4 billion of cash andmarketable securities

However Fitch expects thiseffect to be offset by higher customer retention and service spending as well ashigher costs related to satellite transmission expenses and equipment purchasesin connection with the spin-off of assets to EchoStar. Key to DISH's continued EBITDA and free cash flow growth is its ability tocontrol subscriber churn while balancing retention spending and new customeracquisition costs with overall subscriber profitability. Subscriber churnincreased 8 basis points during the third quarter of 2008 relative to the sameperiod last year to 2.02, which when combined with an 8.7 year-over-yearreduction of gross additions, led to a subscriber decline of 10,000 during thethird quarter. The higher churn rate continues to be driven by a combination ofeconomic, competitive and operational factors, including piracy and fraud.

Additionally, in a high subscriber churnenvironment, Fitch believes that it may prove difficult for DISH to expand ARPUas the company uses price discounts to drive subscriber volume. Fitch believes that DISH's liquidity position is constrained given the company'slarge cash requirements during 2008. Significant uses of cash during the firstnine months of 2008 include: the transfer of approximately $1.5 billion of cashand marketable securities to EchoStar Corporation in connection with thespin-off, $712 million related to DISH's acquisition of 700 MHz spectrum in theFCC's auction, $500 million related to the redemption of the company's 3subordinated convertible notes due 2010. Additionally during the fourth quarterof 2008, DISH used additional cash to fund the redemption of DDBS's 5.75 seniornotes ($971 million) and the settlement related to the Tivo litigation ($105million of restricted cash was released from an escrow account).

These cash useswere partially offset by the issuance of $750 million of senior notes and freecash flow generation As of Sept. 30, 2008, DISH had a total of approximately $1.4 billion of cash andmarketable securities. Considering DISH's use of approximately $971.6 million ofcash to retire DDBS's 5.75 senior notes due 2008, the company's pro forma cashand marketable security position as of Sept 30, 2008 is approximately $461million. This amount of cash is materially below historical levels, and thecompany does not maintain a revolver.