamed EchoStar
Communications Corporation) to be the top level entity in the post-merger
ownership structure, GM has the ability under those agreements to (and the
Merger Parties currently expect that GM will) form a new subsidiary (which is
expected to be a Delaware Corporation named HEC Holdings, Inc.) and contribute
all of the capital stock of Hughes Electronics Corporation to HEC Holdings, Inc.
prior to the split-off and the merger. The effect of this transaction would be
to insert an additional corporation above Hughes Electronics Corporation in the
post-split-off and post-merger ownership structure, to substitute HEC Holdings,
Inc. for Hughes Electronics Corporation as the merger partner with ECC and to
substitute HEC Holdings, Inc. (renamed EchoStar Communications Corporation) for
Hughes Electronics Corporation as the top level entity in the post-merger
ownership structure. However, this transaction would have no practical impact on
the rights of the parties or the Commission's review of the transaction because
HEC Holdings, Inc. would have a governance structure identical to that described
herein for the merged entity and the post-merger, and because relative
percentage holdings of the capital stock of HEC Holdings, Inc. by the current
ECC shareholders, the GM Class H shareholders and GM would remain the same.

         3 Attachment C hereto provides a consolidated list of authorizations to
be transferred and the entities that currently hold them.

         4 These transactions are the subject of a definitive Agreement and Plan
of Merger dated October 28, 2001 between ECC and Hughes ("Merger Agreement"), a
Stock Purchase Agreement between ECC, Hughes, and several Hughes entities
regarding

                                      -2-



I.   INTRODUCTION

         When measured against various components of the Commission's public
interest standard, the proposed merger of ECC and Hughes is consistent with all
relevant Commission rules and policies, and will result in extraordinary,
affirmative public interest benefits. It will advance the Commission's core
policies in favor of a more competitive video marketplace, efficient use of
scarce spectrum and satellite resources, and the provision of advanced broadband
services to all Americans.

         Unfortunately for consumers, today's MVPD market remains dominated by
cable operators, which hold a share of about 80%. As described in the attached
Declaration of Dr. Robert D. Willig,5 New EchoStar will become an integrated,
full-service satellite company that can contend with cable systems and create
the kind of vigorous competition that will benefit all Americans. In the
process, the merger will allow the combined company to provide many other public
benefits that Congress and the Commission have been striving for years to
achieve.

         One of the most compelling efficiencies of the ECC-Hughes merger will
be the elimination of a major restraint on the ability of Direct Broadcast
Satellite ("DBS") operators to compete with cable systems in the MVPD market -
duplicative use of the

--------------------
Hughes' stake in PanAmSat ("PanAmSat Stock Purchase Agreement"), and several
related agreements executed on the same date. The Merger Agreement and the
PanAmSat Stock Purchase Agreement are conditioned, among other things, on
approval of the transfers proposed herein. See Volume II of the Application for
copies of each of these merger-related agreements and the PanAmSat Stock
Purchase Agreement.

         5 Declaration of Dr. Robert D. Willig on Behalf of EchoStar
Communications Corporation, General Motors Corporation, and Hughes Electronics
Corporation ("Willig Decl.") (appended hereto as Attachment A). The Willig
Declaration, among other matters, sets forth an analysis of the relevant market
for this transaction, see id. at P.P. 7-18.

                                      -3-



radio spectrum that the Commission has allocated for DBS service. Currently, ECC
and Hughes' subsidiary DIRECTV, Inc. ("DIRECTV") use different portions of the
DBS spectrum, each with its own expensive satellite fleet, each to provide
overlapping programming services - the same HBO channels, the same CNN channels,
in most cases the same local network channels to the same local metropolitan
areas and, starting in January 2002, even many of the same home shopping local
channels in the same local areas.6

         Today, like never before, this spectrum inefficiency has become a
potentially debilitating competitive impediment for DBS providers due to a
combination of factors, including the imposition of satellite mandatory carriage
obligations, the advent of digital cable services and the new bandwidth that
"going-digital" gives to cable operators. The merger will eliminate the
inefficient duplicative use of the DBS spectrum and liberate DBS capacity that
will be used to facilitate the offering of new and expanded programming choices
to consumers, ultimately introducing more meaningful competition to cable
systems.

         One dramatic example of this effect will be the addition of more
satellite-delivered local broadcast channels to more local metropolitan areas.
New EchoStar will provide local broadcast programming to far more metropolitan
areas - 100 or more - compared to the 36 and 41 metropolitan areas (with an
overlap of 35) served respectively by ECC and DIRECTV now.7 This dramatic
expansion of the number of local channels

--------------------
         6 See Joint Engineering Statement in Support of Transfer of Control
Application, at 8-9 (Attachment B hereto) ("Joint Engineering Statement").

         7 Id. at 9.

                                      -4-



that can be carried on a DBS system will allow New EchoStar to compete more
vigorously against the cable industry's carriage of local broadcast television
channels in more U.S. metropolitan areas and also help achieve Congress's goal
of broad-based local television service by satellite, as reflected in the
Satellite Home Viewer Improvement Act of 1999 ("SHVIA").8

         There will be other significant consumer benefits resulting from the
expanded programming choices delivered by New EchoStar, as well. The merged
entity will provide consumers with many more programming choices than each
company is able to offer standing alone, including the bandwidth-intensive high
definition programming that will encourage consumer adoption of digital
television equipment. The merger also will bring significantly more programming
and a better quality DBS service to Americans living in rural areas, as well as
in the states of Alaska and Hawaii, than would be achievable by each company
operating independently.9

         Moreover, there will be no anticompetitive MVPD market effects
associated with the proposed transaction. As Dr. Willig observes, the
characteristics of the MVPD market in general and of DBS firms in particular
"make it very unlikely that . . . [this merger] will result in higher prices and
lower output through either coordinated behavior among participants in the MVPD
market or unilateral behavior by the merged firm."10 And in response to concerns
regarding the merger's possible effects on rural consumers, Dr. Willig notes
that the expansion of programming and new services that

--------------------
         8 Act of Nov. 29, 1999, Publ. L. No. 106-113, S. 1008, 113 Stat. 1501,
Appendix I (1999)(codified in scattered sections of 47 U.S.C. and 17 U.S.C.).

         9 Joint Engineering Statement at 10.

         10 Willig Decl. at P. 6.

                                       -5-



will be made available to these consumers, combined with New EchoStar's
commitment to maintain uniform national pricing for DBS services, renders it
"more likely that the merger would be of distinct benefit to rural TV households
than that it would diminish competition available to them."11

         The proposed merger also will have positive effects in the programming
market. Unlike most large cable operators, ECC has no ownership stake in any
programming producer, and the Merger Parties do not intend to pursue a strategy
of vertical integration with programmers post-merger. With the spectrum that
would be freed up by this transaction, New EchoStar will have both the ability
and the incentive to serve as an important outlet for promoting the development
of new independent programming services. Furthermore, as Dr. Willig observes,
the approximately 15 million subscribers of the combined entity "should provide
an attractive platform for launching new programs, providing an interested
programmer with a large percentage of the subscribers it would need to create a
viable network."12

         The merger will also dramatically aid New EchoStar in its efforts to
introduce nationwide competition to broadband products and bring true broadband
services to rural and underserved areas - another respect in which the effect of
this transaction is aligned with Congress's and the Commission's objectives and
the public interest. The bandwidth advantage of digital cable systems has
allowed cable operators to bundle their traditional video offerings with
high-speed Internet access, a package that

--------------------
         11 Id. at P. 40.

         12 Id. at P. 42. This estimate of the combined subscriber base of New
EchoStar excludes the subscribers of the National Rural Telecommunications
Cooperative and its affiliate entities who receive DIRECTV programming.

                                      -6-



consumers increasingly demand. The current transitional broadband products of
ECC and Hughes are struggling to achieve a critical mass of subscribers using
Ku-band satellite platforms that are not optimized for broadband services. The
next-generation Ka-band broadband satellite systems will be optimized for very
high speed Internet services, but are also highly capital-intensive, being the
first generation of commercial spacecraft to operate in these frequencies.

         The proposed combination will allow New EchoStar to proceed with prompt
and robust broadband deployment in the Ka-band by spreading the high fixed costs
of deployment over a critical mass of broadband subscribers and achieving an
offering that combines a competitive price and a reasonably short time to
market. Each company standing alone would face significantly greater challenges
in accomplishing those objectives within the time frame that is necessary to
effectively compete with cable's bundled broadband offering of high speed
Internet access products. The creation of New EchoStar will resolve the
inefficiencies and uncertainties that would arise if both companies were faced
with replicating investments in satellite platforms and will eliminate the
spectrum inefficiencies that would exist if each company, in its own right,
conducts duplicative multicasting and broadcast-type IP services. New EchoStar,
by contrast, will have the significantly greater wherewithal to construct the
type of advanced, high-capacity, cost-effective space platform to offer
competitive, next generation high-speed Internet access nationwide - including
to areas served neither by cable nor other broadband offerings - that are
essential if the satellite technology is to

                                      -7-



have any chance of competing with the bundled video/IP services offered by cable
companies.13

         The potential consumer benefits of maximizing New EchoStar's prospects
in the Ka-band are extremely significant for rural areas as well. In those
areas, the New EchoStar Ka-band system will be an important element in bridging
the "digital divide" because it can provide the same high-quality advanced
Internet and IP services to rural subscribers and to subscribers in urban and
suburban areas.

         The acquisition of PanAmSat either by New EchoStar or ECC14 is in the
public interest as well. Significant benefits to consumers will result from
combining the Fixed-Satellite Service ("FSS") resources of ECC and Hughes to
bring broadband satellite services to market faster. The transaction will not
create any significant overlap in the provision of FSS services in the same
product and geographic markets that should raise any concern, as ECC does not
currently provide any telecommunications services of the same type as PanAmSat
in the United States or elsewhere.

         The proposed merger marks the conclusion of a long and careful search
on the part of GM and Hughes for the optimal merger partner for Hughes. GM and
Hughes have chosen ECC as that partner, in large part due to the extraordinary
spectrum efficiencies and cost and revenue synergies promised by the proposed
merger. These benefits cannot be realized unless and until this proposed
transaction is consummated.

--------------------
         13 Joint Engineering Statement at 14-16.

         14 As noted above, Hughes' interest in PanAmSat will either be
transferred to New EchoStar through the merger or transferred through a separate
purchase by ECC of Hughes' interest in the event the merger agreement is
terminated under certain circumstances.

                                      -8-



Accordingly, the Applicants respectfully request that this consolidated
Application be granted as expeditiously as possible.

         This consolidated Application consists of a narrative description of
the parties and the transaction, including a discussion of the public interest
benefits of the transaction, along with several attachments containing the
completed FCC forms and other materials. Each FCC form and its associated
exhibits and filing fee have been filed separately in accordance with the
Commission's Rules. Following the closing of the transactions, the Applicants
will supplement all pending applications under the Commission's Rules, 47 C.F.R.
ss. 1.65 (2000), to reflect the new party in interest. To the extent that any
pending applications, or any other applications for new facilities or for
renewal or modification of existing facilities, are granted prior to the closing
of this transaction, the Merger Parties request a determination by the
Commission that the grant of this Application includes authority for New
EchoStar to acquire control of any subsequently granted authorizations.

     A.  DESCRIPTION OF THE PARTIES

         1.  ECC AND ITS PRESENT AFFILIATES

         ECC was started more than twenty years ago when its Chairman and CEO,
Charles W. Ergen, entered the satellite television business as a distributor of
C-band television satellite systems under the name Echosphere. Since its
founding, ECC has earned a reputation as an innovator in the satellite
television business by achieving a number of significant firsts, including:
development of the first UHF remote control; the first nationwide installation
network dedicated solely to satellite television systems; and

                                      -9-



the first company to offer an Integrated Receiver Descrambler for C-band
satellite television.

         ECC was granted authorization to use the 119(degree) W.L. orbital
location in 1992.15 ECC launched its first satellite to that location in
December 1995,16 and has provided continuous DBS service to customers throughout
the continental United States since early 1996. Also in 1995, the Commission
approved ECC's acquisition of control over Directsat Corporation, which launched
its first satellite to the 119(degree) W.L. orbital location in September 1996.
The combination allowed ECC, upon acquiring Directsat, to integrate the two
satellites into an offering of about 125 video channels.17 Since that time, ECC
has deployed four additional satellites, including one to the 110(degree) W.L.
orbital slot after the Commission's 1999 approval of ECC's acquisition of the
authorization held jointly by MCI Telecommunications Corp. and The News
Corporation Limited ("News Corp.").18 ECC's subsidiaries hold several DBS
authorizations and own and operate six operational DBS satellites located at the
61.5(degree) W.L., 110(degree) W.L., 119(degree) W.L., and 148(degree) W.L.
orbital positions.19 Through its DISH Network brand, ECC is now a provider of
DBS television services in the United States to more than 6 million subscribers.
ECC is

--------------------
         15 See EchoStar Satellite Corporation, 7 FCC Rcd. 1765 (1992).

         16 See EchoStar Satellite Corporation, 11 FCC Rcd. 3015, 3015 (Int'l
Bur. 1996).

         17 See Directsat Corporation, 11 FCC Rcd. 10575, 10577 (1996); see also
Directsat Corporation and EchoStar Communications Corp., Application for
Commission Consent to Transfer of Control, 10 FCC Rcd. 88 (1995).

         18 In re Application of MCI Telecommunications Corp. and EchoStar 110
Corp., For Consent to Assignment of Authorization to Construct, Launch and
Operate a Direct Broadcast Satellite System Using 28 Frequency Channels at the
110(degree) W.L. Orbital Location, FCC 99-109, 15 Communications Reg. (P&F) 1038
(1999)("MCIT").

         19 See Attachment C for a list of ECC authorizations.

                                      -10-



also an international supplier of digital satellite receiver systems and a
provider of other satellite services.

         ECC continues to upgrade its fleet of satellites. EchoStar 7, its
seventh DBS satellite, equipped with state-of-the-art spot-beam technology, is
scheduled to launch soon. ECC plans to launch an additional spot beam satellite,
EchoStar 8, in the year 2002. ECC also has Commission authorizations for Ku-band
and Ka-band FSS systems. ECC's first FSS satellite, a hybrid Ku-band/Ka-band
satellite, is expected to be launched in 2002.

         In addition, ECC currently holds an approximate 32% percent interest in
StarBand Communications, which began offering consumers a two-way, "always-on,"
high-speed Internet access service along with DISH Network programming in
November 2000. ECC also holds less than 20 percent interests in Wildblue
Communications, Inc. and Celsat America, Inc., both of which hope to offer a
similar high-speed Internet service from Ka-band satellites in the future. The
Commission recently approved the acquisition by an ECC subsidiary of a
controlling interest in VisionStar, Inc., another Ka-band licensee.20 This
transaction is expected to close shortly.

         Attachment D contains a chart summarizing the relevant ECC ownership
structure prior to the proposed transaction.

--------------------
         20 In the Matter of Application of VisionStar, Inc. and EchoStar
VisionStar Corp. for Consent to Transfer of Control Over Authorization to
Construct, Launch and Operate a Ka-band Satellite System in the Fixed-Satellite
Service at the 113(degree) W.L. Orbital Location, File No.
SAT-T/C-20001215-00163, DA 01-2481 (Int'l Bur. rel. Oct. 30, 2001).

                                      -11-



         2. THE GM AND HUGHES PARTIES

         Hughes, a Delaware corporation, is a wholly-owned subsidiary of GM,
which is also a Delaware corporation.21 Hughes is the corporate parent of
several other companies that provide specialized communications services to a
wide range of end users. Hughes directly owns all of the issued and outstanding
stock of DIRECTV Enterprises, Inc., a Commission DBS licensee.22 In addition,
Hughes controls various Commission licenses and authorizations through various
other subsidiaries that are directly or indirectly wholly owned, including
Hughes Communications, Inc.; Hughes Communications Galaxy, Inc.; Hughes
Communications Satellite Services, Inc.; Hughes Global Services, Inc.; HOT
Telecommunications, Ltd.; and USSB II, Inc.23 Hughes

--------------------
         21 As discussed herein, GM has created a publicly-traded tracking stock
of GM (GM Class H common stock) designed to provide holders with financial
returns based on the financial performance of GM's wholly-owned Hughes
subsidiary.

         22 DIRECTV Enterprises, Inc. ("DTVE, Inc.") is filing contemporaneously
with this Application several applications for consent, inter alia, to the pro
forma assignment of certain Commission licenses held by DTVE, Inc. and certain
of its subsidiaries to a new Delaware limited liability company, DIRECTV
Enterprises, LLC. Those applications are intended to obtain Commission consent
to the conversion of DTVE, Inc. from the corporate form or organization to the
limited liability company form of organization under Delaware law. It is
anticipated that this pro forma assignment to DIRECTV Enterprises LLC will
occur, upon Commission consent, well in advance of,and without regard to, the
transactions contemplated by this Appplication. Thus, the attached
organizational chart and the attached Form 312s reflect the consummation of that
pro forma assigment.

         23 Hughes Network Systems, Inc. ("New HNS"), a new Delaware corporation
wholly owned by Hughes, is filing contemporaneously with this Application
several applications for consent, inter alia, to the pro forma assignment of
certain Commission licenses held by Hughes and certain Hughes subsidiaries to
New HNS. It is anticipated in advance of, and without regard to, the
transactions contemplated by this Application. Thus, the attached organizational
chart and the attached Form 312s reflect the consummation of that pro forma
assignment.

                                      -12-



indirectly holds an approximately 81% economic and voting interest in
PanAmSat,24 a publicly-traded Delaware corporation and Commission licensee.25
Attachment E includes a chart summarizing the relevant GM/Hughes ownership
structure prior to the proposed transaction.

         DIRECTV launched the United States' first DBS satellite in December
1993 and a second DBS satellite in August 1994.26 In June 1995, DIRECTV launched
a third high-power DBS satellite and in April and May 1999, the Commission
authorized the transfer to DIRECTV of DBS assets and related authorizations held
by United States Satellite Broadcasting Company, Inc. ("USSB")27 and Tempo
Satellite, Inc., respectively.28 As a result of these transactions, DIRECTV
currently provides service to U.S. consumers from five DBS satellites using 32
channels at 101(degree) W.L., 3 channels at 110(degree) W.L., and 11 channels at
119(degree) W.L.29 DIRECTV, together with certain independent distributors, now
have approximately 10.3 million subscribers in the United States.30

--------------------
         24 PanAmSat has recently filed, an application for consent to the pro
forma assignment of certain Commission licenses held by PanAmSat Corporation to
its indirect wholly owned subsidiary, PanAmSat Licensee Corp. It is anticipated
that this pro forma assignment to PanAmSat Licensee Corp. will occur, upon
Commission consent, well in advance of, and without regard to, the transactions
contemplated by this Application. Thus, the attached Form 312s reflect the
consummation of that pro forma assignment.

         25 Hughes Communications, Inc., 12 FCC Rcd. 7534 (1997).

         26 United States Satellit Broadcasting Co., 7 FCC Rcd. 7247 (1992).

         27 United States Satellite Broadcasting Co., 14 FCC Rcd. 4585 (Int'l
Bur. 1999).

         28 Tempo Satellite, Inc., 14 FCC Rcd. 7946 (Int'l Bur. 1999)

         29 DIRECTV voluntarily surrendered the DBS channels previously
allocated to it at the 157(degree) W.L. orbital location in May 1998. See Public
Notice, Rep. No. SPB-127 (rel. June 10, 1998).

         30 Hughes also has interests in direct-to-home ("DTH") satellite
services in several other countries. For example, it holds a 74.7% interest in
DIRECTV Latin America LLC,

                                      -13-



         Hughes Network Systems ("HNS"), a division of Hughes, provides
broadband satellite network solutions for businesses and consumers around the
world. HNS's high-speed, satellite-based Internet access service is marketed
globally under the DirecPC(R) and DIRECWAY(R) brands. The current satellite
broadband services are provided using leased Ku-band transponders. HNS supplies
mobile satellite networks and user terminals and manufactures DIRECTV(TM)
satellite television receivers and set-top boxes. HNS is also responsible for
designing and managing the development, deployment and operation of the Hughes
SPACEWAY system, a next generation, Ka-band satellite platform that will provide
new and advanced services for DIRECWAY customers, consumer and business alike.
SPACEWAY is currently scheduled to begin North American service in 2003. DIRECTV
Broadband, Inc. (formerly known as Telocity, Inc.) offers terrestrial high-speed
DSL service across the country where DSL is available.

         Directly and through its subsidiaries, PanAmSat owns and operates a
fleet of 21 satellites around the world that operate in the FSS bands and a
comprehensive system of teleports and terrestrial resources. PanAmSat carries
programming for broadcasters and programmers to millions of households
worldwide, provides Internet backbone support to Internet service providers,
supports private business communications networks to corporations, and provides
essential pipelines worldwide for telecommunications providers. PanAmSat and its
subsidiaries hold various FCC satellite

--------------------
which provides DTH pay television services throughout Latin America. The
licenses for the services provided in foreign countries are not part of this
Application.

                                      -14-



earth station licenses as well as Section 214 authorizations for the provision
of international services.

         3.  NEW ECHOSTAR

         As described in more detail in Section B below, the transferee, New
EchoStar, is Hughes Electronics Corporation (or a newly formed holding company
above Hughes Electronics Corporation)31 with a new ownership structure that will
result from the merger of ECC with and into Hughes after Hughes is split off
from GM. New EchoStar will control indirectly the interests in all of the FCC
licensees that are the subject of this Application, including Hughes' indirect
interest in PanAmSat that is proposed to be transferred pursuant to the Merger
Agreement. The new company will be renamed EchoStar Communications Corporation
(for clarity, referred to herein as "New EchoStar"). After closing, New EchoStar
will use the DIRECTV(TM) brand for all of its Direct-to-Home ("DTH") consumer
offerings. New EchoStar will have three classes of common stock. As of the
closing of this transaction, Mr. Charles W. Ergen, ECC's controlling shareholder
and a U.S. citizen, will be the Chairman and Chief Executive Officer of New
EchoStar, and through a family trust, will be New EchoStar's largest individual
shareholder, holding all of the outstanding shares of Class B common stock of
New EchoStar, which would represent approximately 16.7% of the total shares of
outstanding common stock (and an approximate 39% voting interest) in New
EchoStar.32 The other ECC public shareholders at the time of the closing will
receive shares of Class

--------------------
         31 See n. 2 above.

         32 Certain matters will also require a separate class vote of the
holders of the shares of Class B common stock of New EchoStar.

                                      -15-



A common stock representing approximately 24.3% of the economic interest (and
approximately 5.7% of the voting interest) in New EchoStar (including newly
issued shares and convertibles). GM potentially would retain (after giving
effect to the Debt/Equity Exchange, (as defined below)) shares of Class C common
stock representing an approximate 4.9% economic interest (and an approximate
4.6% voting interest) in New EchoStar while the GM Class H shareholders would
own shares of Class C common stock representing an approximate 54.1% economic
interest (and an approximate 50.7 % voting interest) in New EchoStar.33
Attachment F summarizes the relevant New EchoStar ownership structure
post-merger.

     B.  DESCRIPTION OF THE TRANSACTIONS

         ECC and Hughes plan to merge their businesses in accordance with the
Merger Agreement. This agreement, as well as an Implementation Agreement and a
Separation Agreement (and various ancillary agreements contemplated thereby),
set forth the transactions contemplated by the parties to effect the business
combination. The PanAmSat Stock Purchase Agreement sets forth the terms under
which ECC would purchase Hughes' approximately 81% indirect interest in PanAmSat
in the event the Merger Agreement is terminated under certain circumstances. The
transactions will be accomplished in a series of interrelated steps, as follows.

--------------------
         33 All of the economic and voting interest percentages above are
estimated, as of the consummation of the merger, based on the recent trading
prices of ECC common stock, and certain assumptions regarding the pre-merger
issuance of new ECC equity securities, conversion of currently outstanding
preference shares and other convertible securities, as well as the treatment of
certain shares for federal income tax purposes.

                                      -16-



         The Recapitalization and Split-off of Hughes. At present a "tracking
stock" GM security related to Hughes' operations is available to the public and
is traded on the New York Stock Exchange and on other exchanges as GM Class H
common stock. While this tracking stock is designed to provide holders with
financial returns based on the financial performance of Hughes, actual ownership
of all Hughes' capital stock remains with GM. Accordingly, to accomplish the
proposed business combination with ECC, prior to the merger, Hughes must be
recapitalized and its stock distributed to GM's stockholders in order to
separate Hughes from GM.

         To accomplish the recapitalization and split-off, the Separation
Agreement calls for Hughes to pay a dividend of up to $4.2 billion to GM (or to
a wholly-owned limited liability subsidiary company of GM)34 and for GM's deemed
retained economic interest in Hughes to be reduced by an amount commensurate
with the dividend. In addition to the dividend to GM, Hughes will issue to GM
shares of new Hughes Class C common stock pursuant to the Separation Agreement.
Next, GM will split off Hughes by distributing to GM Class H common stockholders
one share of new Hughes Class C common stock in redemption of and in exchange
for each share of GM Class H common stock that they hold. GM will either retain
or distribute to holders of its $1-2/3 common stock all or a portion of the
remaining shares of Hughes Class C common stock representing its deemed retained
economic interest in Hughes. In connection with the

--------------------
         34 GM has the ability under the Merger and Implementation Agreements to
create a new wholly-owned limited liability company and insert that company into
the ownership structure between GM and Hughes (or HEC Holdings, Inc., as the
case may be) prior to the split-off and merger.

                                      -17-



split-off, the GM Class H common stock will be cancelled. Upon completion of
these transactions, Hughes will be an independent, publicly-owned company.

         The Merger. Immediately following the re-capitalization and split-off,
ECC will merge with and into Hughes or a newly-formed holding company above
Hughes. Hughes will be the surviving corporation, and the merged entity will be
renamed EchoStar Communications Corporation ("New EchoStar"). As a result of the
merger: (i) the holders of ECC Class A common stock before the merger will
receive shares of the Class A Common Stock of New EchoStar, (ii) the holders of
ECC Class B common stock before the merger will receive shares of the Class B
Common Stock of New EchoStar, and (iii) the holders of Class C Common Stock of
Hughes before the merger (the former GM Class H shareholders and GM and/or the
holders of GM's $1-2/3 common stock who obtained their Class C shares in
connection with the split-off) will retain their Class C Common Stock, now in
New EchoStar. The Class A, Class B and Class C classes of stock will exercise
the voting percentages described above with respect to New EchoStar immediately
after the merger.

         Debt for Equity Exchange. GM has the option, at any time up until the
date that is six months after the closing of the merger, to satisfy certain of
its outstanding debt obligations by issuing or distributing GM Class H common
stock or New EchoStar Class C common stock, respectively, to creditors in
exchange for such debt obligations pursuant to one or more transactions (each a
"Debt/Equity Exchange"). Prior to the merger, GM would effect the Debt/Equity
Exchanges using newly issued shares of GM Class H common stock. After the
merger, the Debt/Equity Exchanges would be effected using shares of New EchoStar
Class C common stock retained by GM after the split-off.

                                      -18-



The transaction documents allow GM to distribute up to 100 million shares of GM
Class H common stock or New EchoStar Class C common stock pursuant to
Debt/Equity Exchanges.

         The PanAmSat Purchase. GM and Hughes currently own indirectly through
various Hughes subsidiaries an approximate 81% controlling interest in PanAmSat.
These subsidiaries would become subsidiaries of New EchoStar pursuant to the
merger. However, in the event the merger transaction is not consummated under
certain circumstances, the GM and Hughes interest in PanAmSat (currently held
through subsidiaries of Hughes) will be transferred, upon Commission consent and
upon satisfaction of other conditions, in its entirety to ECC pursuant to the
PanAmSat Stock Purchase Agreement.

II.  PUBLIC INTEREST STATEMENT

         To approve the transfer of the Hughes and ECC licenses to New EchoStar,
the Commission must find that the proposed transfer serves the public interest,
convenience, and necessity.35 To make this finding, the Commission has
traditionally weighed the public interest benefits of the proposed transaction
against any potential public interest harms to determine whether, on balance,
the benefits outweigh any harms.

         The Commission's public interest analysis generally has included an
examination of the following fundamental questions: (i) whether the transaction
would result in a violation of the Communications Act or the Commission's rules;
(ii) whether the transaction would substantially frustrate or impair the
Commission's implementation or enforcement of the Communications Act or other
related statutes or interfere with the

--------------------
         35 47 U.S.C. ss.ss. 214(a), 310(d).

                                      -19-



Act's objectives; and (iii) whether the transaction promises to yield
affirmative public interest benefits.36

         The analysis also includes an evaluation of the likely competitive
effects of the transaction and whether the proposed transfer creates a
significant likelihood of competitive harm.37 On this issue, more than mere
speculation is required.38 At the same time, Chairman Powell has stated his
intention that the Commission subject proposed mergers to careful "rules-based"
scrutiny and otherwise focus its inquiry in a manner that limits duplication of
effort between its own review and the work of the agencies charged with
evaluating such transactions under the antitrust laws.39

         Each of the fundamental questions considered by the Commission as part
of its analysis is addressed below. The unavoidable conclusion is that the
proposed merger of ECC and Hughes is manifestly in the public interest. The
synergies created by the combination will create substantial public interest
benefits with respect to MVPD competition,40 new programming and other content,
and improved broadband services for millions of Americans. The transaction will
create an integrated, spectrally efficient, full-service satellite competitor
that is truly equipped to combat the dominance of incumbent

--------------------
         36 See, e.g., Time Warner Inc. and America Online, Inc., 16 FCC Rcd.
6547 P. 1 (2001)("AOL/Time Warner"); MCIT, 15 Comm. Reg. (P&F) 1038, P. 7.

         37 Id.

         38 See, e.g., United States v. Citizens & S. Nat'l Bank, 422 U.S. 86,
122 (1975)("The Clayton Act is concerned with 'probable' effects on competition,
not with 'ephemeral possibilities.'")(quoting Brown Shoe Co. v. United States,
370 U.S. 294, 323 (1962)); see also United States v. Baker Hughes, Inc., 908
F.2d 981, 984 (D.C. Cir. 1990).

         39 See "Powell Offers Views on CLEC Woes, Spectrum Policy,"
Communications Daily, May 23, 2001, at 5. "Powell Urges Restraint in FCC Merger
Reviews," Communications Daily, Dec. 11, 1998, at 1; cf. AOL/Time Warner, 16 FCC
Rcd. at 6555 (concurring statements).

         40 See Willig Decl. at P.P. 21-25.

                                      -20-



cable Multiple System Operators ("MSOs"), and to provide new and expanded
services, including state-of-the-art broadband services, to consumers in both
urban areas as well as underserved and rural areas. At the same time, the
structure of the market in which the combined entity will compete, as well as
the combined entity's commitment to non-discriminatory pricing and service,
prevent the merger from posing any risk of harm to the public interest.
Accordingly, the Commission should not only grant this application - it should
do so expeditiously.

     A.  The Transaction Will Comply With the Requirements of the Communications
         Act, All Other Applicable Statutes, and With the Commission's Rules.

         The proposed transaction does not implicate any foreign ownership,
aggregation, cross-ownership, or any other restrictions imposed by the
Communications Act, Commission regulation or applicable statute. Both ECC and
Hughes are currently shareholders of a number of companies that are Commission
licensees, and New EchoStar's Chief Executive Officer will be Mr. Charles W.
Ergen, now Chief Executive Officer of ECC. The qualifications of all relevant
parties are therefore a matter of record before the Commission. The combined
entity will not have alien ownership that even approaches the benchmark of any
applicable foreign ownership rule.41 Nor does the proposed merger implicate any
Commission rule or policy governing cross-ownership or MVPD programming
relationships.42

--------------------
         41 While ECC has received from the Commission a waiver of certain
foreign ownership rules (to the extent applicable) to allow an investment from
an Australian corporation, New Corp., that investment is now well below 5% and
nowhere near the 25% limit of these rules to the extent they apply. See In re
Application of MCI Telecommunications Corp., File No. 73-SAT-P/L-96, FCC 99-110
(rel. May 19, 1999).

         42 AOL Time Warner Inc. has an indirect ownership interest in DIRECTV,
which would represent less than five percent interest in the combined company.

                                      -21-



     B.  The Transaction Will Not Impair Any Statutory Objectives and Will Yield
         Substantial Affirmative Public Interest Benefits

         Far from impairing any statutory policies or objectives, the proposed
transaction will in fact further the important Commission policies in favor of
vigorous competition, the efficient use of spectrum and satellite resources, and
the provision of advanced broadband communication services to all Americans. In
doing so, the merger will yield a number of significant affirmative benefits to
the public interest. The Commission is well-suited to recognize and weigh these
benefits in light of its statutory responsibilities.

         1.  THE TRANSACTION WILL PROMOTE COMPETITION WITH CABLE BY ALLOWING
             INCREASED SPECTRUM AND SATELLITE RESOURCE EFFICIENCY

         For almost a decade now, both Congress and the Commission have made
concerted efforts to open up the MVPD market to effective competition - Congress
with the enactment of the Cable Television Consumer Protection and Competition
Act of 1992 and the Satellite Home Viewer Improvement Act of 1999, and the
Commission with its rules implementing these laws. Nothwithstanding these
efforts, however, the MVPD market is still dominated by cable operators.43 Both
Congress and the Commission have noted this competitive problem on a myriad of
occasions.44 Moreover, policy makers and

--------------------
         43 See Willig Decl. at P.P. 7-18, and below at 37-41, for an analysis
of the relevant market.

         44 See, e.g., S. Rep. No. 102-92, at 1 (1992)(explaining that Congress
enacted the Cable Television Consumer Protection and Competition Act of 1992
("1992 Cable Act") "to promote competition in the multichannel video marketplace
and to provide protection for consumers against monopoly rates and poor
service."); In the Matter of Implementation of Section 19 of the Cable
Television Consumer Protection and Competition Act of 1992: Annual Assessment of
the Status of Competition in the Market for Delivery of Video Programming, First
Report, 9 FCC Rcd. 7442 (1994)("First Competition Report"), at P. 5 (observing
that "Congress...found that without

                                      -22-



regulators alike have envisioned DBS as the most promising alternative MVPD
technology that could help alleviate this problem and ultimately cure it.45

         DBS, however, remains fundamentally constrained by its dependence upon
the radio spectrum for operations. DBS providers must use limited bandwidth from
orbital locations that were not originally optimized for digital transmissions.
The problem of finite bandwidth is seriously exacerbated by the currently
duplicative use of the DBS spectrum. To help accomplish the Commission's vision
of promoting DBS as a complete substitute for cable, DBS providers have had to
offer subscribers programming services similar to those provided by cable
systems, resulting in the use of each provider's spectrum for largely
overlapping programming services.46 For example,

--------------------
competition, there was 'undue market power for the cable operator as compared to
that of consumers and video programmers,' and that 'the cable television
industry has become a dominant nationwide video medium.'" (citing 1992 Cable
Act, ss.ss. 2(a)(2-3), 106 Stat. 1460)); In the Matter of Implementation of the
Satellite Home Viewer Improvement Act of 1999; Retransmission Consent Issues:
Good Faith Negotiation and Exclusivity, CS Docket No. 99-363 (rel. Mar. 16,
2000)(promulgating rules under SHVIA designed "to place satellite carriers on an
equal footing with local cable operators when it comes to the availability of
broadcast programming, and thus give consumers more and better choices in
selecting a multichannel video program distributor.").

         45 Congress noted in 1999 that "with the development of high-powered
satellite service, or DSS, which delivers programming to a satellite dish as
small as 18 inches in diameter, the satellite industry now serves homes
nationwide with a wide range of high quality programming....it offers an
attractive alternative to other providers of multichannel video programming; in
particular, cable television." H.R. Conf. Rep. No. 106-464, at 91 (1999); see
also First Competition Report, 9 FCC Rcd. 7442, at P. 62 (noting the
Commission's expectation in 1990 that DBS "had the potential to 'readily compete
with cable.'")(citing Rate Deregulation & the Commission's Policies Relating to
the Provision of Cable Television Service, Report on Competition, 5 FCC Rcd.
4962 (1990)).

         46 In fact, the current duplicative use of this spectrum was not always
the model for DTH satellite services. In the 1980s, when the Commission first
authorized the DBS service, DTH satellite services were analog, meaning that
each provider could not deliver much more than a handful of channels. Indeed,
DBS itself was first contemplated as an analog service. The DTH satellite
providers therefore planned to use their limited

                                      -23-



currently, ECC and DIRECTV use portions of the same DBS spectrum, each with its
own expensive satellite fleet, each to provide the same HBO channels, the same
CNN channels, and in most cases the same local network channels to the same
metropolitan areas.47 DBS operators have attempted to mitigate this inefficient
duplicative use of DBS spectrum by relying on upgrades in digital compression
and other technologies to "squeeze" as many digital programming channels as
possible in their licensed bandwidth, and indeed, to offer more channels and
superior picture and sound quality relative to analog cable systems. In
addition, DBS providers historically had no need to allocate channel capacity
for the provision of local network signals because they were legally hampered
from retransmitting them in most instances.

         Today, however, DBS spectrum inefficiency has become progressively a
more debilitating problem owing to a number of factors, including satellite
mandatory carriage obligations and the increased competitive threat posed by the
enhanced capabilities of digital cable. While the enactment of the SHVIA
alleviated some of the disparity between DBS and cable program offerings by
giving DBS providers a limited legal ability to retransmit local broadcast
signals starting in November 1999, it did so at a significant cost - the
unprecedented spectrum requirements associated with satellite mandatory carriage
obligations. Without the merger, must-carry obligations will

--------------------

capacity to provide programming services that generally complemented, rather
than duplicated, one another. It was in that environment that the Commission
decided to fragment the DBS spectrum into a patchwork of small channel
assignments - issuing separate permits for 11, 3 or even 1 DBS channel at each
orbital location. The emergence of digital DBS in the early 1990s and the desire
to introduce price competition to cable systems made that paradigm completely
obsolete, and led to the current problem of duplicative use of the DBS spectrum.

         47 See Joint Engineering Statement at 8-10.

                                      -24-



effectively preclude the potential of effective competition with cable in all
but the largest metropolitan areas now served by each DBS provider - DIRECTV now
serves 41 local areas and ECC serves 36 local areas, for a total of 42 areas and
with an overlap of 35 areas. All in all, each of ECC and DIRECTV expects to have
to carry upwards of 300-400 local must-carry stations starting in January 2002,
and most of these stations will be the same from one DBS provider to the
other.48 Must-carry is expected to bring the total of overlapping programs (both
national and local) transmitted by the two companies to over 500.

         Moreover, cable operators have aggressively upgraded the capacity of
their systems to allow for the digital retransmission of video programming.49
Although DBS's digital quality and former capacity superiority have allowed it
initially to make inroads into cable's dominant market position, the roll-out of
upgraded, digital cable

--------------------
         48 For example, as of January 1, 2002, ECC expects that it will be
required to transmit numerous local home shopping channels because of the
satellite must-carry obligations imposed under the SHVIA. See 47 U.S.C. ss. 338
(Supp. V 1999)(as a condition of using the compulsory license made available by
SHVIA for retransmission of local broadcast stations into their "home" market,
DBS providers must carry, on request, the signals of all television broadcast
stations located within the same local market, subject only to certain limited
exceptions).

         49 Comments of National Cable & Telecommunications Association
responding to Notice of Inquiry, In the Matter of Annual Assessment of the
Status of Competition in the Market for the Delivery of Video Programming,
Notice of Inquiry, CS Docket No. 01-129, CS Docket No. 01-129 (dated Aug. 2,
2001), at 25-29 (describing cable companies' $50 billion investment in upgraded
infrastructure over the past five years to facilitate "a broad range of video,
voice and high-speed data possibilities, as well as improved signal reliability,
improved pictures and two-way transmission capability."); see also Annual
Assessment of the Status of Competition in the Market for the Delivery of Video
Programming, Seventh Annual Report, 16 FCC Rcd. 6005, 6009 (2001)("Seventh MVPD
Competition Report")(Commission observation that "[v]irtually all the major MSOs
offer Internet access via cable modems in portions of their nationwide service
areas....Many cable operators also are planning to integrate telephony and
high-speed data access.").

                                      -25-



facilities has compounded cable's incumbency advantages. A fully upgraded
digital cable system now utilizes up to 750 MHz or 850 MHz of equivalent
bandwidth, with no theoretical limitation on the ability to increase its
bandwidth utilization by upgrading its physical plant.50

         Digital cable also allows MSOs to offer a bundle of video and
high-speed Internet access offerings, which has significantly and negatively
affected the willingness of cable subscribers to switch to DBS, as well as other
interactive broadband services. For example, many of the MSOs are now running
trials of their Video on Demand ("VOD") products in test markets, and some have
already commercially launched this service. One observer has noted that "VOD has
emerged as the silver-bullet to DBS, and the MSOs are stockpiling for a 2002
showdown."51 Even before that showdown, the impact of the video/Internet
access/broadband bundle offered by cable has been acutely felt by the DBS
providers. As a result of these developments, cable dominance persists and may
yet be augmented.52 Indeed, in its most recent annual cable competition report,
the Commission notes that the cable industry continues to maintain a dominant
position in the MVPD market, providing service to about 80% of the national MVPD

--------------------
         50 The information capacity per MHz of a digital cable system is not
limited by the signal propagation constraints inherent in DBS systems.

         51 Morgan Stanley, Notes from NCTA 2001 (June 15, 2001); see also
Deutsche Banc Alex. Brown, Cable Industry Outlook, Apr. 16, 2001, at 19, 38 (VOD
is cable's "killer app" that will highlight cable's technological advances over
DBS).

         52 Brigitte Greenberg, "VOD, High-Speed Data, Voice Keys to Cable
Future, Operators Say," Communications Daily (Nov. 29, 2001) at 7 (noting cable
operators' "optimism that services satellite couldn't deliver - video-on-demand
("VOD"), subscription VOD, interactivity, high-speed data and telephony - would
solidify cable's relationship with current customers and bring many defectors to
satellite back into fold.").

                                      -26-



subscribership.53

         Combining the satellite and spectrum resources of ECC and Hughes will
eliminate the duplicative use of the limited amount of available DBS spectrum to
deliver the same programming,54 and allow DBS to compete more effectively
against cable's recent offerings. Elimination of this duplication is an enormous
efficiency resulting from the merger. The Commission is uniquely equipped to
evaluate this benefit because the increased spectrum efficiency resulting from
the merger would promote directly its long-standing policy in favor of efficient
and non-duplicative use of the spectrum.55

         The proposed transaction will do much more, however, than serve the
Commission's spectrum policies in the abstract. Increased spectrum efficiency
will translate into concrete benefits for customers, each recognized
specifically by Congress or the Commission as important in its own right: more
local channels to more markets; more high definition television ("HDTV")
channels; better service to rural areas, Alaska and Hawaii; more diverse and
educational programming; and broader availability of

--------------------
         53 See Seventh MVPD Competition Report, 16 FCC Rcd. at 6008. Cable
claimed more than a 77% share of the MVPD market in August 2001. See Comments of
National Cable & Telecommunications Association responding to Notice of Inquiry,
In the Matter of Annual Assessment of the Status of Competition in the Market
for the Delivery of Video Programming, CS Docket No. 01-129, at 7.

         54 See Joint Engineering Statement at 8-9.

         55 See, e.g., In the Matter of Implementation of the Cable Television
Consumer Protection and Competition Act of 1992, 10 FCC Rcd. 3105, 3120 (1994),
at 3120 P. 39 (1994)(recognizing the public interest in avoiding "duplication of
programming" in the DBS service, which leads to "more diversity in programming
for the consumer"); cf. Hughes Communications Galaxy, Inc., 3 FCC Rcd. 7015 P. 2
(1988)(noting that use of INTELSAT system "to duplicate programming already
available on domestic satellites would be an inefficient use of the available
radio spectrum"); In re Revision of Radio Rules & Policies, 7 FCC Rcd. 2755,
2783 (1992)(explaining that the Commission restricts duplicative use of spectrum
utilized by commercial AM and FM radio stations with overlapping service areas
because "[t]he limited amount of available spectrum could be used more
efficiently by other parties to serve competition and diversity goals.").

                                      -27-



satellite-based Internet access services. These benefits will in turn spur the
incumbent cable operators to greater efforts for the benefit of cable as well as
cable consumers.56 In short, DBS spectrum efficiency will serve as a means to
the all-important end: more vigorous competition in the MVPD market.

          (a) MORE LOCAL CHANNELS TO MORE AREAS

         New EchoStar will provide local broadcast programming to far more
communities - 100 or more, including at least one city in each state, compared
to the 36 and 41 metropolitan areas that ECC and DIRECTV each respectively serve
now.57 The inability to provide local programming has been recognized by
Congress and the Commission as a significant impediment to DBS becoming fully
competitive with cable.58 The legal constraints that contributed to the
competitive imbalance were

--------------------
     56 See, e.g., Merger Impact on Cable: A Wall Street View, skyreport.com
(Nov. 26, 2001) available at
http://www.skyreport.com/skyreport/nov2001/112601.htm#one (noting financial
analysts' prediction that the advantages resulting from "a combination of DBS
assets" would prompt cable to "convert their systems to 100 percent digital,
 .... become more aggressive in developing and distributing both broadband
content and communications in order to drive the penetration of broadband
connectivity," and to "bundle aggressively," with the end result being that
"[c]osts to the consumer will come down through bundled pricing."); Valerie
Milano, "Cable Sees PVRs as Serious Threat, SvoD the Answer," Communications
Daily (Nov. 29, 2001) at 8 (pending merger will spur cable toward more
innovation).

     57 See Joint Engineering Statement at 9. The total number of metropolitan
areas now served by either DIRECTV or ECC is 42, with 35 of these areas served
by both companies.

     58 In the Conference Report accompanying SHVIA, Congress declared that
enabling DBS operators to offer local channels would "allow satellite carriers
for the first time to provide their subscribers with the television signals they
want most: their local stations," and "create parity and enhanced competition
between the satellite and cable industries in the provision of local television
broadcast stations." H.R. Conf. Rep. No. 106-464, at 93; see also Seventh MVPD
Competition Report, 16 FCC Rcd. at 6010P. 13 (observing that "[c]onsumers
historically reported that their inability to receive local signals from DBS
operators negatively affected their decision as to whether to subscribe to DBS .
 . . . Under SHVIA, DBS operators can offer a programming package more comparable
to and competitive with the services offered by cable operators.")

                                      -28-



alleviated somewhat by the passage of SHVIA. The limited channel capacity of DBS
providers, however, as well as the burdens to be soon imposed upon that capacity
in the form of satellite must carry, continue to limit DBS's ability - even with
the implementation of spot-beam satellites and other new technologies - to offer
local programming to many consumers. As a result, local-into-local service has
for now been confined only to the relatively larger metropolitan areas.59 The
merger will dramatically expand the number of areas that can receive local
broadcast station signals and will result in more vigorous competition to cable
in these areas.

         (b) MORE PROGRAMMING CHOICES, INCLUDING HDTV CHANNELS AND
             MORE PAY-PER-VIEW

         New EchoStar also will have the ability to provide consumers with many
more national programming choices than each company is able to provide standing
alone. Just as the merger will eliminate the need to duplicate carriage of local
channels, it will also eliminate the duplication of national channels, thereby
freeing spectrum for more diverse programming choices. This includes more high
definition programming that will encourage consumer adoption of digital
equipment - another explicit Commission objective.60 Currently, ECC and DIRECTV
each offer a limited number of HDTV channels - 2 for DIRECTV and 3 full-time
HDTV channels for ECC. The combined entity will be able to devote several times
that number of channels to HDTV content,61

--------------------
     59 See Joint Engineering Statement at Exhibit 2.

     60 See, e.g., In the Matter of Review of the Commission's Rules and
Policies Affecting the Conversion to Digital Television, Report and Order and
Further Notice of Proposed Rulemaking, 16 FCC Rcd. 5946 (2001) (stressing the
Commission's desire for a "rapid" conversion to digital television ("DTV")); id.
at 5950 P. 11 (Commission expressing its "agree[ment] that the wide availability
of digital programming . . . will help speed the transition to DTV.").

     61 See Joint Engineering Statement at 10.

                                      -29-



driving demand for both HDTV content and equipment, and breaking the vicious
circle of too little HDTV content to drive consumers to purchase HDTV equipment
and too little equipment to justify investment in more content.

         The savings in spectrum that will result from the merger will also
enable New EchoStar to offer greatly expanded pay-per-view ("PPV") and
VOD-like62 services - services that are very important to the economics and
competitiveness of MVPD providers. For example, capacity can be devoted to
caching (i.e., saving for future viewing) on Personal Video Recorders, allowing
users to play PPV movies or have access to specialty programming virtually on
demand.63

         (c) EXPANDED PRODUCT OFFERINGS TO MEET COMPETITION FROM DIGITAL
             CABLE

         The merger will enhance competition by enabling New EchoStar to compete
better with new MSO product offerings made possible by the advent of digital
cable. As mentioned above, the digital cable roll-out has allowed cable MSOs to
offer consumers a broadband bundle, packaging the conventional video services
with high-speed Internet access, VOD and other interactive services, and
Internet telephony. These packages are increasingly popular with MVPD
subscribers.64 DBS, on the other hand, is competitively disadvantaged in this
regard. The DBS spectrum to a consumer's home is

--------------------
     62 See discussion in B(1)(c) below.

     63 See Joint Engineering Statement at 11.

     64 As early in the digital cable roll-out as 1998, the Commission
recognized that "[m]ulti-service offerings and bundling services for sale seem
to enhance subscription to alternative services offered by cable companies. . .
 . Indications are that customers value receiving these services through
'one-stop-shopping.' . . . For example, many large MSO's have found that
bundling increases penetration of video and of new services." In the Matter of
Annual Assessment of the Status of Competition in the Market for the Delivery of
Video Programming, Fifth Annual Report, 13 FCC Rcd. 24284, 24322 P. 60 (1998)
(footnotes omitted).

                                      -30-



now only one-way via satellite and needs to be supplemented by the use of
different frequencies and satellites or by using terrestrial technologies to
allow a broadband two-way offering. Both ECC and Hughes have attempted to create
such broadband packages, ECC with its StarBand investment, and Hughes with its
HNS DirecPC and DIRECWAY offerings. However, during the first year of service,
subscription rates have been low, with only one percent of total DBS
subscribers, less than 200,000, subscribing to these data services nationwide.65
As will be seen below, next-generation satellite broadband services require
significant investment and will be dramatically improved by combining the
resources of both companies.

         As mentioned above, the deployment of digital cable has also provided
cable operators with the ability to offer new interactive services. These
services include video-on-demand, information-on-demand (e.g., sports scores,
financial market information, electronic yellow pages, etc.) and electronic
shopping services. These services are typically enabled through two-way
interaction between the digital cable set-top and server equipment located at
the cable operator's headend.

         Even though the "one-way via satellite" architecture of a DBS operator
does not allow for the same type of headend to set-top connectivity as exists in
a digital cable system, a DBS service can provide many of the same types of
interactive offerings as the digital cable operator provided sufficient
bandwidth for content distribution is available to the satellite operator.66 The
latency of this type of service (i.e., how quickly

--------------------
     65 See Joint Engineering Statement at 14.

     66 In contrast to cable operators, a DBS provider enables its interactive
services by the continuous broadcast of content "carousels" to its set-top
boxes. Under the direction of either the operator or the consumer, each set-top
box selects and presents or stores

                                      -31-



the information is presented to the viewer) and depth of the service (i.e., how
much information is available to the viewer) is directly proportional to the
amount of satellite bandwidth allocated to the content carousel associated with
the service. Simply put, the more bandwidth that is applied to a service, the
more interactive and robust (and consequently the more competitive) the consumer
experience.

         Thus the DBS spectrum efficiencies created through the merger will
allow New EchoStar to offer satellite-based interactive services that can
compete favorably against increasingly sophisticated digital cable offerings and
at the same time provide rural consumers with access to interactive services
they might otherwise not be able to obtain.

         The merger also will enable New EchoStar to compete more effectively
against cable companies (and the telephone companies) as a possible third line
for a bundle of video/data/Internet services into the home. Cable companies with
digital infrastructure can now offer consumers the attractive bundles of video,
high-speed Internet access and other interactive services, and Internet
telephony. As will be seen below, the merger will allow New EchoStar to provide
a truly competitive broadband service, as the new entity will be able to combine
the spectrum available to each company for broadband services and use the
combined potential subscriber base to achieve more

--------------------
information from the content carousel transmitted by the satellite. For example,
in the case of an interactive financial information service, the consumer would
identify the particular stock symbols of interest and the set-top box would wait
for the relevant information to be transmitted over the carousel, "grab" it and
display it to the consumer. If the content is transmitted frequently enough,
this interaction appears to be instantaneous to the viewer. This content
carousel approach applies not only to information-on-demand services but to
almost any satellite-delivered interactive service, including video-on-demand
services and electronic shopping services.

                                      -32-



competitive price points and sustain the extraordinary high up-front capital
investment that is required to launch quickly an advanced satellite broadband
network.

         New EchoStar will thus be able to establish a viable satellite-based
Internet/data service that would compete with cable modem access and telephone
lines as a third line into the home. This efficiency will confer significant
consumer benefits by creating an effective competitive alternative in a line of
business that is increasingly important to consumers - and in which consumer
options currently are limited.67

         (d) BETTER SERVICE TO RURAL AREAS, ALASKA AND HAWAII

         Another major benefit of the newly-freed spectrum will be New
EchoStar's ability to provide Americans living in rural areas, Alaska and Hawaii
with more national programming networks and a better signal.68 As explained
above, by not duplicating each other's programming over the same spectrum, the
combined entity will be able to offer a much greater variety of national
networks than rural and remote areas can receive today.

         This means that New EchoStar will be better able to provide subscribers
in Alaska and Hawaii with a programming package more akin to what is available
to their fellow citizens on the mainland today. Moreover, the combination of
assets, including uplink facilities, will make more feasible the redeployment of
finite satellite assets to non-CONUS western orbital slots, portending further
improvements to service in Alaska and Hawaii.

--------------------
     67 The necessity and importance of spreading the huge costs of pure
broadband satellite services across the required critical mass of broadband
subscribers is discussed in greater detail below.

     68 See Joint Engineering Statement at 10.

                                      -33-



The same spectrum and satellite efficiency that will facilitate a greater
variety of programming also will provide for a more reliable signal in all rural
and remote areas. This could translate into any number of benefits, including
potentially smaller dish sizes for some subscribers in remote areas such as
Alaska and Hawaii.69

         In addition, as discussed further below, citizens in rural America will
also benefit from the extent to which the combination of ECC and Hughes will
improve competition with cable incumbents in numerous metropolitan areas.
National pricing is the most practicable and efficient method of DBS pricing,
and New EchoStar will commit to continued uniform and non-discriminatory pricing
and service throughout the country. As a result of national pricing, rural DBS
customers will reap many of the benefits that enhanced competition with cable
will provide to customers in non-rural areas. In effect, the national price will
act as a conduit that allows the competitive dynamic in such important, highly
competitive regions to have a beneficial impact on consumers throughout the
nation, including in rural areas where cable does not exist.70

         Finally, perhaps one of the largest benefits promised by the
transaction for rural areas is that the merger will help make seamless satellite
broadband a reality for all Americans - deploying faster to all regions, with
greater applications and service offerings. Broadband deployment is discussed in
more detail below.

         (e) MORE ETHNIC, FOREIGN LANGUAGE AND NICHE PROGRAMMING

         The same principle of spectrum efficiency will apply to niche
programming such as ethnic, foreign language, or other programs that appeal to

--------------------
     69 See Joint Engineering Statement at 11.

     70 See Willig Decl. atP.P. 38-39.

                                      -34-



specialized audiences. These audiences would have greatly expanded viewing
opportunities with the additional programming available as a result of the
merger. For example, the merged entity could provide several more channels of
Spanish-language programming than the companies' combined current offerings, as
well as increased exposure for foreign language programming with smaller
followings - a very important benefit for audiences that desire this
programming.

         (f) MORE EDUCATIONAL PROGRAMMING

         The spectrum efficiencies resulting from the merger will allow the
provision of additional educational programming, another area in which the
benefits from the transaction serve explicit statutory goals. Congress has
required DBS providers to set aside a percentage of their capacity for such
programming,71 but the qualified programmers using ECC's and DIRECTV's set-aside
channels overlap. For example, DIRECTV and ECC now use different portions of the
spectrum to provide the same C-SPAN and C-SPAN II feeds. Eliminating this
overlap would free spectrum for additional public interest programming.

         (g) OTHER EFFICIENCIES THAT WILL RESULT FROM THE MERGER

         The combination will also allow the rationalization of the two
companies' satellite fleets. These satellites are now inefficiently deployed due
to the fragmentation of DBS spectrum assignments, which was in turn based on the
now-discarded model of analog DBS. The deployment of satellites at 110(degree)
W.L. is a good example of this inefficiency. DIRECTV has a satellite at that
location for the purpose of using its

--------------------
     71 See 47 U.S.C.ss.335(b) (1994) (DBS providers are required to set aside
four to seven percent of channel capacity "exclusively for noncommercial
programming of an educational or informational nature.").

                                      -35-



assignment of only 3 DBS channels, even as EchoStar's EchoStar 5 satellite now
located at that slot and the EchoStar 8 satellite to be launched to that slot
are each equipped with 32 transponders and stand ready to use all of the
spectrum at that location. The result is that the two DBS companies are
constrained in their ability to compete by outdated requirements that are the
equivalent of an airline being required to fly its planes only half-full. The
merger will allow the companies to align their combined satellite fleet to the
dictates of market efficiency.72

         In addition, New EchoStar will achieve greater economies of scale and
substantial cost synergies as a result of the integration of the ECC and DIRECTV
satellite platforms. For example, the proposed merger will allow New EchoStar to
offer a common service platform to new customers; to combine and improve each
company's distribution networks; and to use the satellite uplink centers for
new, rather than redundant, services. The resulting cost synergies resulting
from such steps will include: reduced subscriber acquisition costs; reduced
customer turnover, or "churn"; improved signal security as a result of moving to
a standardized DBS service platform; reduced programming costs as a result of
having a larger subscriber base; and the elimination of duplicative overhead.73
All of these synergies will contribute to the creation of a dramatically
stronger competitor to cable's dominance of the MVPD marketplace and will be
manifested to the DBS consumer.

--------------------
     72 See Joint Engineering Statement at 4-7.

     73 See Joint Engineering Statement at 2-3, 7-8, 12.

                                      -36-



         2. THE MERGER WILL HAVE OTHER SIGNIFICANT PRO-COMPETITIVE
            EFFECTS AND WILL NOT HAVE AN ANTI-COMPETITIVE IMPACT IN ANY
            OF THE RELEVANT MARKETS

         MVPD Market. The merger will have significant pro-competitive effects -
increased competition to cable operators - and will not have an anticompetitive
impact in the relevant product market - the MVPD market. Recent technological
and regulatory developments have left no doubt that the relevant market for
purposes of analyzing this transaction, as previously defined by the Department
of Justice ("DOJ"), is now "the delivery of multiple channels of video
programming to the home . . . via . . . cable, satellite, or wireless
technologies."74 As Dr. Willig testifies, definition of a "relevant market" for
the purpose of competition analysis of mergers depends crucially on demand
substitution considerations - the degree to which consumers view the products as
substitutable.75 This ability to raise prices profitably is a function of the
degree to which

--------------------
     74 See Willig Decl. atP.P. 12-13 (discussing the relevant market
determination made by the Department of Justice in the Primestar case.) In 1998,
Primestar, a joint venture of large cable companies, sought to acquire rights to
an orbital slot for nationwide DBS service that were held jointly by News Corp.
and MCI Telecommunications Corp. DOJ sued to enjoin that acquisition, alleging
that allowing cable operators through Primestar to control those DBS assets
would eliminate the possibility that those assets could be used to compete
against cable. In its complaint, DOJ alleged that the MVPD market was the
relevant product market for the purpose of evaluating Primestar's proposed
purchase of the DBS assets. See United States v. Primestar, Inc., Civ. No.
1:98CV01193 (JLG) (D.D.C. May 12, 1998).

     75 See Willig Decl. atP. 8. In particular, the U.S. Department of Justice
and Federal Trade Commission define a market "as a product or group of products
and a geographic area in which it is produced or sold such that a hypothetical
profit-maximizing firm, not subject to price regulation, that was the only
present and future producer or seller of those products in that area likely
would impose at least a 'small but significant and nontransitory' increase in
price, assuming the terms of sale of all other products are held constant." Id.
(citing Department of Justice and Federal Trade Commission, Horizontal Merger
Guidelines, available at http://www.usdoj.gov.atr.public/guidelines/horiz_book/
toc.html).

                                      -37-



consumers view two products as providing similar services or benefits. If one
firm came to become the only provider of one of the products, but not the other,
and if consumers found the products to be good substitutes, then the presence of
the second product would prevent the firm from realizing an increase in profits
by significantly raising its price. Therefore, the second product would directly
constrain the price of the first product, and the relevant market would include
the second product.

         Dr. Willig has concluded, based on the business behavior of the DBS
industry, federal government cases and studies, the views of the cable industry,
and the views of independent analysts, that DBS prices are directly constrained
by cable prices. Therefore, the relevant market for evaluating the merger of ECC
and DIRECTV includes cable providers.76

         For example, Dr. Willig observes, DBS pricing decisions appear to be
driven by competition with cable companies, as the stated primary objective of
both companies is to gain market share by luring consumers away from the leading
cable providers, and the firms accordingly price their DBS programming services
at levels based primarily on the prices charged by cable providers.
Additionally, Dr. Willig observes that each company has laid claim to success in
luring subscribers away from cable, which is corroborated by public statements
of cable companies attributing DBS subscriber growth to aggressive efforts by
DBS to target cable customers, the fact that the

--------------------
     76 Indeed, Dr. Willig explains that the market is dynamic and the boundary
of the market in which DBS providers compete may well expand. As bundled
packages with digital television, high-speed Internet access, and
video-on-demand become relatively more important in the MVPD market, the
participants in the relevant market may grow beyond the historical MVPD
participants to include DSL providers, incumbent phone companies, and cellular
phone providers. See id. at P. 17.

                                      -38-



cable industry itself views DBS as a significant competitor, and the
acknowledgement by cable companies that their pricing and advertising strategies
are influenced by competition from DBS.

         Dr. Willig also notes that a number of cases and studies by the federal
government confirm that cable firms are part of the relevant market. The DOJ,
for example, found that the MVPD market was the relevant market in the Primestar
case, discussed above. And in its annual analysis of competition in video
programming, the FCC groups the cable industry and the DBS industry in the MVPD
market.77 The FCC has also concluded that DBS and cable services are
substitutes.78 In sum, Dr. Willig concludes, the relevant market for analyzing a
merger between ECC and DIRECTV is the MVPD market.79

         As previously noted by the Commission, over 96 percent of all
television households in the United States are passed by cable television
systems and these cable

--------------------
     77 See Seventh MVPD Competition Report, 16 FCC Rcd. 6037, atP. 61.

     78 In its 2000 Report on Cable Industry Prices, the FCC concluded that DBS
puts statistically significant downward pressure on demand for cable services.
The report continues to state that "DBS is a substitute for cable services. This
result is different from our earlier finding reported in the 1999 Price Survey
Report, which showed DBS exerting only a modest influence on the demand for
cable service. One explanation for the increased importance of DBS as a
competitor of cable is the passage of . . . [SHVIA] in November 1999, which
eliminated the prohibition on DBS delivery of local network signals into their
local television markets. The two DBS operators have begun offering local
signals in many major television markets thus more closely matching services
provided by cable operators." See In the Matter of Implementation of Section 3
of the Cable Television Consumer Protection and Competition Act of 1992;
Statistical Report on Average Rates for Basic Service, Cable Programming
Services, and Equipment, Report on Cable Industry Prices, 16 FCC Rcd. 4346, 4364
(2001), P. 53.

     79 Dr. Willig also explains that, for the purposes of evaluating the
competitive impact of the proposed merger, the national pricing for monthly
subscription and programming fees by both EchoStar and DIRECTV suggest that a
national-level analysis is the most appropriate. See Willig Decl. atP. 18.

                                      -39-



operators continue to be the dominant distributors in the national MVPD
market.80 Indeed, cable television operators maintain nearly an 80 percent share
of the total MVPD market.81 DBS also competes with a number of other MVPD
distributors using different transmission media, such as wireless cable, SMATV,
open video systems, direct-to-home analog and digital satellite offerings, cable
overbuilds and electric utilities.82 In addition, there may soon be a number of
new providers using technologies and frequency bands that will compete in this
market, including terrestrial point-to-multipoint services in several fixed
service bands and potential new satellite entrants.83

         Evaluated in this market, the proposed merger will have decidedly
pro-competitive effects. The effect on competition is not adequately measured by
the number of competitors, but rather by their effectiveness. As the DOJ and the
Commission have recognized, increasing the effectiveness of DBS competition (and
thus ensuring adequate MVPD competition) may only be achievable by foregoing
additional DBS competitors.84

--------------------
     80 See Seventh MVPD Competition Report, 16 FCC Rcd. 6005, at App. B, Table
B-1 (noting that approximately 96.6 percent of U.S. households with at least one
television were passed by cable at the end of 1999); MCIT, 15 Comm. Reg. (P&F)
1038, atP. 16.

     81 Seventh MVPD Competition Report, 16 FCC Rcd. 6005 atP. 15.

     82 Id.

     83 See, e.g., OpTel, Inc.'s Request for Action, In the Matter of Petition
for Rulemaking To Amend 47 C.F.R.ss. 101.603 and Related Rules - To Allow the
use of 12 GHz OFS Frequencies for the Delivery of Video Programming Material, CS
Docket No. 99-250, RM-9257 (dated Nov. 6, 2001).

     84 For example, when the Commission considered the application of an ECC
subsidiary to acquire additional DBS licenses, the Department of Justice
commented that "MVPD competition is best served by the emergence of a strong
high-power DBS competitor with enough capacity to compete effectively with
cable." Comments of the United States Department of Justice, In the Matter of
the Application of MCI Telecommunications Corp. and EchoStar 110 Corp., File No.
SAT-ASG-19981202-00093, at 8 (Jan. 14, 1999). The Commission agreed: "[W]e view
the potential competitive benefits of allowing EchoStar to become a stronger
competitor in MVPD

                                      -40-



As described above and by Dr. Willig, the transaction will result in improved
and expanded programming choices for consumers, as well as the provision of
innovative new services, which will make New EchoStar a better competitor to
cable.85 Indeed, as all cable firms roll out their digital upgrades, DBS has a
narrow window of opportunity to ignite full-scale competition as cable customers
transition to digital service, before consumer inertia and the high switching
costs from cable to DBS leave consumers locked in, and cable further entrenched.
Moreover, as Dr. Willig discusses, the characteristics of the MVPD market in
general and of DBS firms in particular "make it very unlikely that a merger of
EchoStar and DirecTV would result in higher prices and lower output through
either coordinated behavior among participants in the MVPD market or unilateral
behavior by the merged firm."86

         As outlined above, this transaction will produce enormous benefits for
all Americans, including the small percentage of U.S. households that are not
currently passed by cable operators. These sparsely populated areas already are
being served by a number of C-band providers that are beginning to roll out new
digital offerings (e.g., 4DTV products) and offer over 500 programming
channels.87 These products remain very attractive, particularly in areas where
dish size is not a significant deterrent.

--------------------
markets as outweighing the potential competitive costs of
reduced entry into the DBS industry." MCIT, 15 Comm. Reg. (P&F) 1038, atP. 21.

     85 Willig Decl. at P. P. 23-24 (discussing merger specific efficiencies
that will lead to benefits such as greater geographic coverage of local
channels, more specialty, ethnic and foreign language programming, interactive
television services, and video-on-demand).

     86 Id. atP. 6.

     87 Satellite Today, C-Band Subscribers on Motorola's Front Burner, April
13, 2001. See also, www.4DTV.com.

                                      -41-



         In addition, recognizing the concerns of consumers in the 3.4% of U.S.
television households not passed by cable,88 New EchoStar is committed to
pricing its DBS services on a uniform, nationwide basis. This means that, after
the merger, the few consumers in areas not served by cable will in fact benefit
from the intensified MVPD competition that will exist in all other areas where
New EchoStar will compete with cable. In this way, these rural customers will
obtain the benefits of competition between and among DBS, different cable MSOs,
as well as the newer cable overbuilders and other emerging competitors offering
other solutions throughout the country that increasingly are promoting and
comparing their digital offerings to DBS. In other words, those consumers
located in sparsely populated areas not currently served by cable will obtain
DBS service at prices developed as a result of the more vigorous competition
among New EchoStar and the 8 or 9 largest cable operators and other new entrants
providing overbuild and other solutions in the rest of the country. In short,
not only will the merger not have an anti-competitive impact in rural areas, it
will produce tangible competitive benefits for consumers in those areas, too.

         Programming. The programming market also will benefit from the proposed
merger as a result of the more efficient use of spectrum and the creation of a
much stronger alternative distribution outlet for programmers not affiliated
with cable MSOs. In this regard, the proposed merger will not create the types
of vertical relationships that raised concern in other transactions. The DOJ and
the Federal Trade

--------------------
     88 See note 81, supra. The Commission noted that there were approximately
100.8 million television households during the 1999-2000 television season. See
Seventh MVPD Competition Report, 16 FCC Rcd. 6005, at P. 18. Based on this
total, it may be estimated that roughly 3.4 million are not passed by cable.

                                      -42-



Commission have brought a number of cases addressing the vertical relationships
between cable MSOs and competition in programming that were settled by consent
decree.89 In contrast, the Merger Parties do not intend to pursue a strategy of
vertical integration with programmers post merger. Combined with the amount of
available spectrum that will be freed up, this absence of vertical integration
will help create a significant outlet for existing and new non-affiliated cable
programmers, which now find it difficult to obtain carriage on the platforms of
vertically integrated cable operators.90


         3. THE MERGER WILL PROMOTE DEPLOYMENT OF ADVANCED
            BROADBAND SERVICES TO ALL AMERICANS

         The merger of ECC and Hughes will have a profoundly positive effect on
the deployment of facilities-based, advanced, two-way, broadband services via
satellite to all Americans, especially in rural areas outside the reach of other
broadband alternatives such as DSL and cable modem services. The combined
resources of ECC and Hughes will enable the merged company to accelerate and
better promote the deployment of such services to both rural and urban
markets.91 This will support the Congressional and Commission policy objectives
of providing affordable, high-speed Internet access to all Americans,
particularly those living in rural areas.

--------------------
     89 See, e.g., Time Warner Inc., et al.; Prohibited Trade Practices, and
Affirmative Corrective Actions, 62 Fed. Reg. 11202 (Federal Trade Comm'n Mar.
11, 1997) (consent order).

     90 Gary Thorne, President of Moviewatch, a programming service expected to
premiere next year, underscored this potential benefit, observing that with the
proposed merger "the additional spectrum at least gives us opportunities to
place networks. Because if there was - if there is - one place where spectrum
eventually does get used up, it's on the satellite side of the world." Linda
Moss, New Nets Squeeze Into Consolidated Market, Multichannel News, Nov. 26,
2001.

     91 See Joint Engineering Statement at 14-16.

                                      -43-



         The Telecommunications Act of 1996 specifically directs the Commission
to "encourage the deployment on a reasonable and timely basis of advanced
telecommunications capability to all Americans . . ."92 In its most recent
annual report on advanced broadband services, the Commission emphatically stated
its commitment "to ensuring that advanced services become available to all
Americans."93 The Commission went on to note, however, that certain consumers
(e.g., those in rural areas) are "particularly vulnerable" to not receiving such
services.94

         Satellite systems are especially well-suited for the provision of
broadband services in rural and other underserved areas and for providing a
critical competitive alternative in suburban and urban environments. Satellite
systems have nationwide coverage areas and are able to offer high-quality,
ubiquitous service as soon as the satellite system is launched and operational.
As such, satellite systems offer instantaneous deployment to low-population
density and low-income areas that may not have enough demand to justify a
terrestrial build-out.95

--------------------
     92 See Telecommunications Act of 1996, Tit. VII,ss.706(a), Pub. L. No.
104-104, 110 Stat. 153 (1996), reproduced in the notes following 47 U.S.C.ss.157
(Supp. 2001).

     93 See In the Matter of Inquiry Concerning the Deployment of Advanced
Telecommunications Capability to All Americans in a Reasonable and Timely
Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section
706 of the Telecommunications Act of 1996, Second Report, 15 FCC Rcd. 20913,
20917 P. 8 (2000) ("Second Report").

     94 Id. at 20918.

     95 In addition, satellites offer ubiquitous service at prices that are
distance insensitive, in contrast to the distance-based prices that are
characteristic of many terrestrial networks. These advantages allow satellite
operators to provide first- and last-mile connectivity more cost-effectively
than terrestrial systems, which have historically focused their deployment on
high-density urban areas. See Extending Wireless Telecommunications Services to
Tribal Lands, Notice of Proposed Rulemaking, FCC 99-205, WT Docket No. 99-266,
P. 24 (rel. Aug. 18, 1999).

                                      -44-



         In spite of this potential, however true, satellite broadband
deployment to date has been minimal. According to the Second Report, high speed
services over satellite as of 1999 accounted for less than 50,000 lines, with
none of these lines satisfying the Commission's definition of advanced services
due to the limited upstream capabilities of these facilities.96 ECC and Hughes
have made reasonable progress compared to that baseline with early-entry
interactive Ku-band broadband products. However, to date, only one percent of
DBS subscribers has purchased high-speed satellite data services. The current
consumer costs for these products, including equipment and monthly fees, given
the low market penetration and lack of economies of scale, place them out of
reach for many consumers, and make them less competitive with terrestrial
offerings that offer bundled video and IP services in one package.97

         As the Commission has recognized, the future of truly seamless
satellite broadband communications lies with the deployment of next-generation
systems in the Ka-band. The Commission has licensed these systems in the hope
that they would usher in "a new age in satellite communications" by providing "a
wide variety of broadband interactive digital services in the United States and
around the world."98 The reality, however, is that deployment of these new
satellite systems is taking longer and requiring more capital than many
companies/licensees have been able to sustain. In the more than

--------------------
     96 Id.P. 111.

     97 See Joint Engineering Statement at 14-16.

     98 See In the Matter of Rulemaking to Amend Parts 1, 2, 21 and 25 of the
Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, to
Reallocate the 29.5-30.0 GHz Frequency Band, and to Establish Rules and Policies
for Local Multipoint Distribution Service and for Fixed Satellite Services, 12
FCC Rcd. 22310, 22310 (1997).

                                      -45-



four years that have elapsed since the Commission's May 1997 authorization of
the construction, launch and operation of Ka-band satellites in the first round
of Ka-band licensing, certain licensees have encountered serious obstacles in
their attempts to marshal the enormous capital and infrastructure required to
construct, launch and operate satellite systems.99 Even well-established
satellite companies such as Lockheed Martin Corporation have backed away from
the challenge of developing a Ka-band system, with its recent announcement that
it will not invest further in its Ka-band venture, Astrolink.100

         Each of ECC and Hughes has already made significant broadband
investments and plans future deployment of additional high-speed Internet access
services, but there are tremendous economic and technological hurdles that must
be overcome to do so using satellites.101 For example, in view partly of the
financing community's reluctance to finance such projects, ECC's first Ka-band
satellite, EchoStar 9 (to be launched in 2002), is a cautiously modest project,
equipped with only a limited number of spot beams designed to serve only a few
geographical areas in the United States. And while Hughes will invest
approximately $1.5 billion and has already spent nearly $1 billion to begin
deploying SPACEWAY system spacecraft in early 2003,102 Hughes is not immune to
downturns in the capital markets that could affect the timing of its deployment
or its ability to offer competitively priced offerings. Current investments,

--------------------
     99 Global Wireless, Pie in the Sky, September 1, 2001.

     100 Decision Near on Astrolink as Lockheed Ends Funding, Communications
Daily, November 1, 2001.

     101 See Joint Engineering Statement at 14-16.

     102 The first phase of the SPACEWAY system will consist of two satellites
and one spare to serve North America.

                                      -46-



divided between the firms, may lack the economies of scale to compete with
terrestrial services, thus implying higher prices to rural communities and less
competition in non-rural areas.103

         The merger will promote exponentially the efforts of both companies to
implement truly competitive next-generation broadband systems in a fashion that,
absent the merger, would likely be significantly less beneficial to the public.
The parties expect that the proposed transaction will allow the two companies to
develop a combined critical mass of broadband subscribers to spread the
tremendous fixed costs that, as noted above, have deterred other satellite
companies from proceeding with broadband satellite systems. The merger will
speed broadband service availability, significantly improve subscriber growth,
and therefore substantially enhance the competitive position of broadband
satellite services vis-a-vis cable operators that can and do offer fully bundled
Internet Protocol/video packages.104 Cross-technology competition always
benefits the public. The lower prices resulting from "intermodal" competition in
urban areas will also benefit rural and underserved users with lower prices.

         Second, a greater breadth of service will be implemented by the
combined company more rapidly than would be possible absent the combination, and
thereby will reach the consuming public more quickly. Time to market is of the
essence. If next-generation satellite broadband services reach the market only
after cable and DSL have commanded 60% of potential broadband customers, it is
not clear whether any late-coming service would be able to attract enough of the
remaining customers to become

--------------------
     103 See Joint Engineering Statement at 14-16.

     104 Id.

                                      -47-



viable. This consideration highlights the more general point, noted above, that
only a narrow window of opportunity is presented for imposing heightened
competitive pressure on cable before cable is able to lock in its dominant
position. The fact that effective competition occurs on the basis of bundles of
offerings, and that broadband is a critical element of the bundle, reinforces
the point further.

         The merger will also boost broadband deployment by combining the
Ka-band spectrum resources available to each entity. To be competitive with
cable high-speed access, a satellite broadband platform needs to be capable of
supporting several million U.S. subscribers. Each of ECC and Hughes (including
PanAmSat) now has access to Ka-band spectrum at 3 orbital locations (in ECC's
case, only two of these slots can support a one-dish solution), but Ka-band
spectrum is limited in its ability to provide ubiquitous broadband services as a
result of the Commission's satellite-terrestrial sharing decisions in the 18 GHz
band. Even with the most advanced technology, each orbital location can only
serve a finite number of customers. The number of customers that can be served
is directly proportional to the amount of spectrum that is available. By
combining resources in a merged entity, ECC and Hughes will be better positioned
to create a Ka-band system capable of serving the nation's broadband service
requirements while effectively and competitively challenging cable modem and DSL
services.105

         In short, commercialization of the Ka-band has been a cornerstone in
the Commission's laudable effort to promote rapid deployment and competition in
the provision of advanced broadband services and to promote the efficient use of
spectrum

--------------------
     105 Id.

                                      -48-



by using the Ka-band to provide a new class of service that is simply not
possible in the crowded Ku- and C-bands used for traditional Fixed-Satellite
Service.106 Approval of the proposed transaction will pave the way for the rapid
deployment of a Ka-band satellite system capable of providing competitive
broadband and other advanced services to all Americans, including those in rural
areas, consistent with the Commission's goals and the public interest.

         4. THE PANAMSAT PURCHASE IS IN THE PUBLIC INTEREST

         The ECC-Hughes combination will result in a transfer of control of
Hughes' controlling interest in PanAmSat, either to New EchoStar as a
consequence of the merger, or through a separate purchase by ECC of Hughes'
indirect interest in PanAmSat in the event the merger agreement is terminated
under certain circumstances. In either event, the transfer of control of Hughes'
interest in PanAmSat is in the public interest and should be approved.

         As outlined above, significant benefits to consumers will result from
combining the FSS resources of ECC and Hughes to bring broadband satellite
services to market faster. The merger will not create any significant overlap in
the provision of FSS services in the same product and geographic markets that
should be of any concern to the Commission.107 ECC does not currently provide
any telecommunications services of the type provided by PanAmSat in the United
States or elsewhere. While Hughes and

--------------------
     106 See Rulemaking to Amend Parts 1, 2, 21, and 25 of the Commission's
Rules, 12 FCC Rcd. at 22312.

     107 While ECC is a potential competitor in the FSS market, there are a
number of other existing domestic and international FSS service providers (e.g.
Loral/Orion, GE/SES, New Skies, etc.) as well as new entrants.

                                      -49-



PanAmSat own and operate a fleet of FSS satellites and associated earth stations
that are utilized primarily to provide domestic and international satellite
services, respectively, the Commission has already determined that the
consolidation of their businesses and operations under the control of Hughes
serves the public interest.108 Moreover, the combined FSS authorizations held by
all three companies do not create market power in any one company in light of
the large number of FSS satellite licenses held by other non-affiliated
companies.109


III. WAIVER REQUESTS:  APPLICATION CUT-OFF RULES AND
     ADDITIONAL APPLICATIONS

         In connection with the approval of this transaction, the parties
respectfully request that the Commission waive the application of its "cut-off"
rules with respect to all pending applications filed by Hughes or its
subsidiaries (including PanAmSat) and by ECC for additional space station
authorizations, to the extent that those applications have been the subject of
an FCC cut-off notice prior to the closing date.110

         Section 25.116 of the Commission's rules provides that any pending
application will be considered "newly filed" and therefore may lose its place in
a processing round if it is modified by a "major amendment" - including an
amendment that specifies a substantial change in beneficial ownership or control
of the applicant.111 An amendment will not be deemed a major amendment, however,
if it reflects a change

--------------------
     108 See Hughes Comm., Inc., and Anselmo Group Voting Trust/PanAmSat
Licensee Corp., 12 FCC Rcd. 7534 (1997).

     109 See, e.g., TRW, Inc., 16 FCC Rcd. 14407 (Int'l Bur. rel. Aug. 3, 1999);
CAI Data Systems, Inc., 16 FCC Rcd. 14269 (Int'l Bur. rel. Aug. 3, 1999);

     110 Attachment G appended hereto provides a consolidated list of pending
applications filed by Hughes and its subsidiaries and by ECC.

                                      -50-



in ownership or control that the Commission determines is in the public interest
and the Commission grants an exemption from the cut-off date.112 The Commission
has traditionally granted such exemptions where the proposed transaction will
serve a legitimate business purpose and will serve the public interest.113

         As described throughout this application, the proposed transaction
serves a legitimate business purpose. By combining their satellite assets and
operational resources, the transaction will enhance the combined enterprise's
U.S. and global service capabilities, allowing it to compete more effectively
and efficiently with dominant cable and other MVPD service providers. The
transaction involves - indeed, it is primarily focused upon - operational
satellites. Moreover, the applications currently pending are an integral part of
Hughes' and ECC's expansion plans that were announced well before this proposed
transaction and are essential to the continued competitiveness of their
respective businesses. Under these circumstances, there can be no question that
the transaction serves an independent business purpose and was not entered into
for the purpose of acquiring the pending applications.114 For these reasons, the
Commission should exempt all currently pending applications filed by Hughes and
its subsidiaries and by ECC from any applicable cut-off rules.

--------------------
     111 See 47 C.F.R.ss.25.116(b) (2000).

     112 See 47 C.F.R. atss.25.116(c)(2) (2000).

     113 See, e.g., DirectCom Networks, Inc., DA 01-1683P. 16 (Int'l Bur. rel.
Aug. 3, 2001); Loral Space & Comm. & Orion Network Syst., 13 FCC Rcd. 4592,
4599,P. 17 (1998); Hughes Comm., Inc. & Anselmo Group Voting Trust/PanAmSat
Licensee Corp., 12 FCC Rcd. 7534 (1997); AT&T Corp. & Loral SpaceCom Corp., 12
FCC Rcd. 925 (1997).

     114 GE/SES, DA 01-2100 atP. 56; Loral/Orion, 13 FCC Rcd. at 4599.

                                      -51-



IV. SECTION 304 WAIVER

         In accordance with Section 304 of the Communications Act of 1934, 47
U.S.C. ss. 304, the Applicants hereby waive any claim to the use of any
particular frequency or of the electromagnetic spectrum because of previous use
of the same, whether by license or otherwise.

V. CONCLUSION

         For the foregoing reasons, the Applicants respectfully request that the
Commission grant this application promptly and provide for any other authority
that the Commission finds necessary or appropriate to enable the Applicants to
consummate the proposed transactions.





                                      -52-



                                          Respectfully submitted,

                                          GENERAL MOTORS CORPORATION




                                          By:  ____________________________
                                               [name]
                                               [title]




                                      -53-



                                          HUGHES ELECTRONICS CORPORATION




                                          By:  ____________________________
                                               [name]
                                               [title]




                                      -54-



                                          ECHOSTAR COMMUNICATIONS
                                          CORPORATION




                                          By:  ____________________________
                                               David K. Moskowitz
                                               Senior Vice President and General
                                                Counsel





                                      -55-




                                          ECHOSTAR COMMUNICATIONS
                                          CORPORATION




                                          By:  ____________________________
                                               David K. Moskowitz
                                               Senior Vice President and General
                                                Counsel




Dated:  November ___, 2001



                                      -56-




                                   BEFORE THE
                        FEDERAL COMMUNICATIONS COMMISSION
                             WASHINGTON, D.C. 20554


------------------------------------------

Application of

ECHOSTAR COMMUNICATIONS CORPORATION,
GENERAL MOTORS CORPORATION,
HUGHES ELECTRONICS CORPORATION

         Transferors,

and

ECHOSTAR COMMUNICATIONS CORPORATION

         Transferee,

For Authority to Transfer Control
------------------------------------------


                       DECLARATION OF DR. ROBERT D. WILLIG
                                  ON BEHALF OF
               ECHOSTAR COMMUNICATIONS CORPORATION, GENERAL MOTORS
                CORPORATION, AND HUGHES ELECTRONICS CORPORATION

I.  QUALIFICATIONS

          1. My name is Robert D. Willig. I am Professor of Economics and Public
Affairs at the Woodrow  Wilson School and the Economics  Department of Princeton
University,  a position I have held since 1978. Before that, I was Supervisor in
the Economics Research Department of



                                       1




Bell  Laboratories.  My teaching and research have  specialized in the fields of
industrial organization, government-business relations, and welfare theory.

          2. I served as Deputy Assistant  Attorney General for Economics in the
Antitrust  Division of the Department of Justice (DOJ) from 1989 to 1991. I also
served on the  Defense  Science  Board  task force on the  antitrust  aspects of
defense industry consolidation and on the Governor of New Jersey's task force on
the market pricing of electricity.

          3. I am the author of Welfare  Analysis of Policies  Affecting  Prices
and Products,  Contestable  Markets and the Theory of Industry  Structure  (with
William  Baumol and John  Panzar),  and  numerous  articles,  including  "Merger
Analysis,  IO  Theory,  and Merger  Guidelines."  I am also a  co-editor  of The
Handbook of Industrial Organization,  and have served on the editorial boards of
the American  Economic Review,  the Journal of Industrial  Economics and the MIT
Press Series on regulation.  I am an elected Fellow of the  Econometric  Society
and an associate of The Center for International Studies.

          4. I have been  active in both  theoretical  and  applied  analysis of
telecommunications  issues.  Since  leaving  Bell  Laboratories,  I have  been a
consultant to AT&T, Bell Atlantic,  Telstra,  and New Zealand Telecom,  and have
testified before the U.S. Congress,  the FCC, and the public utility commissions
of about a dozen  states.  I have been on  government  and  privately  supported
missions involving telecommunications  throughout South America, Canada, Europe,
and Asia.  I have written and  testified  on a wide range of  telecommunications
issues, including



                                       2




the scope of competition, end-user service pricing and costing, unbundled access
arrangements  and  pricing,  the  design of  regulation  and  methodologies  for
assessing what activities should be subject to regulation,  directory  services,
bypass arrangements,  and network  externalities and universal service. On other
matters,  I have worked as a consultant with the Federal Trade  Commission,  the
Organization  for  Economic  Cooperation  and  Development,  the  Inter-American
Development Bank, the World Bank, and various private clients. A full list of my
articles and other  professional  publications and activities is presented in my
curriculum vitae, which is attached as Exhibit A.

II. PURPOSE OF STATEMENT

          5. I have been asked by EchoStar Communications  Corporation,  General
Motors Corporation, and Hughes Electronics Corporation to address certain issues
related to the proposed  merger  between  EchoStar and DIRECTV (a  subsidiary of
Hughes),  including  the  impact  of the  proposed  merger  on  competition  and
consumers,  and the degree to which there are merger-specific  efficiencies that
cannot be achieved in the absence of the transaction.

          6. To summarize my analysis,  which is based on  information  obtained
from  interviews  of senior  executives  at both EchoStar and DIRECTV as well as
from publicly available information, I conclude that (a) the relevant market for
analyzing  a  merger  between  EchoStar  and  DIRECTV  is no  narrower  than the
Multi-Channel  Video Programming  Distributor  (MVPD) market, and may be broader
than that; (b) the proposed merger offers the possibility of



                                       3






substantial  efficiency  improvements,  especially in radio  spectrum use, which
would directly  benefit DBS consumers by providing an expanded array of services
(e.g., the provision of local broadcast  programming to more metropolitan areas,
more High-Definition Television channels, and more specialized programming), and
also  benefit an even broader  group of  consumers by creating a more  effective
competitor to cable  providers  than either company could be on its own; (c) the
nature of competition in the MVPD market makes it very unlikely that a merger of
EchoStar  and DIRECTV  would result in higher  prices and lower  output  through
either  coordinated  behavior  among  the  participants  in the MVPD  market  or
unilateral  behavior by the merged firm; (d) the proposed  merger is more likely
to be of distinct  benefit to rural TV households  than to diminish  competitive
benefits  available to them; and (e) a merger between EchoStar and DIRECTV would
not  create  or  exacerbate  any  valid  concerns  the  Federal   Communications
Commission (FCC) has about vertical  integration because EchoStar and DIRECTV do
not  have  any  significant  vertical  relationships  with  programmers,  and if
anything, the merger could increase competition among program providers.

III. DELINEATION OF RELEVANT MARKET

          7. A key step in the competitive analysis of any merger or acquisition
is the  delineation of the relevant  market(s).  In the case of a merger between
EchoStar and DIRECTV,  the relevant  market is no narrower than the MVPD market,
and may be broader than that.1 The

--------------------

1 The MVPD market includes the cable industry and Direct Broadcasting  Satellite
(DBS)  services.  Other  available MVPD services  include home satellite  dishes
(HSD),  multi-channel multi-point distribution service (MMDS), and private cable
or satellite master antenna television (SMATV) systems. See Annual Assessment of
the Status of

                                       4







cable  industry  has  been  preeminent  in the  MVPD  market.2  Although  Direct
Broadcasting  Satellite (DBS)  providers have made  significant  inroads,  cable
firms still provided service for more than 77 percent of all MVPD subscribers in
July 2001.3

          8.  The  definition  of  a  "relevant   market"  for  the  purpose  of
competition  analysis  of  mergers  depends  crucially  on  demand  substitution
considerations   -  the  degree  to  which   consumers   view  the  products  as
substitutable.  In particular,  the U.S. Department of Justice and Federal Trade
Commission  define a market "as a product or group of products  and a geographic
area in which it is produced or sold such that a hypothetical  profit-maximizing
firm,  not  subject to price  regulation,  that was the only  present and future
producer or seller of those products in that area likely would impose at least a
`small but significant and nontransitory'  increase in price, assuming the terms
of sale of all other products are held  constant."4 This ability to raise prices
profitably is a function of the degree to which  consumers  view two products as
providing  similar  services  or  benefits.  If one firm came to become the sole
provider of one of the products,  but not the other,  and if consumers found the
products to be good  substitutes,  then the presence of the second product would
prevent the firm from realizing an increase in profits by significantly  raising
its price.  The second product would  directly  constrain the price of the first
product, and the relevant market would therefore include the second product.

--------------------

Competition in the Market for the Delivery of Video Programming,  Seventh Annual
Report, 16 FCC Rcd. 6005, 6008 (2001) ("Seventh Cable Competition  Report"),  at
P. 3.

2 Seventh Cable  Competition  Report atP. 5. The FCC stated:  "Cable  television
still is the  dominant  technology  for the  delivery  of video  programming  to
consumers in the MVPD marketplace."

3 See Comments of National Cable & Telecommunications Association, In the Matter
of Annual Assessment of the Status of Competition in the Market for the Delivery
of Video Programming,  Notice of Inquiry, CS Docket No. 01-129, (dated August 2,
2001), atP. 7.

4 See  Department of Justice and Federal  Trade  Commission,  Horizontal  Merger
Guidelines, available at http://www.usdoj.gov/atr/public/guidelines/horiz_book/
toc.html


                                       5






          9. The business  behavior of the DBS industry  indicates,  and Federal
government cases and studies, the views of the cable industry,  and the views of
independent analysts appear to confirm, that DBS prices are directly constrained
by cable prices.  Therefore,  the relevant  market for  evaluating the merger of
EchoStar and DIRECTV includes cable providers.

          10. DBS  pricing  decisions  appear to be driven by  competition  with
cable  companies.  Executives  at both  EchoStar  and DIRECTV  confirm  that the
objective of each firm is to gain market share by luring consumers away from the
leading cable providers,  and the firms  accordingly price their DBS programming
services at levels based primarily on the prices charged by cable providers.  In
determining  their prices,  the companies collect detailed data on cable pricing
of many systems and, as necessary, adjust their pricing to remain competitive on
a national basis.5 Moreover, the focus on cable providers, rather than the other
DBS firm, is highlighted  by DIRECTV's lack of response to EchoStar's  recent "I
Like 9" pricing strategy.6 According to a DIRECTV executive,  EchoStar's "I Like
9" package did not affect DIRECTV's pricing decisions because DIRECTV's focus is
on obtaining new customers from cable providers, not the other DBS provider.

--------------------

5 When  queried  regarding  their  pricing  decisions  relative to the other DBS
provider,  executives at both EchoStar and DIRECTV  indicated  that they monitor
the pricing of the other firm,  but that such pricing plays little (if any) role
in their own pricing decisions.  The executives  repeatedly  emphasized that the
primary  determinant  of their  pricing  was the price  required  to lure  cable
subscribers to DBS.

6 In August  2001,  EchoStar  began its "I Like 9" pricing  strategy.  Under the
plan,  new customers  who purchased an EchoStar  satellite TV system for $199 or
more received  EchoStar's  "America's  Top 100"  programming  package for $9 per
month for one year. (EchoStar usually charges $30.99 per month for the America's
Top 100 programming  package.) See EchoStar  Communications  Corporation,  "DISH
Network  Announces  New `I Like 9'  Promotion:  Over 100  Channels of  Satellite
Television for Only $9 a Month," Press Release, July 31, 2001.




                                       6






          11.  Consistent  with the stated focus of DBS  providers on attracting
cable subscribers, it appears based on statements by executives of both EchoStar
and  DIRECTV  that a majority of new DBS  consumers  had  previously  been cable
subscribers.  In addition,  executives responsible for marketing and advertising
at both  EchoStar  and DIRECTV  emphasize  that their  campaigns  are focused on
convincing  extant  cable  consumers  that DBS offers a superior  product.  This
emphasis on cable customers is  corroborated  by public  statements by the cable
firms themselves. For example, Cablevision observed in a recent FCC filing that:

          "The  growth  in DBS  subscribers  is due in  part  to the  aggressive
          efforts of DIRECTV and DISH network to target Cablevision  subscribers
          in their  market  efforts.  For  example,  DISH  network's  recent  ad
          campaign featured print ads entitled 'Save Money vs. Cablevision,' and
          direct mail, door hangers,  and radio  live-reads  advising  consumers
          that  'Cablevision  is raising  your rates  again.'  DIRECTV's  'Cable
          Bites' print ads feature side-by-side  comparisons of tier pricing and
          number of channels."7

          12. DBS pricing  strategies thus appear to be directly  constrained by
the prices of cable  providers,  and therefore  cable  companies are part of the
relevant  market for analyzing  this proposed  merger.  Such a position has been
affirmed in a number of different  cases and studies by the Federal  government.
In its 1998 complaint against Primestar,  for example, the Department of Justice
alleged that the MVPD market was the relevant product market and stated that:

          "Cable and DBS are both MVPD products.  While the programming services
          are delivered via different technologies,  consumers view the services
          as similar and to a large degree  substitutable.  Indeed, most new DBS
          subscribers  in recent years are former cable  subscribers  who either
          stopped  buying  cable or  downgraded  their cable  service  once they
          purchased  a DBS system.  Cable and DBS  compete by

--------------------

7 See Reply Comments of Cablevision Systems Corporation, In the Matter of Annual
Assessment of the Status of  Competition in the Market for the Delivery of Video
Programming, Notice of Inquiry, CS Docket No. 01-129, (dated September 5, 2001),
at 3.



                                       7






          offering  similar packages of basic and premium channels for a monthly
          subscription fee."8

          13.  The  Justice  Department  noted  that the  cable  industry  had a
distinct  advantage  because it could  provide  consumers  with local  broadcast
services in local  markets (the  so-called  local-into-local  issue).  Since the
Justice Department's Primestar complaint, the Congress has allowed DBS providers
to provide  local-into-local  services,  which  makes  cable and DBS even closer
substitutes than that suggested by the quotation above.

          14. In its annual  analysis of competition in video  programming,  the
Federal  Communications  Commission  (FCC) groups the cable industry and the DBS
industry  in the  MVPD  market.9  In  addition,  the  FCC  concluded  that  "DBS
distributors  compete with a number of other MVPDs using different  transmission
media" and that  "competitors  in the MVPD market include cable  operators,  DBS
operators," and other technologies, such as wireless cable operators.10

--------------------

8 See United States v. Primestar,  Inc.,  Civil No.  1:98CV01193  (JLG) (D.D.C.)
(May 12, 1998), atP. 63.

9 See Seventh Cable Competition Report at P. 61. The FCC has also concluded that
DBS and cable  services are  substitutes.  In its 2000 Report on Cable  Industry
Prices,  the FCC  concluded  that DBS puts  statistically  significant  downward
pressure on demand for cable services.  The report  continues to state that "DBS
is a substitute  for cable  services.  This result is different from our earlier
finding reported in the 1999 Price Survey Report, which showed DBS exerting only
a modest  influence on the demand for cable  service.  One  explanation  for the
increased  importance  of DBS as a  competitor  of cable is the  passage  of the
Satellite Home Viewer Improvement Act (SHVIA) in November 1999, which eliminated
the  prohibition  on DBS  delivery  of local  network  signals  into their local
television  markets.  The two DBS operators have begun offering local signals in
many major television  markets thus more closely matching  services  provided by
cable  operators."  See  Statistical  Report on Average Rates for Basic Service,
Cable Programming Services, and Equipment,  Report on Cable Industry Prices, FCC
(2001), at P. 53.

10 See In re Application of MCI Telecommunications Corp. and EchoStar 110 Corp.,
File No.  SAT-ASG-19981202-00093,  FCC 99-109  (released May 19, 1999), at P. 15
and  footnote  40. The U.S.  Department  of Justice  (DOJ) agreed with the FCC's
finding in the case.  Specifically,  the DOJ stated that "the  transaction  will
greatly  increase  EchoStar's  capacity to transmit video  programming  and will
enhance  its  ability to compete  aggressively  and  effectively  against  other
distributors of multichannel  video  programming,  including the cable companies
that dominate these distribution  markets." See Department of Justice,  "Justice
Department  Urges FCC To  Approve  Direct  Broadcasting  Satellite  Deal,"  News
Release, January 14, 1999. Similarly, in response to a General Accounting Office
study on the competition  between DBS and cable, the FCC filed a comment that it
was concerned

                                       8






          15.  Although  not  itself a proof  that cable  prices  constrain  DBS
prices,  further evidence is provided by the fact that the cable industry itself
views DBS as a significant  competitor.11 The CEO of Cox  Communications,  Inc.,
one of the  largest  cable  providers  in the  nation,  argued,  "The  satellite
companies are very real, very serious competitors for our core business,  and we
take  them  extremely  seriously."12  Similarly,  in  testimony  to  the  Senate
Judiciary Committee, National Cable and Telecommunications Association President
and CEO Robert Sachs stated that:

          "Before 1996, cable operators faced video  competition  primarily from
          over-the-air  television,  C-band satellite receivers,  video rentals,
          and movie theaters.  Direct broadcast  satellite (DBS) competition has
          changed that  forever.  Being  digital from the start,  and having the
          advantage of substantially greater channel capacity, DBS spurred cable
          operators to replace  hundreds of thousands of miles of coaxial  cable
          with fiber optics so that they too could offer  consumers  hundreds of
          channels  of  digital  video  and audio  services.  In  responding  to
          vigorous  competition  from DBS,  cable  operators  have made enormous
          investments  in  not  just  plant  but  computers,   billing  systems,
          personnel, and training - resulting in significant improvements in the
          quality of service we provide to our customers."13

--------------------

about the study's  results  because the FCC believed "that DBS  penetration  not
only  influences  cable rates but also is influenced by them." See Comments from
the Federal Communications  Commission in General Accounting Office, "The Effect
of Competition From Satellite Providers on Cable Rates," July 2000, page 40.

11 Further  confirmation that cable and DBS compete within a single market comes
from Wall Street  analysts.  A number of analyst  reports explain changes in DBS
subscriber  growth by actions  taken by cable  companies,  and vice  versa.  For
example,  Merrill Lynch recently cited "aggressive  digital cable rollouts" as a
reason for the decline in projected DBS  subscriber  growth.  See Merrill Lynch:
"Eye in the Sky: 3Q01  Preview,"  October 8, 2001,  page 2.  Similarly,  Goldman
Sachs argued that "Increased  competition  from cable operators not only has the
potential of increasing churn of DIRECTV ("winning back" cable subscribers), but
also  affecting the amount of gross  subscribers  the company adds." See Goldman
Sachs, "Hughes Electronics Corp.," September 18, 2001, page 2.

12 See Christopher  Stern,  "Cable's Satellite Wars:  Communications  Giants Are
Waging  A  Multibillion-Dollar   House-to-House  Battle  for  Subscribers,"  The
Washington  Post,  August 13, 2000, page H01. 13 Robert Sachs,  Testimony Before
Subcommittee on Antitrust,  Business Rights,  and Competition,  Committee on the
Judiciary,  United States Senate,  April 4, 2001,  pages 2-3. The National Cable
and  Telecommunications  Association  (NCTA) further  argued,  "Today  consumers
nationwide  may  turn  to  direct  broadcasting  satellite  ("DBS")  as a  fully
substitutable  alternative  to cable for MVPD  service."  See Reply  Comments of
National  Cable  &  Telecommunications  Association,  In the  Matter  of  Annual
Assessment of the Status of  Competition in the Market for the Delivery of Video
Programming, Notice of Inquiry, CS Docket No. 01-129, (dated September 5, 2001),
at 1-2. In  addition,  Daniel  Brenner of NCTA wrote to the  General  Accounting
Office that "Cable operators have responded to competition from DBS in a variety
of ways that increase the value of their services to customers."  These include:
(1) DBS's far greater channel  capacity has spurred cable operations to increase
the number of


                                       9







          16. Cable companies have also stated that their pricing  decisions and
advertising  strategies are influenced by competition  from DBS providers.  AT&T
has argued that, "Cable operators' behavior reflects the significant marketplace
constraints  imposed by DBS."14 In addition,  AT&T  Broadband has focused entire
advertising   campaigns  on  luring  DBS  customers  back  to  digital  cable  -
underscoring AT&T's apparent belief that digital cable is a substitute to DBS.15
Furthermore, in explaining a recent pricing decision, a general manager of a New
England cable company said that "We have sought to strike a balance  between the
need to offset some of our increased  programming  costs,  and the need to price
our products competitively against DIRECTV and other satellite providers."16

          17. Based on the evidence  presented  above, I conclude that the cable
industry  should be  included  in the  relevant  market for  analyzing  a merger
between EchoStar and DIRECTV.  Moreover, markets are dynamic and the boundary of
the market in which DBS providers compete with cable operators may be expanding.
For example,  as bundled packages with digital

---------------------

channels they provide;  (2) cable operators have improved  reliability and added
new services;  and (3) operators have introduced new program packaging  options.
See  Comments  from the National  Cable and  Telecommunications  Association  in
General Accounting Office,  "The Effect of Competition From Satellite  Providers
on Cable Rates," July 2000, page 44.

14 See Comments of AT&T  Corporation,  In the Matter of Annual Assessment of the
Status of  Competition  in the Market  for the  Delivery  of Video  Programming,
Notice of Inquiry, CS Docket No. 01-129, (dated August 3, 2001), at 12.

15 In a November 2001 AT&T Broadband television commercial,  a woman states that
"so, with this basic  satellite  plan, we have to share a receiver?  The service
man  replies,  "well,  look on the bright  side,  ma'am.  While  your  husband's
watchin' sports in the den, you'll have sports in your room,  you'll have sports
in the kids' room,  and you have  sports  right here in the  kitchen.  Be like a
sports bar." The announcer  then says,  "with  satellite,  additional  TVs are a
problem.  Different  channels  on  different  TVs at the  same  time.  No  extra
equipment to buy. Problem solved.  Digital cable from AT&T Broadband."  Campaign
Media Analysis Group, "AT&T Broadband Sports," November 2001.

16 Lisa Marie Pane, "Cox To Increase Cable Rates  Statewide,"  Associated  Press
State and Local Wire, July 10, 2001.

                                       10






television,  high-speed Internet access, and  video-on-demand  become relatively
more important in the MVPD market,  the  participants in the relevant market may
well grow beyond the historical  MVPD  participants - which include cable firms,
DBS  providers,  "overbuilders,"  C-Band  providers,  private cable or satellite
master  antenna  television  (SMATV)  systems,  and  multi-channel   multi-point
distribution  service  (MMDS)  providers - to include DSL  providers,  incumbent
phone  companies,  and cellular phone  providers.  As technologies  evolve,  the
distinction between "video" and "data" services may become increasingly  blurred
(e.g.,  video could  increasingly be delivered over the Internet,  and broadband
data  services  could  increasingly  be delivered  via  satellite).  To be sure,
predicting  the future  course of the  industry is extremely  difficult  and the
market structure may develop in ways that are unanticipated today. Nevertheless,
cable and DBS  operate in a dynamic  market and the  relevant  market may extend
beyond the current MVPD industry.

          18. Finally,  for the purposes of evaluating the competitive impact of
the  proposed  merger,  the  national  pricing  for  monthly   subscription  and
programming  fees by both  EchoStar and DIRECTV  suggest  that a  national-level
analysis  is the most  appropriate  (see  below for  further  discussion  of the
competitive effects of the proposed merger).

IV. MERGER-SPECIFIC EFFICIENCIES

          19. The evidence  that I have  examined  shows that the merger  offers
substantial efficiency benefits, especially in radio spectrum use.



                                       11






          20. Spectrum has become an increasingly  scarce resource as the number
of  commercially  viable uses of the spectrum has expanded over the past several
decades.  Both DBS firms  indicate  that each is making  full use of its current
spectrum  to  provide  its  existing  services,  and the  prospects  for the DBS
industry  to  receive  additional  spectrum  in the next few  years  are  small.
Therefore,  improving the efficiency with which the DBS sector uses its spectrum
is the only viable way for additional spectrum-intensive services to be provided
to DBS  customers.  Such  efficiency  improvements  would  directly  benefit DBS
consumers by providing an expanded array of services, and also benefit a broader
number of consumers by  increasing  competition  with the cable  industry.  Both
EchoStar and DIRECTV emphasize that the potential for additional improvements in
spectrum  efficiency  by each firm  individually  is  minimal.  Future  spectrum
efficiency  improvements must therefore reflect the elimination of redundant DBS
spectrum use or some technological  advance that is not currently anticipated by
the DBS industry.

          21. In the DBS industry,  most of the communication is one-way and the
marginal consumer requires  virtually no additional  spectrum.17 In other words,
unlike  some  other  uses of  spectrum,  doubling  the  number of DBS  consumers
receiving  one-way  services  requires  essentially  no  increase  in  spectrum.
Currently, EchoStar and DIRECTV each broadcast many identical cable channels and
broadcast  station  feeds - that  is,  they  both  use  spectrum  for  identical
programming (e.g., CNN, HBO, local network  affiliates,  etc.). Such programming
could be

--------------------

17 The trivial increase in spectrum  requirements  reflects the need to transmit
instructions  to the set-top box regarding  the relevant  service  package.  The
amount of spectrum required for such purposes is extremely small.

                                       12






eventually  provided  with  roughly  half the current  spectrum if EchoStar  and
DIRECTV were  combined.  And the spectrum  ultimately  "freed up" by a merger of
EchoStar and DIRECTV would thus allow "New EchoStar" to provide new services and
other content - especially  local channels in many local  communities that would
not otherwise receive them - that DBS executives emphasize would not be possible
in the absence of the merger.

          22.  Increased  spectrum  efficiency  obtained  through  a  merger  of
EchoStar and DIRECTV  would  benefit  consumers in a variety of ways.18  Several
broad  categories of benefits are apparent.  The most  important  benefit may be
that  additional  DBS  spectrum  efficiency  would  facilitate  new and improved
services (such as greater geographic coverage of local channels, more specialty,
ethnic, and foreign language programming,  interactive  television services, and
video-on-demand)  that would help DBS more vigorously  compete against the cable
industry's  ability to  upgrade  unilaterally  its  bandwidth  to provide  these
services on a digital-cable tier.

          23. Examples of the potential consumer benefits that would result from
spectrum  made  available  through  the merger  include  improved  and  expanded
programming choices:

          O    More local  channels to more  metropolitan  areas.  New  EchoStar
               believes it can provide local  broadcast  programming  for 100 or
               more  communities  (while  fulfilling

--------------------

18 As the Joint Engineering  Statement  attached to this application notes, many
merger-specific  benefits will occur almost immediately,  while others will take
some period of time to be fully achieved. For example, New EchoStar will need to
transition  to a common  set-top box  platform  to capture the full  benefits of
eliminating the current duplicative use of spectrum.  The transition to a common
set-top box platform,  however, will take some time and cost to implement.  As a
result,  the full  merger-specific  efficiencies  will not be achieved until the
transition  to a  common  set-top  box  platform  is  complete.  See  the  Joint
Engineering Statement for further discussion of this issue.


                                       13






               the  "must-carry"  rules),  compared  to roughly  40  overlapping
               communities  that the  companies  serve  now.19  Providing  local
               programming  is spectrum  intensive,  which limits the ability of
               current DBS providers to deliver such service outside the largest
               metropolitan  areas.  Both EchoStar and DIRECTV are launching new
               "spot beam"  satellites to satisfy the  must-carry  rules for the
               roughly 40 local  metropolitan  areas that are already served. To
               use the spot beam  technology,  each  company  has to set aside a
               certain  amount  of  spectrum  (and  a  corresponding  amount  of
               transponder  capacity) for regional use.  Further  upgrades using
               spot beams to serve  even more  local  areas  would  require  the
               sacrifice of yet more spectrum,  as well as the substantial costs
               of launching more satellites with spot beam transponders for less
               potential   return  as  they  attempt  to  serve  less  populated
               communities.   With  only  a  fixed   amount  of  spectrum   (and
               transponder capacity), each company faces the opportunity cost of
               giving  up  frequencies  that  would  otherwise  carry  satellite
               networks that are  necessary to compete with cable.  EchoStar and
               DIRECTV executives  indicated that providing local programming is
               crucial to  encouraging  subscribers to switch to DBS from cable;
               EchoStar and DIRECTV  executives  added that their  internal data
               show that subscriber  growth in areas where local  programming is
               now  available  has been higher than that in areas  without  such
               local  programming.  The  lack  of such  services  in all

--------------------

19 EchoStar currently  provides local  broadcasting  services in 36 metropolitan
areas, while DIRECTV provides local services in 41 communities.  The communities
with local  broadcasting  service  overlap  significantly:  both firms currently
provide "local-into-local" service in 35 of the same metropolitan areas.



                                       14





               but the largest  metropolitan  areas  attenuates the  competitive
               pressures imposed on cable providers by the DBS industry.20

          O    More HDTV  channels.  New EchoStar has committed to use a portion
               of the spectrum freed up by the merger to provide  consumers with
               additional  high-definition  programming.  Each company currently
               offers  only two to four  channels of HDTV  programming,  largely
               because HDTV is  extremely  spectrum  intensive.21  By freeing up
               additional spectrum, the combined entity will be able to offer an
               expanded number of HDTV channels.  This commitment of spectrum to
               HDTV programming will provide additional incentives for consumers
               to invest in HDTV  hardware,  and for producers to invest in HDTV
               content.  It may  thus  help  to  jump-start  the  sluggish  HDTV
               adoption process.

         O    More diverse programming. Spectrum efficiencies will also permit
              expanded specialized programming. Such programming could include
              ethnic, foreign language, educational, or other programs that
              appeal to specialized audiences.

--------------------

20  See  Seventh  Cable  Competition  Report  at P.  13.  The  FCC  stated  that
"[c]onsumers historically reported that their inability to receive local signals
from DBS operators negatively affected their decision as to whether to subscribe
to DBS."  Goldman  Sachs  added  that,  "The  ability to offer  local-into-local
programming  is  extremely  important  for DIRECTV and DISH  Network  because it
enables the companies to more  effectively  compete with cable  operators."  See
Goldman Sachs,  "Satellite  Communications:  DBS Operators,"  December 18, 2000,
page 26.

21  EchoStar  currently  offers four HDTV  channels  (including  a  pay-per-view
channel),  while DIRECTV offers two channels. In addition to a HDTV HBO channel,
DIRECTV  provides  a  combination  of live and taped  sports  and  entertainment
programming  and  pay-per-view  programming  on one of its HDTV  channels.  (The
sports and entertainment  programming is broadcast for roughly 18 hours per day,
while pay-per-view is available for approximately six hours per day.)

                                       15







          24.  Another  important  benefit is that the  merger may spur  further
innovations in DBS product  offerings.  New EchoStar's  larger  subscriber  base
would  significantly  increase  the ability of the firm to make the  investments
necessary to develop advanced  services,  such as  price-competitive  high-speed
Internet  access,  and to achieve the scale  necessary to spread the fixed costs
among a sufficient number of subscribers.22 These new services could include:

          O    Competitive  broadband  services.  A larger  customer  base would
               allow New  EchoStar to increase the speed of  deployment  and the
               scale  of  investment  in  satellite-based,  high-speed  Internet
               access  systems that could  effectively  compete with cable modem
               and  DSL  services.  Industry  executives  believe  that  current
               satellite-based,    high-speed   Internet   offerings   are   not
               competitive  with cable modem and DSL  services  for a variety of
               reasons.  For example,  given current  spectrum  allocations  and
               technological  constraints,  executives stated that the number of
               subscribers  that could be provided  broadband  service by either
               EchoStar or DIRECTV was significantly below the subscriber levels
               needed to  achieve a  price-competitive  satellite-based  system.
               Because of its  broader  base of DBS  subscribers,  however,  the
               combined  entity  would  be in a better  position  to  develop  a
               satellite-based   broadband   system  that  achieves   sufficient
               economies of scale to compete with cable modem and DSL  services.
               Such economies of scale could be captured by the proposed  merger
               because satellite-based broadband service requires a "redundancy"
               system,  in case a primary

--------------------

22 The FCC has recognized  that firms that can take advantage of scale economies
by spreading  development  costs over a larger  customer base are more likely to
invest  in  infrastructure.  See  Competition,  Rate  Regulation,  and the FCC's
Policies Relating to the Provision of Cable Television  Services,  Report, 5 FCC
Rec. 4962, 5003, at P. 71:


                                       16







               satellite  fails, and doubling the number of subscribers does not
               require a  doubling  of the  number of  back-up  satellites.  The
               acceleration of competitive  satellite-based  broadband  services
               would benefit  consumers across the United States by providing an
               alternative  to cable  modem and DSL  services;  it would also be
               particularly beneficial to those in areas - such as rural America
               - without  access to cable modem or DSL  service.  (See below for
               further  discussion of the  competitive  impact on the high-speed
               Internet access market and the consumer benefits to rural areas.)

          O    New services. The elimination of spectrum redundancies will allow
               New  EchoStar  to  provide  a  variety  of  services,   including
               interactive  offerings  and the  necessary  bandwidth  to provide
               video-on-demand  using  personal  video  recording  devices.  DBS
               providers  are  currently  adding  these  options,  but  spectrum
               constraints limit their ability to expand the services to include
               more choices and more features.  For example, as I understand it,
               spectrum constraints limit the "near"  video-on-demand  offerings
               of DBS providers to the top 10 or 20 movies; additional bandwidth
               would allow New EchoStar to significantly expand such services to
               include  a  larger  library  of  movies  and  potentially  "true"
               video-on-demand.   Because   digital  cable  has  more  bandwidth
               available and is therefore able to offer such advanced  services,
               DBS  providers  must  offer  a  similar  set  of  services  to be
               competitive.

          25. The merger  would also  reduce per  subscriber  programming  costs
through the

--------------------

"[I]ncreased  concentration  [in the cable  industry] has provided  economies of
scale and fostered program investment."

                                       17






expansion  of the  subscriber  base.  According  to  executives  at EchoStar and
DIRECTV,  programming  costs account for between one-third and two-fifths of the
firms' expenses of providing service, and a significant share of MVPD/programmer
contracts - including many existing  contracts  between  programmers  and either
EchoStar and DIRECTV - include volume  discount  clauses.  Since the merger will
increase the customer base of New EchoStar  substantially,  such volume discount
clauses  would  allow the  combined  entity to  benefit  immediately  from lower
programming  costs.  The larger  customer  base would also allow New EchoStar to
obtain future  programming  contracts that are more  consistent  with the prices
paid by the largest cable operators, such as AT&T and Time Warner Cable. Neither
DBS company  believes it would be able to achieve such  programming cost savings
on its own.

26. Another obvious area of cost savings  involves  operational  costs. A merger
would  produce  significant  savings in key business  areas,  such as uplink and
backhaul  expenditures  and satellites  (satellites  typically cost between $220
million  and $300  million  to  construct,  launch,  and  insure).23  One  other
potential  long-term  efficiency  gain involves the  standardization  of set-top
boxes.  Such  standardization  could reduce  manufacturing  costs through volume
purchasing, allow easier integration into TVs and other hardware, and facilitate
the  production  of  new  technologies.   Moreover,  the  merger  would  produce
administrative cost savings.

--------------------

23 The costs of construction,  launch,  maintenance,  and insurance of the "spot
beam" satellites do not depend on the number of consumers  receiving the signal.
A combined entity, with a larger customer base in each local area, would be more
willing to assume the fixed costs associated with the required satellites.


                                       18






V. COMPETITIVE EFFECTS

          27.  The  characteristics  of the MVPD  market  and of DBS  firms,  in
particular,  make it very unlikely that this merger will result in higher prices
and lower output through either  coordinated  behavior among the participants in
the MVPD market or unilateral behavior by the merged firm.

          28.  A price  increase  as a  result  of  coordinated  interaction  is
unlikely following the proposed merger, in part due to the way the DBS and cable
industries  are   structured.   Both  DBS  firms  currently  set  their  monthly
subscription  and other  programming  fees on a national  basis;24  both  firms'
executives indicate that allowing the price to vary on a regional or local basis
would be  impractical.25  First,  customers not  adequately  served by cable are
geographically dispersed.

--------------------

24  In  1992,  DIRECTV  entered  into  an  agreement  with  the  National  Rural
Telecommunications  Cooperative  (NRTC).  As part of the  agreement,  which  was
substantially  revised  in 1994,  NRTC  paid  more than  $100  million  and,  in
exchange,  received  an  exclusive  right in certain  regions of the  country to
distribute most DIRECTV  programming  transmitted on 27 of the 32 frequencies at
the 101(0) slot. (According to NRTC, it holds such exclusive distribution rights
for eight percent of television households.) The influx of resources for DIRECTV
was  important  in the early  1990s  because it  provided  a rural  distribution
network  and,  as the Chief  Executive  Officer of NRTC has noted,  it helped to
"capitalize  the launch of the first DBS service in America."  See, for example,
B.R. Phillips, Chief Executive Officer of NRTC, Testimony Before Subcommittee on
Courts and  Intellectual  Property,  Committee of the  Judiciary,  United States
House of  Representatives,  February 4, 1998. As a result of the agreement,  for
customers  in "NRTC  areas,"  prices  for the  DIRECTV  programming  exclusively
distributed  by NRTC and its affiliate  entities are  determined by NRTC and its
affiliate  entities;  prices for all other  programming  distributed  by DIRECTV
(e.g.,  premium channels) are determined by DIRECTV on a national basis. DIRECTV
and NRTC are currently  engaged in a contractual  dispute regarding the scope of
NRTC's  exclusive  distribution  rights.  New EchoStar  will commit to continued
uniform and non-discriminatory pricing and service throughout the country.

25  Another  element  of  obtaining  DBS  service  is the  upfront  cost  to the
subscriber for the equipment and  installation.  Local variations for such costs
are more  practical,  and both firms,  in fact,  have  offered  temporary  local
promotions  on equipment  and  installation  in the past.  However,  these local
promotions  have been offered as a reaction to cable firm  activities  (e.g.,  a
cable price increase) in particular local areas; according to executives of both
firms,  these  promotions  have  been  aimed at cable  subscribers  - and not in
response to activity by the other DBS  provider.  Furthermore,  several  factors
suggest  that New  EchoStar  would not want to,  and  likely  could  not,  raise
equipment and installation  prices in specific  regions above their  competitive
levels,  especially  for any extended  period of time.  First,  consumers  could
purchase their  equipment at any location - including over the Internet - making
extended  regional  price  differentiation  difficult,  if  not  impossible,  to
implement. Second, EchoStar and DIRECTV executives


                                       19






Thus,  it would be extremely  difficult to segment such  customers  from others.
Second,  pricing  by region or local  area would  require  modifications  to the
companies'  billing and customer  support systems;  would require  retraining of
customer service  representatives;  would limit the companies' ability to engage
in national  price  advertising,  including  advertising  and marketing over the
Internet; and may cause customer confusion and dissatisfaction. New EchoStar has
committed  to  maintaining  its  policy  of  uniform  national  pricing  for its
programming.

          29. To set their national prices, DBS firms examine the prices charged
by the various cable systems  around the country and use these cable prices as a
benchmark for setting their prices. Cable firms, on the other hand, set price on
a local  franchise-by-franchise  basis,  and prices can differ depending on many
factors  that are  specific  to the market in which the  franchise  is  located.
Although New EchoStar will face  competition from at least one cable firm in any
particular  franchise area, tacitly reaching an agreement on a coordinated price
is not simply a question  of  reaching an  agreement  with one other  firm.  New
EchoStar will set its price based on a function of what cable firms are charging
in the various  franchise  areas.  In order to elevate price,  the various cable
multiple system operators  (MSOs),  each of whom owns systems in a mix of areas,
would  somehow  need to raise price  across  their  range of  systems.  From the
perspective  of the cable  firms,  the optimal  price for New EchoStar to charge
would  likely  differ  from  firm to  firm,  making  an  agreement  all the more
difficult to reach.  Thus, a coordinated  price  increase after the merger would
require an agreement  among multiple  cable firms and New EchoStar,  not just an
agreement between two firms.


--------------------

emphasize that they have reduced upfront costs in the past to attract customers,
and that they would continue to offer  promotions  and other  incentives so that
New EchoStar's upfront consumer costs would be low enough to attract


                                       20






          30. The danger of a coordinated  price increase is further  attenuated
by the fact  that  many of the  major  metropolitan  areas  have  more  than one
non-cable,  non-DBS MVPD provider.26 For example, in New York City,  Cablevision
has argued that it "faces  significant  competition  from  various  providers of
SMATV service....  Terrestrially,  RCN also provides service  throughout much of
the New York  metropolitan  area, and boasts of its 'substantial  growth' in the
New York market."27 In Washington,  DC,  Starpower - a joint venture between RCN
and the local utility - is competing  against  Comcast,  the DBS providers,  and
SMATV  entities.28 More broadly,  one overbuilder  (RCN) is currently  providing
service in seven of the ten largest metropolitan telecommunications markets.29

          31.  Furthermore,  a unilateral  price increase is unlikely after this
merger for two principal  reasons.  First,  under current market  conditions,  I
understand  that in response  to any price  increase by either of the DBS firms,
subscribers  who would leave DBS for cable  would  substantially  outnumber  the
subscribers who would leave one DBS firm for the other DBS firm. As noted above,
executives  at  both  EchoStar  and  DIRECTV  indicated  that  the  majority  of
subscribers to DBS service were previously cable subscribers and the majority of
subscribers that

--------------------

cable consumers to DBS.

26 These non-cable,  non-DBS  providers  include  "overbuilders,"  multi-channel
multi-point  distribution  service  (MMDS),  private  cable or satellite  master
antenna television (SMATV) systems, and incumbent local exchange carriers (ILEC)
using Very High-Speed Digital Subscriber Lines (so-called VDSL).

27 See Reply  Comments  of  Cablevision  Systems  Corporation,  In the Matter of
Annual Assessment of the Status of Competition in the Market for the Delivery of
Video Programming,  Notice of Inquiry, CS Docket No. 01-129, (dated September 5,
2001), at 3-4.

28 See Reply Comments of Comcast Corporation, In the Matter of Annual Assessment
of  the  Status  of  Competition  in  the  Market  for  the  Delivery  of  Video
Programming, Notice of Inquiry, CS Docket No. 01-129, (dated September 5, 2001),
at 10-11.

29 See "RCN Announces Third Quarter Results," Press Release, November 7, 2001.


                                       21






discontinue  one DBS  service  choose  to  subscribe  to  cable  rather  than to
subscribe to the other DBS  service.  The smaller the  diversion of  subscribers
from one DBS firm to the other, the smaller would be the expected price increase
from conceivable unilateral competitive effects after the merger.30

          32. Second, the merger could reduce marginal costs through a reduction
in the cost of programming per additional  subscriber.  Even if some subscribers
would be  diverted  from one DBS firm to the  other  after a price  increase,  a
reduction in marginal costs  resulting from the merger could cause the DBS firms
to lower their price.31

          33. In  addition,  the merger  could serve to promote  competition  by
providing  New EchoStar  with the  bandwidth and economies of scale to match the
new bundled services offered by cable companies. According to executives at both
EchoStar and  DIRECTV,  the  introduction  of digital  cable - which  reduces or
eliminates the historical  quality and capacity  advantages of DBS over (analog)
cable - combined with the possibility of bundling  high-speed  Internet  access,
video-on-demand,  and other advanced services is a competitive  threat to future
DBS subscriber  growth.32  Given spectrum  constraints,  DBS firms are unable to
fully match the existing and potential  services offered by cable companies that
can unilaterally increase their bandwidth. The danger is therefore that DBS will
become less competitive  with the leading cable  providers.  As

--------------------

30 Robert D. Willig, "Merger Analysis, Industrial Organization Theory and Merger
Guidelines," Brookings Papers on Economic Activity: Microeconomics, 1991 at 299.

31 Carl Shapiro,  "Mergers with  Differentiated  Products,"  Remarks  before the
American Bar Association, 1995.

32 For example,  Goldman  Sachs  concluded  that "We see the bundling of [cable]
services as the most significant threat to DBS because of its potential not only
to slow gross additions,  but also to win back subscribers  (seen through higher
churn).  Both have the obvious effect of slowing net subscriber  growth for DISH
Network  and  DIRECTV."  See  Goldman  Sachs,  "Satellite  Communications:   DBS
Operators," December 18, 2000, page 1.



                                       22






discussed  above,  New EchoStar has committed to providing more local  channels,
more diverse programming, and more advanced services. In addition, executives at
the two DBS firms believe that the proposed merger will enable them to develop a
more competitive  satellite-based,  high-speed  Internet access option that will
help New EchoStar  better compete with digital cable's  bundled  offerings.  The
combined  entity could  therefore  represent a more effective  competitor to the
dominant cable firms than the combined competitive impact from each DBS provider
on its own.

          34. Finally,  satellite and uplink infrastructure  require substantial
investments.  By contrast,  the marginal costs of providing additional customers
with  service  are  relatively  low.  Such a cost  structure  would  provide New
EchoStar  with  strong  incentives  to  spread  its  fixed  costs  among a wider
subscriber  base.  Executives  at  both  firms  emphasize  that  New  EchoStar's
incentives  are to attract new customers  before  digital cable becomes  further
entrenched, since consumers who commit to a digital cable/cable-modem bundle may
perceive fewer benefits to moving to DBS (relative to analog cable customers).33
The dynamic  incentive to expand the customer  base of DBS service will continue
after the proposed merger.

Competitive issues in rural America

          35. A number of analysts have raised  concerns  about the impact of an
EchoStar-DIRECTV  merger on rural  consumers.  The concern appears to arise from
the  perception  that


                                       23






cable is not  available in some rural  areas,  and  therefore  that the proposed
merger  would create a monopoly in the rural MVPD  market.  Based on  interviews
with top  executives of both firms and a review of publicly  available  industry
data, such concerns appear to be unfounded for three reasons.

          36.  First,  nearly every  household  in America with a television  is
passed by cable:  according to the FCC, 96.6 percent of TV households are passed
by  cable.34  After the  merger,  the vast  majority  of  households  would thus
continue  to have the benefit of direct  price  competition  described  earlier.
Furthermore,  those households not passed by cable are geographically  diverse -
that is, they do not appear to be concentrated  in any specific  areas.  Even in
the absence of its national pricing  commitment,  it would be very difficult for
New  EchoStar  to price  discriminate  in its  monthly  subscription  and  other
programming  fees  against  households  that are not passed by cable  (given the
geographical  mixing  of those  with and  without  cable  access  and the  other
impediments to price discrimination for DBS service described above).35


--------------------

33 Goldman Sachs similarly notes that "As cable operators upgrade their networks
and roll out new service, cable subscribers will have less incentive to 'churn'
to DBS." See Goldman Sachs, "Satellite Communications: DBS Operators," December
18, 2000, page 33.

34 A debate exists about  precisely the correct way to calculate the  percentage
of households passed by cable. See Seventh Annual Report at P. 18. See also U.S.
Department   of  Commerce  and  U.S.   Department   of   Agriculture,   Advanced
Telecommunications in Rural America: The Challenge of Bringing Broadband Service
to All  Americans,  April  2000 at 19.  I have  cited  the  most  commonly  used
statistic, which is also the principal statistic cited by the FCC in the current
and  past  reports  on  competition  in the  market  for the  delivery  of video
programming.

35 As noted in  footnote  25,  the cost of  equipment  and  installation  has on
occasion varied across markets as a result of targeted local promotions. But, as
discussed  above,  several  factors  suggest  that the prices of  equipment  and
installation  would  not rise  above  their  competitive  levels  following  the
proposed merger. Furthermore, rural subscribers should be able to take advantage
of retail subsidies that are made through  geographically  diverse retail chains
or over the Internet.  In other words,  rural customers would likely be no worse
off following the merger, and may benefit from more intense  competition between
New EchoStar and cable  companies;  rural  customers would also benefit from the
above-mentioned  expansions of DBS programming and services that would otherwise
not be available in the absence of the merger.



                                       24






          37. Second, many rural consumers not passed by cable would still enjoy
some choice of MVPD providers.  For example,  C-Band Satellite or Home Satellite
Dish (HSD) has nearly one million  subscribers.36  New C-Band digital  equipment
continues to be developed and made available to customers in order to access and
view digital programming. Companies like Motorola have developed C-Band products
to compete directly with DBS and allow subscribers to receive digital signals.37

          38.  Third,  New EchoStar has  committed to  maintaining  its national
pricing plan. The implication of such a commitment is that MVPD prices for rural
consumers  will be  driven  by  competition  in urban  areas.  As  noted  above,
executives  at both  EchoStar  and DIRECTV view a national  pricing  strategy as
providing cost savings and  advertising  benefits,  and  contributing  to higher
levels of customer  satisfaction.  This  history  suggests,  and New  EchoStar's
stated commitment underscores, that national pricing would be perpetuated.

          39. In  addition,  as noted  above,  with  national  pricing,  monthly
service  prices are not likely to rise as a result of the merger.  According  to
executives  at EchoStar and DIRECTV,  these prices are  generally  driven by the
prices set by the major  cable MSOs  throughout  the  country,  which often face
competition from  overbuilders  and other MVPD providers.  Such

--------------------

36 See Sky Research, Volume 8, Number 11, November 2001, page 3.

37 It is important to note that C-Band has high up-front costs,  with dish costs
averaging $2,000.  However, more than a hundred broadcast channels are available
for free,  and a package  of two movie  channels  and 50 basic  services  can be
purchased  for as low as $30 to $35  per  month.  See  Orbit  magazine's  C-band
Frequently  Asked Questions  (FAQ) at  http://www.orbitmagazine.com/orbfaqs.htm.
Motorola's 4DTV offers nearly 300 free channels.  For $30 per month, 4DTV offers
59  subscription  channels  and 22  movie  channels,  in  addition  to the  free
channels. See http://www.4dtv.com/4DTV/what_4dtv.html.


                                       25






pricing pressure would not change after a merger of EchoStar and DIRECTV.

          40.  Thus,  it is more  likely  that the merger  would be of  distinct
benefit  to rural  TV  households  than  that it  would  diminish  competition's
benefits  available to them.  First,  many of the new programming  services that
could be potentially  created from spectrum freed up by the merger would benefit
all customers,  including rural  customers.  Second,  as emphasized  above,  the
proposed  merger will allow the combined  entity to have the subscriber base and
the spectrum needed to offer a more price-competitive, satellite-based broadband
service to rural consumers.  For many such rural consumers,  satellite broadband
is the only feasible means of obtaining  high-speed  access to the Internet.  In
evaluating the impact of the proposed merger on rural consumers, it is therefore
significant to consider the benefits of expanded broadband delivery.

VI. VERTICAL INTEGRATION

          41.  In the  past,  the FCC  has  raised  the  concern  that  vertical
integration  between video programmers and MVPD providers may "deter competitive
entry in the video marketplace  and/or limit the diversity of programming."38 At
the same time,  the FCC has  instituted  program  access rules,  with the stated
purpose of preventing vertically  integrated MVPDs from treating  non-integrated
MVPD  providers in a  discriminatory  fashion to the detriment of competition in
the MVPD  market.39  Put simply,  the concern is that an  integrated  entity (a)
would not want to carry  programming  that competes with  programming it owns or
(b) would not make available

--------------------

38 See Seventh Annual Report at P. 172.

39 Id at P. 178.


                                       26




programming it owns to competing MVPD providers on reasonable  commercial terms.
This merger, however, clearly does not create or exacerbate any concerns the FCC
might have about vertical  integration  because EchoStar and DIRECTV do not have
any significant vertical relationships with programmers.40

          42. If anything,  this merger may increase  competition  among program
providers.  The FCC has noted that many programming  services have been planned,
but have not been able to launch.  One  factor  that has  limited  the launch of
these new networks is the lack of channel  capacity,  particularly  among analog
cable systems.41 The merger between EchoStar and DIRECTV,  as stated above, will
remove  duplication  among the two services and thereby provide  bandwidth to be
used as  vehicles  to  launch  new  programming  services.42  In  addition,  the
approximately  15 million  subscribers of the combined  entity should provide an
attractive  platform  for  launching  new  programs,   providing  an  interested
programmer with a large  percentage of the subscribers it would need to create a
viable  network.43  New  EchoStar  would be  unaffiliated  with any  programming
interests,  and  therefore,  would  not face  any  disincentives  to  carry  new
programming  that its  subscribers  would  value.  Therefore,  this merger could
result in an increase in the programming offerings available to consumers.

--------------------

40 News  Corporation  has an  ownership  interest in  EchoStar  that it has been
selling off over time.  It currently  has less than a  five-percent  interest in
EchoStar.

41 See Seventh Annual Report at P. 176.

42 For example,  the  President of  Moviewatch,  a network that will be launched
next year,  recently stated that one advantage of an EchoStar and DIRECTV merger
is that "additional  spectrum...  gives us opportunities to place networks." See
"New Nets Squeeze Into Consolidated  Market,"  Multichannel  News,  November 26,
2001, page 60.

43 This estimate of the combined  subscriber  base of New EchoStar  excludes the
subscribers of NRTC and its affiliate entities who receive DIRECTV programming.


                                       27




VII. CONCLUSION

          43. The proposed merger of EchoStar and DIRECTV offers the possibility
of substantial efficiency improvements,  especially in radio spectrum use, which
would directly  benefit DBS consumers by providing an expanded array of services
(e.g., the provision of local broadcast  programming to more metropolitan areas,
more High-Definition  Television channels,  more interactive services,  and more
specialized  programming),  and also  benefit a broader  number of  consumers by
increasing competition with the cable industry. These efficiencies do not appear
to be available without the merger.

          44.  Furthermore,  the  nature  of MVPD  market  competition  makes it
unlikely that a merger of EchoStar and DIRECTV would result in higher prices and
lower output through either  coordinated  behavior among the participants in the
MVPD market or  unilateral  behavior by the merged  firm.  Indeed,  the proposed
merger could serve to promote  competition  by providing  New EchoStar  with the
bandwidth  and economies of scale to match the new bundled  services  offered by
cable  companies.  The  proposed  merger of EchoStar  and DIRECTV is thus in the
public interest.



                                                                    ATTACHMENT B

    JOINT ENGINEERING STATEMENT IN SUPPORT OF TRANSFER OF CONTROL APPLICATION


         This joint engineering statement is being submitted to the Federal
Communications ("FCC") by EchoStar Communications Corporation ("ECC") and Hughes
Electronics Corporation ("Hughes") in support of their Consolidated Application
for Authority to Transfer Control of various FCC licenses. This statement will
address some of the more significant efficiencies that will be achieved by the
proposed merger of ECC and Hughes.

         Transition Plans. ECC and Hughes have determined that there will be
substantial efficiencies and synergies (including expense savings and revenue
enhancements) as a result of the merger of their two businesses. Many of these
benefits will occur almost immediately, while others will take some period of
time to be fully achieved. ECC and Hughes have developed a process for
determining how best to transition their respective businesses upon completion
of the merger. The parties anticipate that many of these transition decisions
will have been made by the time the merger closes within the constraints of
applicable law, while many other decisions will be made upon consummation of the
merger.

         Explanation of Transition Process. A joint ECC/Hughes team of key
executives and employees has been formed to address the most important
transition issues associated with the merger of the businesses of both
companies. This team will be led by Charles W. Ergen, the Chairman and Chief
Executive Officer of ECC and the person designated to become the Chairman and
CEO of the combined company ("New EchoStar"). Other members of this transition
team include Michael T. Dugan, President and Chief Operating Officer of ECC,
Eddy Hartenstein, Chairman and CEO of DIRECTV and Jack A. Shaw, President and
CEO of Hughes. All decisions will be made in the best interests of the combined
companies and their subscribers. Some of the







more important operational issues that will need to be addressed include: which
set top box platform to use, how best to transition customers to a common set
top box platform, the repositioning of existing and planned satellite resources
that takes the maximum advantage of the spectrum efficiencies gained by the
merger, and the types of programming to be added to the current mix of local,
national and high definition programming.

         Set Top Box Transition. One of the most important issues that will have
to be addressed is which set top box platform to employ on a going forward
basis. Each company has chosen different methods for meeting the anticipated
needs of its respective customers, including different conditional access
systems, transport streams and descrambling structures, which has resulted in
the development of set top boxes that are not compatible with one another. ECC
has chosen to deploy an MPEG-2, DVB compatible digital architecture that allows
for software upgrades via satellite and enhanced addressable security features
to minimize signal piracy. ECC's entire family of receivers and outdoor units
currently supports multiple satellites in multiple orbital locations. While ECC
is the principal manufacturer of its set top boxes, JVC and others also produce
consumer equipment compatible with ECC's system architecture. ECC's latest
models include hard drives that allow for personal video recording (PVR) of up
to 35 hours of programming, as well as a High Definition (HDTV) receiver that
offers state-of-the-art picture quality.

         DIRECTV's digital technology to deliver its programming differs from
ECC's in that DIRECTV's receivers use a slightly different error correction
method, slightly different compression techniques, and a substantially different
conditional access system for protection from signal theft. DIRECTV also employs
an MPEG-2 based digital architecture in its set top boxes, but the transport
format differs from ECC's as does its signal encryption scheme. The signal
format



                                       2






and receiver technology used by either company can provide similar, video
quality and consumer oriented features. In many receiver models, the primary
integrated circuits used are identical. The receiver software provides the
unique characteristics associated with either service.

         In order to obtain the most significant consumer benefits from the
merger, it will be necessary to transition to a common set top box platform. One
platform will enable the combined company to achieve substantial manufacturing
efficiencies, lowering the overall research and development costs as well as the
per unit cost of building receivers for a larger subscriber base. A common set
top box platform will also allow each subscriber to receive the maximum amount
of programming that a combined fleet of satellites and ground stations can
offer. Also, a common set top box will place the combined company on a more
level playing field with cable, which has for some time had common technology
and shared research and development costs for their set top boxes.

         The transition to a common set top box platform will begin almost
immediately after the merger. Currently, ECC and DIRECTV together serve
approximately 15 million subscribers utilizing separate fleets of DBS satellites
located in different orbital positions.1 The amount of time it will take to
complete such a transition is dependent upon the number of set top boxes that
may need to be exchanged. Of course, this exchange program would be done as
seamlessly as possible at no cost to existing subscribers. During this
transition period, satellite signals will be simulcast or simulcrypted, so that
subscribers owning either set top box platform can receive their existing
programming.

--------------------

         1 This subscriber number is exclusive of those subscribers who receive
DIRECTV programming directly from NRTC and its affiliate entities.


                                       3



         Satellite Fleet Transition. In addition to developing a plan for
obtaining a common set top box platform, it will be necessary to develop a
complementary plan for transitioning the existing and planned satellite fleets
of each company. Today, ECC has six DBS satellites located at four orbital
locations. (See Exhibit 1 attached hereto.) From two of these locations
(119(degree) W.L. and 110(degree) W.L.) ECC can reach virtually all of the
Continental United States (CONUS) as well as Hawaii and portions of Alaska. Due
largely to the fact that its first two satellites were assigned to 119(degree)
W.L., most of ECC's national programming and approximately 10 percent of its
local broadcast programming originate from that location, where it now has two
satellites (EchoStar 4 and 6) operating on 21 DBS frequencies.2 (One of these
satellites - EchoStar 4 -- only has limited operational capacity due to a
deployment failure and other in-orbit anomalies.) ECC's only other CONUS
location is at 110(degree) W.L. where it currently has one satellite (EchoStar
5) providing both national programming and most of its local broadcast
programming over 29 DBS frequencies. Two other DBS satellites (EchoStar 1 and 3)
provide several types of programming, including HDTV, niche and international
programming from the non-CONUS 61.5(degree) W.L. and 148 (degree) W.L. orbital
locations.3 (EchoStar 2 is in the process of relocating to the 148(degree) W.L.
orbital location to augment service at that slot.) In the near future, ECC will
launch its first spot-beam satellite (EchoStar 7) to the 119(degree) W.L.
orbital slot. Later next year ECC intends to launch its second spot-beam
satellite (EchoStar 8) to the 110(degree) W.L. orbital slot.

         ECC's satellites operate in a combination of low power and/or high
power modes. Generally, the higher the power, the stronger the received signal,
the less need for error correction,

---------------------

         2 Throughout this Engineering Statement, reference will be made to DBS
frequencies or DBS transponders. The FCC has allocated 500 MHz of downlink
spectrum for DBS service at 12.2 - 12.7 GHz. This spectrum has been further
channelized into 32 frequencies/transponders.

         3 The 61.5(degree)W.L. and 148(degree)W.L. orbital locations can reach
varying parts of the CONUS with a quality DBS signal.



                                       4


and the more video and audio channels that can be compressed into each DBS
transponder. EchoStar 1 and 2 are only capable of operating in a low power mode
utilizing up to 16 CONUS transponders. EchoStar 3, 4, 5 and 6 were each designed
to operate with up to 32 low power CONUS transponders or up to 16 high power
CONUS transponders or a combination of both, while EchoStar 7 and 8 were each
designed to operate with 16 high power CONUS transponders and, by operating on
five other frequencies re-used 5 times, 25 spot-beam transponders.

         While one antenna dish can "see" both the 110(degree) W.L. and
119(degree) W.L. orbital locations, multiple dishes are required to receive
programming from the 110(degree)/119(degree) W.L. and either of the 61.5(degree)
or 148(degree) W.L. non-CONUS slots. Approximately 80 percent of ECC's
subscribers currently have antenna dishes capable of viewing programming from
both the 110(degree) and 119(degree) W.L. orbital locations. Approximately five
percent of ECC's subscribers have installed multiple antenna dishes for viewing
the programming from the non-CONUS orbital locations.

         DIRECTV currently has five operational DBS satellites located at three
CONUS locations - 101(degree), 110(degree) and 119(degree) W.L. (See Exhibit 1
attached hereto.) Most of its national and local programming currently
originates from the three satellites (DIRECTV 1R, 2 and 3) located at
101(degree) W.L. and operating over its 32 assigned DBS frequencies. Recently,
DIRECTV's first spot-beam satellite (DIRECTV 4S) was launched into orbit and
soon will be located at 101(degree) W.L. to provide primarily additional local
broadcast programming. Additional programming is originated from DIRECTV 6,
which is located at 119(degree) W.L. DIRECTV is assigned 11 DBS frequencies at
that location. Another satellite (DIRECTV 5) is planned to be launched during
the first quarter of 2002 and will be located at 119(degree) W.L. in order to
replace DIRECTV 6, which is operating at reduced capacity due to power subsystem
issues. DIRECTV also has one satellite (DIRECTV 1) operating on 3 assigned DBS
frequencies at 110(degree) W.L. DIRECTV 1 is currently being used for



                                       5






local broadcast service only. DIRECTV currently has on order another spot-beam
satellite that is planned to be in service by the end of the year 2003.

         DIRECTV's satellites also have both high power and low power DBS
transponders. DIRECTV 1, 2 and 3 can operate with a maximum of 8 high power
CONUS transponders or 16 low power CONUS transponders. DIRECTV 1R has 16 high
power CONUS frequencies, whereas DIRECTV 5 and 6 were each designed to operate
with a maximum of 16 high power or 32 low power CONUS transponders (although
DIRECTV 6 is now limited to 11 low power DBS transponders due to power
subsystems issues). DIRECTV's newest spot beam satellite (DIRECTV 4S) is capable
of operating on up to 10 high power CONUS transponders as well as 44 spot beam
transponders (by re-using 6 frequencies an average of 7.33 times). Most DIRECTV
subscribers currently have a single antenna dish that can view only the
satellites located at 101(degree) W.L. A small percentage of its subscriber base
have antenna dishes that can view programming from DIRECTV's 101(degree) W.L.
and 119(degree) W.L. satellites, and an even smaller subscriber base can view
programming from the 110(degree) W.L. orbital slot.

         There are several possible scenarios for redeploying the combined
satellite fleets post merger that would significantly improve the utilization of
the DBS spectrum and satellite resources. Under one possible scenario, most
national programming could be placed on the 32 DBS frequencies at 110(degree)
W.L. with most Western U.S. local and specialty programming moving to
119(degree) W.L. and most Eastern U.S. local and specialty programming moving to
101(degree) W.L. Under another possible scenario, most national programming
could be placed on the 32 DBS frequencies at 101(degree) W.L. with corresponding
local and specialty programming located on satellites at other CONUS slots. With
the existing satellite resources of both companies (assuming spot beam
satellites are successfully placed in service), New EchoStar could provide from
the three CONUS



                                       6




locations upwards of 320 national standard definition (SDTV) programming
channels (assuming a 10:1 compression ratio - i.e., each DBS transponder
compressing 10 SDTV channels) and over 1000 local broadcast stations for up to
100 metropolitan areas throughout the United States, including Alaska and
Hawaii.

         Such a combined fleet of satellites would also eliminate the obvious
inefficiencies associated with splitting up the 32 DBS frequencies at the
110(degree) W.L. and 119(degree) W.L. orbital slots between the two companies.
Today, in order for DIRECTV to provide service from its three assigned DBS
frequencies at 110(degree) W.L. it must place one of its satellites at that
location and equip its subscribers that want to receive its programming with a
special three-feed antenna. Even after its spot beam satellite (DIRECTV 4S)
becomes operational, DIRECTV will use at least two of its CONUS frequencies at
101(degree) W.L. for the retransmission of local broadcast programming, leaving
approximately 240 SDTV video channels available for national programming (again,
assuming 10:1 compression ratios). Conversely, ECC is currently limited to
providing approximately 210 national SDTV video channels from its 21 assigned
DBS frequencies at 119(degree) W.L., assuming no local broadcast channel feeds.
Without spot beam satellites, this figure would be reduced on a one-for-one
basis as every local station is added, and would be lowered to a maximum of
approximately 160 national SDTV video channels when EchoStar 7 becomes
operational (i.e., ECC would be able to retransmit up to 250 local SDTV stations
using five CONUS frequencies, but in so doing reduce the number of SDTV channels
available for national programming by 50).

         Ground Station Transition. Today, ECC operates two ground station
complexes, one in Cheyenne, Wyoming and the other in Gilbert, Arizona, primarily
to backhaul national and local programming and to uplink that programming to its
fleet of satellites. These facilities also provide primary and backup telemetry,
tracking and command (TT&C) for its in-orbit satellites.



                                       7




DIRECTV has similar earth station complexes in Los Angeles, California and
Castle Rock, Colorado. Each complex includes numerous earth station antennas and
associated electronics and hardware, and must be manned by an extensive staff of
skilled technicians, operators, and engineers on a 24x7 basis.

         There are several potential scenarios post merger that will result in
significant cost savings for the New EchoStar. Clearly, both companies must
invest significant recurring dollars to backhaul local stations across the
country to each of their uplink facilities which requires nearly a one hundred
percent duplication of equipment and fiber. Much of this duplication could be
eliminated post merger. While it is desirable to maintain some site diversity
between uplink centers, additional benefits can be obtained by minimizing
equipment redundancy between the companies, and by eliminating the need to
expand continually the existing facilities to support the growing list of must
carry local broadcast channels.

         Comparison of Channel Capacities. A combined ECC/DIRECTV will have
significantly more DBS channel capacity at its disposal to provide more national
and local programming to its subscribers than each company would have absent the
merger. ECC and DIRECTV currently are assigned 50 and 46 CONUS transponders,
respectively. Assuming a 10:1 compression ratio for SDTV channels and no spot
beam satellites (which is the case today), ECC can employ up to 500 SDTV video
channels while DIRECTV can employ up to 460 SDTV video channels. Of this amount,
however, a substantial number of these channels are currently being utilized by
each company for the provision of the same local broadcast channels (4 to 5
channels per metropolitan area) in approximately 35 metropolitan areas. Upon the
successful launch and placement in orbit of spot beam satellites, each company
should be able to maintain approximately



                                       8




the same number of metropolitan areas with local broadcast stations while
fulfilling its must carry obligations under the Satellite Home Viewer
Improvement Act of 1999 ("SHVIA").

         Today, each company also offers its subscribers a national programming
lineup that is very similar in content, substantially duplicating each other's
programming. (See Exhibit 2 attached hereto.) ECC has approximately 235 national
programming channels and DIRECTV has approximately 179 national programming
channels. Of these, approximately 150 channels are duplicative. DIRECTV also
carries about 40-50 pay-per-view (PPV) channels depending on the season, whereas
ECC carriers about 39 PPV channels, six of which are simulcast on the satellites
located at 61.5(degree) W.L. and 148(degree) W.L. This leaves only enough
channel capacity to offer the requisite minimum of educational and public
affairs programming and a few HDTV channels, which require significantly more
bandwidth than SDTV video channels.

         The combined company would be able to eliminate much of the substantial
duplication of local broadcast and national programming and thereby increase
significantly the amount of national programming choices and local broadcast
areas, as well as more HDTV, educational, niche and international programming.

         More Local-Into-Local Stations and Metropolitan Areas. Each DBS company
typically offers only a few local broadcast stations to a small number of
metropolitan areas. Today, ECC offers 4-5 local stations in 36 metropolitan
areas, whereas DIRECTV offers approximately the same number of local stations in
all but one of these metropolitan areas plus an additional 6 metropolitan areas
for a total of 41 metropolitan areas. (See Exhibit 2 attached hereto.) Post
merger, the combined company will be able to eliminate much of this local
channel duplication and free up additional channels to serve upwards of 100
metropolitan areas with local programming, including at least one metropolitan
area in each of the fifty states.



                                       9




         More HDTV Programming. Currently, DIRECTV and ECC only have enough
satellite capacity to offer 2-3 full-time HDTV channels to their subscribers.
Moreover, in order for any subscriber to obtain this programming he or she must
purchase and install a special antenna dish. This is because ECC only offers
HDTV programming from its non-CONUS 61.5(degree) W.L. and 148(degree) W.L.
locations, while DIRECTV utilizes some of its capacity at 119(degree) W.L. for
this programming. Absent the merger, it is unlikely that many more, if any,
additional HDTV programming would be carried on either DBS company's channel
lineup due to the significant bandwidth requirements for such programming and
the competing demands for other programming choices. Post merger, with the
spectrum freed up by avoiding the duplication of national and local programming,
it is anticipated that New EchoStar will be able to offer at least 12 HDTV
channels from one or more of its full CONUS orbital locations.

         Better Service to Alaska and Hawaii. It has been a challenge for DBS
providers to offer the full range of programming choices to residents in Alaska
and Hawaii due to their far western and northern locations in relation to the
CONUS orbital slots centered over the United States. Most subscribers in these
locations also require larger antenna dishes. Neither company is able to offer
any local broadcast channels over their current operational fleet of satellites;
however, with the upcoming launches of ECC's spot beam satellites, it will be
able to offer such programming if it can do so and still meet its satellite must
carry obligations.

         With the combined satellite and spectrum resources of both DBS
companies, New EchoStar will be able to offer more program choices to the
residents of Alaska and Hawaii. Not only will they receive the best available
programming currently being offered by each DBS provider, but they also will
benefit from the increased programming choices available as a result of the
spectrum efficiencies outlined above.



                                       10




         More Reliable Service. New EchoStar's increased spectrum efficiency and
better utilization of satellite capacity will also enable it to provide more
reliable service. This benefit is derived from two primary areas: the increased
redundancy associated with more in-orbit satellites in case of unexpected
satellite failures; and the ability to utilize the additional capacity where
available to increase the amount of error correction applied to the DBS signal.

         More Diverse National Programming. As shown in Exhibit 2, there is
substantial duplication of the existing national programming currently being
offered by ECC and DIRECTV. There is substantially more video programming, music
programming, and other programming services available to DBS providers than they
currently have the channel capacity to provide to their subscribers. For
example, of the approximate 300 national programming channels available today,
ECC currently includes about 235 on its programming menu. DIRECTV includes even
fewer channels on its programming menu.

         Enhanced Near Video-on-Demand Capabilities. Today, due to their
spectrum constraints both ECC and DIRECTV have limited capabilities to offer
their subscribers video-on-demand services. While both companies now offer set
top boxes with personal video recorders (PVR) that allow the viewer to download
up to 35 hours of programming on hard drives for later viewing, this convenience
is not equivalent to video-on-demand service. Such service requires the storage
of an extensive library of movies and other programming by the DBS provider for
almost instantaneous retrieval by millions of active subscribers. Through the
offering of more pay-per-view channels with staggered viewing times, as well as
more extensive use of PVR caching, however, New EchoStar will be better able to
approximate video-on-demand services for its subscribers.



                                       11






         Substantial Procurement, Operational and Manufacturing Savings. The
combined company, with its larger subscriber base and unified fleet of
satellites and ground infrastructure, will be able to achieve substantial cost
savings as a result of the merger. ECC's preliminary estimates for these
expected cost savings amount to almost $3 billion per year. A significant
portion of these savings will be achieved through reductions in subscriber
acquisition costs, more efficient distribution of product offerings, reduced
production cost, more cost-effective set-top box research and development, and
more efficient advertising. New EchoStar should also benefit from substantial
savings through reduced programming costs associated with having a larger
subscriber base since most DBS distribution arrangements offer additional
discounts on a volume basis. In addition, New EchoStar can expect to achieve
substantial savings from a reduction in subscriber churn as more services are
offered over a unified platform that can better compete with digital cable.
Moreover, significant cost savings will be achieved by rationalizing the
satellite fleet of both companies, by eliminating future satellite procurements
and capital expenditures, by achieving operating efficiencies and by eliminating
duplicative overhead expenses. For example, the merged company could serve its
national customer base and fully utilize the spectrum resources at the three
CONUS DBS locations with only two satellites at each orbital slot. Indeed, upon
the successful launch of EchoStar 7 and 8, ECC could utilize fully all 32 DBS
transponders at 110(degree) W.L. and 119(degree) W.L. orbital locations
operating just two satellites at each location instead of the four that are
slated to operate at there.

         Technological Developments. The combined resources of the merged
companies will also lead to the more rapid and efficient deployment of newer
technologies, including possibly the introduction of advanced modulation, coding
and compression techniques that would further enhance overall channel carrying
capacity. Given the current platforms that each company



                                       12






employs and their existing fleet of satellites, however, neither DBS provider
alone can expect to achieve any significant improvements in channel capacity
using the limited spectrum resources available to them. Each company already
compresses its digital signals to achieve approximately a 10:1 ratio of SDTV
programs per DBS transponder. Four to five years ago, compression ratios of 6-8
were achievable and the future outlook using existing hardware is only expected
to achieve ratios of about 12:1 with acceptable service quality.

         Moreover, while spot-beam satellites soon will be launched that will
enable greater frequency reuse and allow for additional local programming over
the same number of DBS transponders, they were designed based upon the current
inefficiencies in the fragmented assignment of DBS frequencies. For example, ECC
designed both of its spot beam satellites with the understanding that it had
access to only 21 DBS transponders at 119(degree) W.L. With this limit in mind,
ECC could only devote five of these transponders to spot beams, since it needed
the remaining 16 DBS frequencies for national programming. Each spot beam
satellite was also designed with the understanding that it could be used as a
backup for the other spot beam satellite in case of a launch or in-orbit
failure.

         In any event, these future achievements in spectrum efficiencies are
being more than offset by the increased demands for satellite bandwidth. As
noted above, DBS providers soon will be required by the satellite must carry
provisions of SHVIA to retransmit a significantly greater number of local
broadcast channels in each metropolitan area that they currently provide local
programming. It is estimated that ECC alone will need up to 300 more video
channels to maintain all of its local programming areas. Similarly, DIRECTV will
require approximately 330 more video channels in its local programming areas to
comply with SHVIA. In addition, as viewers begin to watch more HDTV programming,
it will become more difficult to satisfy their demand for



                                       13






such programming using existing satellite and spectrum resources. Today, ECC and
DIRECTV need an entire DBS transponder to produce one HDTV channel (as opposed
to approximately 10 SDTV channels in each transponder). While there may be some
improvements in this compression ratio over time, with the limited spectrum
resources of each company it simply will not be possible to satisfy the
potential demand for high definition programming.

         DBS providers also compete today with digital cable that is offering an
ever growing number of national and pay-per-view programming to their
subscribers. ECC and DIRECTV are therefore extremely constrained in devoting any
more of their national DBS capacity to local programming or other services and
expect to continue to compete at a national level. Tradeoffs constantly must be
made as to how best to employ their limited spectrum resources.

         Broadband Satellite Deployment Efficiencies. ECC's and Hughes'
experiences to date with their investments in several broadband technology
companies have been mixed. While ECC currently offers a two-way broadband
service through its affiliate, Starband, the subscriber take rate for this
service has been slow with the prospects unlikely for increasing the number of
subscribers significantly in the near future. Starband leases CONUS transponders
on Ku-band satellites and offers a two-way broadband service to residential
consumers starting at about $70 per month. Hughes' satellite broadband offerings
(DirecPC and now DIRECWAY) also have not yet obtained sufficient scale in their
residential subscriber base to achieve stand-alone viability. When used for
point-to-point services, current Ku-band satellite platforms do not provide
sufficient spectral efficiency to achieve the competitive price levels needed
for significantly faster subscriber ramp up.

         ECC and Hughes also have investments in Ka-band projects - Wildblue and
Spaceway, respectively. While these programs both use Ka band satellites, they
differ in their



                                       14






technological and commercial approach. Wildblue has announced plans that include
launching a Ka-band payload on board the Canadian satellite Anik F2 in 2002,
whereas Spaceway plans on deploying a number of Ka-band satellites starting in
2003. Both companies are using spot-beams, although Spaceway will be using a
larger number of beams and on-board processing (enabling services using a single
hop) and packet replication which will significantly increase the flexibility of
the platform. ECC also is building a Ku/Ka-band satellite (EchoStar 9) with
limited spot beam capabilities. This satellite could be used to backhaul DBS
programming to ECC's uplink facilities and/or to provide limited broadband
services.

         ECC and Hughes believe that Ku-band two-way broadband satellite
services, such as those implemented by Starband and Hughes, will struggle to
achieve sufficient economies of scale to effectively compete with terrestrial
DSL and cable broadband services. Both companies believe, however, that the new
Ka-band satellite platforms offer the opportunity to achieve price points that
will allow broadband satellite services to compete with terrestrial broadband
alternatives. In order to achieve the necessary economies of scale and scope,
one company must have access to a sufficient number of state-of-the-art
satellites in relatively close proximity to one another and must have enough
spectrum to sustain a critical mass of subscribers. ECC and Hughes estimate that
at least 5 million subscribers would be necessary in the next 5 years to recover
the significant up front investment and subscriber acquisition costs associated
with launching and marketing such two-way broadband satellite service. Since
each Ka-band orbital slot can only serve at most 1.5 to 2.0 million subscribers
with the use of spot beam satellites, access to a number of orbital locations is
necessary to begin to meet even these minimum subscriber objectives.

         Broadband satellite systems also require ground stations and access
gateways, both primary and redundant, as well as the provision of customer
support facilities. Considerable




                                       15






efficiencies will be achieved through the merger of these operational activities
and investments leading to reduced costs and lower service prices. In addition,
the consumer terminals required for the provision of satellite broadband
services are more expensive than the equivalent terrestrial terminals.
Significant reductions in satellite terminal costs can be achieved by
manufacturing efficiencies brought about by increased volumes. Increasing the
size and rate of development of the Ka-band systems will have a major positive
impact on terminal cost, in turn, significantly increasing the competitiveness
of these systems.

         In summary, New EchoStar, with its combined Ka and Ku-band spectrum and
satellite resources, will be able to achieve operating scale and efficiencies
that will allow it to provide broadband services that will compete effectively
with terrestrial broadband systems. It will have access to a sufficient number
of Ka-band orbital slots within an arc of 22 degrees, which will facilitate a
one dish solution for consumers and allow for needed redundancy in case of
operational problems. It also will be able to achieve scale in manufacturing to
significantly reduce subscriber terminal costs, and offer bundled DBS and
broadband services that will permit full competition with digital cable by
significantly increasing the perceived value of the services. In addition, New
EchoStar can offer its broadband services to a much larger DBS subscriber base,
which will help alleviate the high subscriber acquisition costs and provide
services that will compete effectively with terrestrial broadband systems.
Finally, by combining the investments of both companies and standardizing the
product, the fixed costs for the system will be reduced by 50%, providing a more
competitive and compelling product to the American consumer.


                                       16


In connection with the proposed transactions, General Motors Corporation (GM),
Hughes Electronics Corporation (Hughes) and EchoStar Communications Corporation
(EchoStar) intend to file relevant materials with the Securities and Exchange
Commission, including one or more Registration Statement(s) on Form S-4 that
contain a prospectus and proxy/consent solicitation statement. Because those
documents will contain important information, holders of GM $1-2/3 and GM Class
H common stock are urged to read them, if and when they become available. When
filed with the SEC, they will be available for free at the SECs website,
www.sec.gov, and GM stockholders will receive information at an appropriate time
on how to obtain transaction-related documents for free from General Motors.
Such documents are not currently available.

General Motors and its directors and executive officers, Hughes and certain of
its officers, and EchoStar and certain of its executive officers may be deemed
to be participants in GMs solicitation of proxies or consents from the holders
of GM $1-2/3 common stock and GM Class H common stock in connection with the
proposed transactions. Information regarding the participants and their
interests in the solicitation was filed pursuant to Rule 425 with the SEC by
EchoStar on November 1, 2001 and by each of GM and Hughes on November 16, 2001.
Investors may obtain additional information regarding the interests of the
participants by reading the prospectus and proxy/consent solicitation statement
if and when it becomes available.

This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.

Materials included in this document contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause our actual results to be materially different
from historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of GM,
Hughes, EchoStar, or a combined EchoStar and Hughes, to differ materially, many
of which are beyond the control of EchoStar, Hughes or GM include, but are not
limited to, the following: (1) the businesses of EchoStar and Hughes may not be
integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; (2) expected benefits and synergies from
the combination may not be realized within the expected time frame or at all;
(3) revenues following the transaction may be lower than expected; (4) operating
costs, customer loss and business disruption including, without limitation,
difficulties in maintaining relationships with employees, customers, clients or
suppliers, may be greater than expected following the transaction; (5)
generating the incremental growth in the subscriber base of the combined company
may be more costly or difficult than expected; (6) the regulatory approvals
required for the transaction may not be obtained on the terms expected or on the
anticipated schedule; (7) the effects of legislative and regulatory changes; (8)
an inability to obtain certain retransmission consents; (9) an inability to
retain necessary authorizations from the FCC; (10) an increase in competition
from cable as a result of digital cable or otherwise, direct broadcast
satellite, other satellite system operators, and other providers of subscription
television services; (11) the introduction of new technologies and competitors
into the subscription television business; (12) changes in labor, programming,
equipment and capital costs; (13) future acquisitions, strategic partnership and
divestitures; (14) general business and economic conditions; and (15) other
risks described from time to time in periodic reports filed by EchoStar, Hughes
or GM with the Securities and Exchange Commission. You are urged to consider
statements that include the words may, will, would, could, should, believes,
estimates, projects, potential, expects, plans, anticipates, intends, continues,
forecast, designed, goal, or the negative of those words or other comparable
words to be uncertain and forward-looking. This cautionary statement applies to
all forward-looking statements included in this document.