DIRECTV 2006 Annual Report Download - page 20

THE DIRECTV GROUP, INC.
manage inventory and monitor the overall service network performance for nearly all of the third party
installation network.
Customer Service Centers. As of December 31, 2006, we used 31 customer service centers
employing over 17,000 customer service representatives. Most of these customer service centers are
operated by Convergys Customer Management Group, Inc., Precision Response Corporation,
ClientLogic Operating Corporation and N.E.W. Customer Service Companies, Inc. We currently
operate four customer service centers located in: Boise, Idaho; Tulsa, Oklahoma; Huntsville, Alabama;
and Missoula, Montana that employ approximately 4,200 customer service representatives. 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, technical and other support. We continue 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.
Competition
We face substantial competition in the MVPD industry and from emerging digital media
distribution providers. Our competition includes companies that offer video, audio, interactive
programming, telephony, data and other entertainment services, including cable television, other DTH
companies, RBOCs, wireless companies and companies that are developing new technologies. Many of
our competitors have access to substantially greater financial and marketing resources. We believe our
brand, the quality and variety of video, audio and interactive programming, quality of picture, access to
service, availability of a broadband Internet service, customer service and price are the key elements for
attaining and retaining subscribers.
•Cable Television. We encounter substantial competition in the MVPD industry from cable
television companies. Most cable television operators have a large, established customer base,
and many have significant investments in companies that provide programming content.
According to the National Cable & Telecommunications Association’s Mid-Year 2006 Industry
Overview, 108 million of the 110 million U.S. television households, or 99%, are passed by cable.
Of the 110 million U.S. television households, approximately 94 million subscribe to a MVPD
service and approximately 69% of MVPD subscribers receive their programming from a cable
operator. In addition, most cable providers have completed network upgrades that allow for
enhanced service offerings such as digital cable, HD local channels, broadband Internet access
and telephony services. Cable companies bundle these services with their basic services, offering
discounts and providing one bill to the consumer.
•Other Direct Broadcast Satellite and Direct-To-Home Satellite System Operators. We also compete
with EchoStar Communications Corporation, which had about 13 million subscribers at the end
of 2006, representing approximately 14% of MVPD subscribers. Other domestic and foreign
satellite operators also have proposed to offer DTH satellite service to U.S. customers using
U.S.-licensed satellite frequencies or foreign-licensed frequencies that have the ability of covering
the United States. SES Americom, Inc., for example, is the licensee of U.S. frequencies that can
be used to offer DTH service, and has petitioned the FCC for a declaratory ruling to allow it to
provide service using frequencies assigned to it by the Government of Gibraltar and the United
Kingdom.
•Regional Bell Operating Companies. Several RBOCs have started to upgrade their infrastructure
by replacing their older copper wire telephone lines with high-speed fiber optic lines. These fiber
lines provide the RBOCs with significantly greater capacity enabling them to offer new and
enhanced services, such as Internet access at much greater speeds and video. For example,
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