DIRECTV 2005 Annual Report Download - page 22

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THE DIRECTV GROUP, INC.
Launch insurance typically covers the time frame from ignition of the launch vehicle through
separation of the satellite from the launch vehicle. In the past, DIRECTV U.S. has launched satellites
without insurance. DIRECTV U.S. has been evaluating whether to purchase launch insurance for the
three satellites it expects to launch in 2006 and 2007 and will make a final determination on the
satellites based on information relating to premiums for such insurance and other considerations. We
do not currently expect to purchase in-orbit insurance for these satellites. As of December 31, 2005,
DIRECTV U.S. had in-orbit insurance coverage for an aggregate amount of approximately $447 million
for two of its in-orbit satellites.
Digital Broadcast Centers. To gather programming content, ensure its digital quality, and transmit
content to its satellites, DIRECTV U.S. built two digital broadcast centers, located in Castle Rock,
Colorado and Los Angeles, California. These facilities provide the majority of our national and local
standard-definition and HD programming. We have also built uplink facilities in Oakdale, Minnesota
and Winchester, Virginia, which are primarily used to provide new HD channels. Three additional
uplink centers are being built so that we may continue to expand DIRECTV U.S. local HD
programming. Programming is received by DIRECTV U.S.’ broadcast centers from content providers
via satellite, fiber optic cable and/or special tape. Most satellite-delivered programming is then
digitized, encoded and transmitted to DIRECTV U.S.’ satellites. Each broadcast center was designed
with redundant systems to minimize service interruptions.
Installation Network. DIRECTV HOME SERVICES↧ installation and service network performs
installation, upgrades and other service call work for DIRECTV U.S. As of December 31, 2005, home
service providers performed approximately 85% of all service calls through 11 outsourced companies
with over 14,000 technicians around the United States. In addition, DIRECTV U.S. and its retailers
also utilize employer-based or contract installation providers, which perform the remainder of all new
professional subscriber installations. DIRECTV U.S. sets the quality of installation and service
standards, performs quality control, manages inventory and monitors the overall service network
performance for nearly all of the third party installation network.
Customer Service Centers. As of December 31, 2005, DIRECTV U.S. used 22 customer service
centers employing nearly 15,000 customer service representatives. Most of these customer service
centers, which employ approximately 10,500 customer service representatives, are operated by
Convergys Customer Management Group, Inc., Precision Response Corporation, ClientLogic Operating
Corporation and N.E.W Customer Service Companies, Inc. DIRECTV U.S. currently owns three
customer service centers located in Boise, Idaho, Tulsa, Oklahoma and Huntsville, Alabama that
employ approximately 4,200 customer service representatives. A fourth DIRECTV owned and operated
customer service center is scheduled to open in Missoula, Montana in 2006. Potential and existing
subscribers can call a single telephone number 24 hours a day, seven days a week, to request assistance
for hardware, programming, installation and technical support. DIRECTV U.S. continues to increase
the functionality of telephone-based and web-based self-care features in order to better manage
customer service costs and improve service levels.
NRTC and Pegasus Transactions
Pursuant to an agreement entered into in 1992 with the National Rural Telecommunications
Cooperative, or NRTC, the NRTC had the exclusive right to distribute DIRECTV services transmitted
from 27 of the 32 frequencies located at 101 WL to subscribers located primarily in rural areas of the
United States. The NRTC separately contracted with its members and affiliates, including Pegasus
Satellite Television, Inc., or Pegasus, to provide them with rights to market and sell these services. The
NRTC paid DIRECTV U.S. a fee on the revenues from these services. DIRECTV U.S. had also
separately contracted with the NRTC and Pegasus, the NRTC’s largest affiliate, and permitted each of
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