DIRECTV 2010 Annual Report Download - page 29

DIRECTV
have launched satellites without insurance. As of December 31, 2010, the net book Competition
value of DIRECTV U.S.’ in-orbit satellites was $1,724 million, none of which is We face substantial competition in the MVPD industry and from emerging
insured. digital media distribution providers. Our competition includes companies that offer
video, audio, interactive programming, telephony, data and other entertainment
Digital Broadcast Centers. To gather programming content, ensure its
services, including cable television, other DTH companies, telcos, wireless
digital quality, and transmit content to our satellites, we have built two digital
companies and companies that are developing new technologies, including online
broadcast centers, located in Castle Rock, Colorado and Los Angeles, California.
video distributors, or OVDs. Many of our competitors have access to substantially
These facilities provide the majority of our national and local standard-definition
greater financial and marketing resources. We believe our brand, the quality and
and HD programming. We have also built five uplink facilities which are used to
variety of video, audio and interactive programming, quality of picture, access to
provide HD local channels. Our broadcast centers receive programming from
service, availability of HD and DVR services, customer service and price are the key
content providers via satellite, fiber optic cable and/or special tape. Most satellite-
elements for attaining and retaining subscribers. Our over 19.2 million subscribers
delivered programming is then digitized, encoded and transmitted to our satellites.
represent approximately 19% of MVPD subscribers at December 31, 2010.
We designed each broadcast center and uplink facility with redundant systems to
minimize service interruptions. •Cable Television. We encounter substantial competition in the MVPD
industry from cable television companies. According to the National
Installation Network. The DIRECTV Home Service Provider, or HSP, Cable & Telecommunications Association’s 2008 Industry Overview, 96% of
network performs customer installation, upgrade, and service call work for us. From the 128.6 million U.S. housing units are passed by cable. Most cable
2008 to 2010, we entered into several transactions that brought a significant television operators have a large, established customer base, and many have
portion of this HSP network activity in-house. We now directly employ nearly significant investments in companies that provide programming content.
5,000 technicians and utilize an additional 10,000 technicians from six outsourced Approximately 100 million households subscribe to an MVPD service and
companies around the United States. The combined workforce completed approximately 60% of MVPD subscribers receive their programming from a
approximately 92% of all in-home visits in 2010. We set quality standards for all cable operator. In addition, most cable providers have completed network
installation, upgrade, and service work, perform quality control procedures against upgrades that allow for enhanced service offerings such as digital cable, HD
those standards, manage network inventory levels, and monitor overall network channels, broadband Internet access and telephony services. Cable
performance for nearly all of the installation and service network. companies bundle these services, offering discounts and providing one bill
Customer Service Centers. As of December 31, 2010, we utilized 36 to the consumer.
customer service centers employing over 17,000 customer service representatives. •Telephone Companies. Several telcos have upgraded a significant portion of
Most of these customer service centers are operated by Convergys Customer their infrastructure by replacing their older, copper wire telephone lines with
Management Group, Inc., Alorica, Inc., Sitel Operating Corporation, N.E.W. high-speed fiber optic lines. These fiber lines provide the telcos with
Customer Service Companies, Inc., VXI Global Solutions, Inc. and significantly greater capacity enabling them to offer new and enhanced
Teleperformance. We currently own and operate six customer service centers located services, such as broadband Internet access at much greater speeds and
in: Boise, Idaho; Tulsa, Oklahoma; Huntsville, Alabama; Missoula, Montana; digital- quality video. For example, Verizon announced that at the end of
Huntington, West Virginia and Denver, Colorado that employ approximately 5,000 2010, it had the capability to serve approximately 16 million homes with
customer service representatives. Potential and existing subscribers can call a single fiber optic lines with the goal of having the capability to serve 18 million
telephone number 24 hours a day, seven days a week, to request assistance for homes by the end of 2011. In addition, AT&T is deploying fiber optic lines
hardware, programming, installation, technical and other support. We continue to to neighborhoods and expects to have the capability to serve approximately
increase the functionality of telephone-based and web-based self-care features in 30 million of its homes passed by the end of 2011. As of year-end 2010,
order to better manage customer service costs and improve service levels.
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