DIRECTV 2002 Annual Report Download - page 16

HUGHES ELECTRONICS CORPORATION
•High-Quality Digital Picture and Sound. DIRECTV’s video and audio programming is 100%
digitally delivered, providing customers with digital-quality video pictures and CD-quality
sound. This compares favorably with those cable providers that continue to offer popular
programming in an analog format and only offer a limited selection of digital channels for an
additional fee.
•Superior Customer Service. DIRECTV has been recognized for attaining top rankings in
studies measuring customer service performance in its industry. For example, DIRECTV
ranked “#1 in Customer Satisfaction Among Satellite/Cable TV Subscribers” according to the
J.D. Power and Associates 2002 Syndicated Residential Cable/Satellite TV Customer
Satisfaction StudySM. DIRECTV believes that providing high-quality customer service is an
important element in reducing its churn rate and attracting new subscribers. DIRECTV has
approximately 7,200 customer service representatives in 10 locations. DIRECTV’s customer
service representatives are available by telephone 24 hours a day, 7 days a week to handle
account payments, subscriptions for new services or programming, activation, technical
troubleshooting, billing questions and other customer requests.
•Market Leadership. Hughes believes that its global leadership positions in its target
markets—digital multi-channel entertainment and information, satellite transponder leasing and
private business networks—enable it to achieve economies of scale. The entertainment,
information and communications services businesses generally are characterized by higher
upfront fixed costs with relatively lower variable operating costs. A market leadership position
enables some of the costs of developing expanded services, such as infrastructure costs, to be
spread across a larger customer base allowing for a more affordable service for customers and
a more profitable service for Hughes.
•Global Spectrum, Orbital Slots and Satellite Technology Advantages. Operation of an
international satellite fleet requires significant international and U.S. regulatory approvals.
Hughes considers its regulatory authorization to use desirable broadcast spectrum and its
orbital slots to be a competitive advantage. For example, DIRECTV has licenses to broadcast
its services from 46 frequencies (out of a total of 96 DBS assigned frequencies) over the
continental United States. In addition, Hughes believes that PanAmSat’s global transmission
capability, especially its ability to transmit signals among many of the world’s major regions,
utilizing 16 orbital slots as of December 31, 2002, provides it with a competitive advantage over
commercial competitors who operate satellite fleets limited to regional coverage.
Hughes also believes that satellite-based service offerings have inherent competitive
advantages over ground-based services for many applications. These include:
• the ability to economically broadcast hundreds of channels to millions of recipients over very
wide geographic areas through a single supplier with little incremental cost per end user;
• the potential for low cost, two-way communications to areas of low population density; and
• the ability to roll-out new services to a large number of customers quickly.
Hughes believes that its ability to develop leading satellite technologies has helped it become a
leader in each of its businesses, and it intends to continue to develop new technologies to
maintain these leadership positions.
•Comprehensive Portfolio of Global Satellite Services. Hughes believes that its presence in
several major segments of the entertainment, information and communications services
industry provides it with operating synergies and allows it to respond to the latest industry
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