DIRECTV 2010 Annual Report Download - page 32

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DIRECTV
•Enhance Programming Features. We believe that we can differentiate our In most of the markets in which we operate, cable television is our principal
service from that of our competitors through the use of enhanced features competition. Cable operators typically offer analog services for lower monthly fees
such as interactivity. For example, we first offered interactive services for and with lower upfront installation and connection fees than we do. In addition,
soccer matches from the 2006 FIFA World Cup and provided similar the cable operators with which we compete are in various stages of upgrading their
features for the 2010 FIFA World Cup. We have offered similar interactive networks in order to provide broadband and telephony services, and in some
services for the U.S. Open娃 and Major League Baseball威. markets the major cable operators are competing with us based principally on their
offer of a ‘‘triple play’’ bundle of video, broadband and telephony services. In most
•Tailored Offerings. Additionally, our strategy includes expanding into the cases, they discount the value of their programming services in order to sell
rapidly growing middle class market within the region by tailoring our offers broadband and telephony services, which can adversely affect the attractiveness of
and products accordingly. Typically, these offers and products are similar to our offers to subscribers.
our traditional ones except they allow subscribers access to significantly
fewer channels and limit the number of set-top boxes a subscriber may have In addition to competition from cable services, we face increasing competition
in their home. We believe these offers and products provide affordable from other providers of DTH services. Telefonica, the Spanish telephone company,
access to our service to value-focused subscribers. provides DTH services in Peru, Chile, Brazil, Colombia and Venezuela. Telmex
provides DTH service in Chile and Peru, and in 2009 it launched services in Brazil
Infrastructure through its affiliate, Embratel. Oi, the second fixed line incumbent in Brazil (in
addition to Telefonica), launched a DTH service in 2009. Also, in Mexico a joint
We provide services in PanAmericana and Brazil from leased transponders on venture of EchoStar Corp. and MVS Comunicaciones launched a new DTH service
two satellites. Sky Mexico provides its services from leased transponders on a in 2009, with substantial commercial support and cooperation from Telmex, which,
separate satellite. In addition, we lease a backup satellite that serves Sky Brazil and due to regulatory restrictions, is not currently permitted to provide its own video
Sky Mexico. services in Mexico. These competitors have significant resources and have proven
Our principal digital broadcast centers are located in the United States and their ability to grow their businesses rapidly. They typically seek to focus on
Brazil. We also have several smaller satellite uplink facilities in the region. offering lower-cost, limited services packages in support of their telephony and
broadband offerings, which can increase our churn and put pressure on our
We typically have self-contained customer service centers in each of the margins. Also, the existence of multiple DTH operators in a single market dilutes
countries we operate. In addition, we operate two pan-regional centers located in our ability to market our DTH service as an alternative to cable, traditionally our
Colombia that provide primary and backup customer service support to most of the principal competition.
PanAmericana region.
In a number of markets, existing wireline telephony operators have announced
Competition their intention to upgrade their infrastructure in order to provide new and
enhanced services, including video programming. These and other companies have
The pay television and other emerging broadband video and data markets in announced plans to build wireless broadband networks that will also be capable of
Latin America are highly competitive. In each of our markets, we compete primarily delivering broadband, telephony and video services. However, to date only a very
with other providers of pay television, which distribute their programming by small number of such upgrades and build outs have been actively pursued on other
satellite, cable, terrestrial microwave systems, traditional over-the-air broadcasting or than a test basis.
the Internet. In addition, in certain markets we face significant competition from
illegal and informal sector pay television operations. We compete primarily on the
basis of programming selection, price, technology and quality.
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