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EchoStar Takes Controlling Equity Stake in StarBand

EchoStar Communications Corp. has increased its equity stake in StarBand Communications, Inc., to a 32 percent ownership position, which will increase to 60 percent upon commencement of the construction of StarBand's next generation satellite. EchoStar, the parent company of pay television provider Dish Network, is an original investor and one of the largest distribution channels for StarBand, the nation's first satellite-delivered Internet service.

In exchange for its increased equity stake, the Littleton, Colo.-based EchoStar will invest an additional $50 million in cash in the Reston, Va.-based StarBand. Gilat Satellite Networks Ltd. will provide EchoStar with proprietary satellite design technology and the engineering expertise necessary to construct and operate Starband's satellite, which will be suited for two-way, high-speed Internet access. Construction of the satellite is expected to begin by the end of this year.

EchoStar will have four out of seven seats on the StarBand board of directors, and Gilat Satellite Networks Ltd. will have the three remaining board seats. Gilat has designated current StarBand directors, Feldman, Yoel Gat, chairman of Gilat, and Brian Friedman of ING Furman Selz Investments as directors of StarBand.

The agreement continues EchoStar's strategy to offer a complete bundled package of Internet, programming and interactive television services to its more than 6 million U.S. Dish Network customers.

"We are very excited that EchoStar has reinforced its commitment to StarBand with increased funding and critical infrastructure investment," said Zur Feldman, StarBand's co-chairman and chief executive officer (CEO). "EchoStar's Dish Network is a company that provides StarBand with strong distribution, satellite expertise, attractive product bundling opportunities and first-hand knowledge about how to grow quickly and efficiently."

StarBand recently announced the launch of its third-generation product, the StarBand Model 360 satellite modem that provides greater connectivity options than its predecessor, the StarBand Model 180. Dish Network retailers will begin selling the StarBand Model 360 later this month.

"Our investment in StarBand is an investment in the future of our customers," said Charlie Ergen, chairman and CEO of EchoStar. "StarBand is a true national solution for consumers seeking high-speed Internet and satellite TV, all on a single dish and at one price. StarBand was first to market last year with two-way satellite delivery of the Internet and has since proven the reliability of its technology and the strength of consumer demand."

Founded early last year, StarBand's investors and strategic partners include EchoStar, Gilat, Microsoft Corp., and ING Furman Selz Investments. StarBand has exclusive rights to Gilat's two-way high-speed Internet technology to consumers in the United States and Canada.