DIRECTV 2005 Annual Report Download - page 21

THE DIRECTV GROUP, INC.
•Improve Customer Service. DIRECTV U.S. believes that excellent customer service is
critical to its success and it expects to continue to focus on improving customer service in
2006. By selectively in-sourcing specific customer service functions, DIRECTV U.S. has
assumed more accountability and control of its subscribers’ experiences. In the second half
of 2004, DIRECTV U.S. opened two new owned and operated customer call centers. In
2006, DIRECTV U.S. plans to further expand its company owned and operated call centers
with the opening of at least one additional call center. DIRECTV U.S. is also continuing to
enhance its telephone-based, web-based and self-care capabilities.
•Improve Distribution. While DIRECTV U.S. expects to maintain its strong relationships
with its core retailers and dealers, it also will continue to develop and strengthen its direct
sales channels and strategic marketing alliances with RBOCs and other telephone service
providers. In addition, DIRECTV U.S. expects to significantly improve its sales and
distribution in multiple dwelling units.
Infrastructure
Satellites. DIRECTV U.S. currently uses a fleet of seven satellites to broadcast its service from its
101 WL, 103 WL, 110 WL and 119 WL orbital locations. DIRECTV U.S. also broadcasts from 72.5
WL under its arrangement with Telesat Canada, or Telesat, Industry Canada and the FCC as well as
from 95 WL using transponders on a satellite it leases. Our eighth satellite, SPACEWAY 2, which was
launched in November 2005, is expected to begin broadcasting HD services in the second quarter of
2006 from its 99 WL orbital location.
The FCC licensed DIRECTV U.S. to operate 46 DBS Ku-band frequencies at various orbital
positions including 32 frequencies at the 101 WL orbital location, 11 frequencies at the 119 WL orbital
location, and three frequencies at the 110 WL orbital location. In addition, the FCC has granted
DIRECTV U.S. Ka-band licenses for DBS operations at the 99 WL, 101 WL and 103 WL orbital
locations. In the third quarter of 2004, DIRECTV U.S. obtained final approval from Industry Canada
and the FCC to use the 72.5 WL orbital location. As a part of its arrangement with Telesat, DIRECTV
U.S. transferred two satellites, both of which were previously used as in-orbit spares, to orbital locations
controlled by Telesat for use by Telesat for its own services broadcast into Canada. DIRECTV U.S. also
relocated a third satellite to the 72.5 WL orbital location, where it broadcasts local channel services to
29 markets in the United States.
Satellites Under Construction. DIRECTV U.S. currently has four satellites under construction.
DIRECTV 9S, which is expected to launch mid-2006, will provide backup capacity at the 101 WL and
119 WL orbital locations. DIRECTV U.S. also plans to launch DIRECTV 10 and DIRECTV 11 in
2007. These two satellites will provide DIRECTV U.S. with increased capability for local and national
HD channels, as well as capacity for new interactive and enhanced services and standard-definition
programming. Once launched, these satellites will operate from our Ka-Band orbital locations. In
addition, DIRECTV 12 is being constucted and will serve as a ground spare.
Satellite Risk Management. DIRECTV U.S. uses launch and in-orbit insurance to mitigate the
potential financial impact of satellite fleet launch and in-orbit failures unless the premium costs are
considered to be uneconomical relative to the risk of satellite failure. The insurance generally does not
compensate for business interruption or loss of future revenues or subscribers. We rely on in-orbit
spare satellites and excess transponder capacity at key orbital slots to mitigate the impact of satellite
failure on our ability to provide services. However, programming continuity cannot be assured in all
instances or in the event of multiple satellite losses.
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