DIRECTV 2004 Annual Report Download - page 14

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THE DIRECTV GROUP, INC.
The receiving equipment consists of a small receiving satellite dish antenna, a digital set-top receiver and a remote control,
which is referred to as a DIRECTV® System. After acquiring and installing a DIRECTV System, customers activate DIRECTV
U.S.’ service by calling DIRECTV U.S. and subscribing to one of DIRECTV U.S.’ programming packages.
Key Strengths
DIRECTV U.S. is our principal business and is characterized by the following key strengths:
•
Large Subscriber Base. DIRECTV U.S. is the largest provider of DTH digital television services and the second
largest MVPD provider in the United States, in each case based on the number of subscribers. DIRECTV U.S. believes
that its large subscriber base provides it with the opportunity to obtain programming on favorable terms and secure
unique and exclusive programming. DIRECTV U.S. also believes that its large subscriber base contributes to
achieving other economies of scale in areas such as DIRECTV System equipment purchasing, customer service and
broadcast operations.
•
Leading Brand Name. Results from a study DIRECTV U.S. commissioned in 2004 indicated that over 85% of
consumers in the U.S. are aware of the DIRECTV service. DIRECTV U.S. believes the strength of its brand is an
important factor in its ability to attract new customers. In addition, DIRECTV U.S. believes its recognized brand name
enhances its ability to secure strategic alliances with programmers, distributors and other technology and service
providers.
•
High-Quality Digital Picture and Sound. DIRECTV U.S.’ video and audio programming is 100% digitally
delivered, providing customers with digital-quality video pictures and CD-quality sound. We believe this compares
favorably with 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.
•
Substantial Channel Capacity and Programming Content. As a result of its significant channel capacity,
DIRECTV U.S. believes it is able to deliver to its customers one of the widest selections of local and national
programming available today in the United States, including exclusive programming such as the NFL SUNDAY
TICKET package and international programming such as the DIRECTV PARA TODOS® service, which is designed
for Spanish-speaking customers in the United States.
•
Superior Customer Service. DIRECTV U.S. has attained top rankings in customer satisfaction studies for its
industry, including being ranked #1 among satellite and cable TV companies for the last three years according to the
American Customer Satisfaction Index conducted by the University of Michigan. DIRECTV U.S. believes that
providing high-quality customer service is an important element in minimizing its subscriber disconnection, or churn,
and attracting new subscribers.
•
Valuable Orbital Slots and Satellite-Based Technology. DIRECTV U.S. believes its regulatory authorization to
use desirable orbital slots and broadcast spectrum helps sustain its position as one of the leading companies in the
MVPD industry. The FCC has designated three direct broadcast satellite, or DBS, orbital slots in the Ku-Band
spectrum that provide full coverage across the 48 contiguous states of the United States, often referred to as CONUS
coverage. Within these three orbital slots, there are 96 assigned DBS frequencies. DIRECTV U.S. holds licenses to
broadcast its services from 46 of these 96 DBS frequencies. In addition, we hold additional licenses in the Ka-Band
spectrum which DIRECTV U.S. intends to use primarily for the broadcast of high-definition programming.
DIRECTV U.S.’ satellite-based service provides it with many advantages over ground-based cable television services,
including the ability to distribute hundreds of channels to millions of recipients nationwide with minimal incremental
infrastructure cost per additional subscriber, comprehensive coverage to areas with low population density in the United
States and the ability to quickly introduce new services to a large number of customers.
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