DIRECTV 2010 Annual Report Download - page 46

DIRECTV
FCC is considering changes to these and other rules related to retransmission under certain circumstances, existing licenses are subject to revocation or
consent, some of which could make negotiations more difficult, increase fees modification and upon expiration, renewal may not be granted. If existing licenses
charged by broadcasters for carriage, or result in the increased withholding of are not renewed, or are revoked or materially modified, our ability to generate
broadcast signals. revenue could be materially adversely affected.
In certain cases, satellite system operators are obligated by governmental
Satellite programming signals have been stolen and may be stolen in the future, regulation and procedures of the International Telecommunications Union to
which could result in lost revenues and would cause us to incur incremental coordinate the operation of their systems with other users of the radio spectrum in
operating costs that do not result in subscriber acquisition. order to avoid causing interference to those other users. Coordination may require a
The delivery of subscription programming requires the use of conditional satellite system operator to reduce power, avoid operating on certain frequencies,
access technology to limit access to programming to only those who subscribe and relocate its satellite to another orbital location and/or otherwise modify planned or
are authorized to view it. The conditional access system uses, among other things, existing operations. For example, the FCC has conditionally granted Spectrum Five
encryption technology to protect the transmitted signal from unauthorized access. It authority to provide direct broadcast satellite service using frequencies assigned to it
is illegal to create, sell or otherwise distribute software or devices to circumvent that by the Government of the Netherlands from an orbital slot located halfway between
conditional access technology. However, theft of cable and satellite programming slots at which we currently operate. Other operators have filed similar requests. We
has been widely reported, and the access cards used in our conditional access system believe this closer proximity, if ultimately implemented, would significantly increase
have been compromised in the past and could be compromised in the future. the risk of interference which could adversely affect the quality of service provided
to our subscribers. We may not be able to successfully coordinate our satellites to
We have undertaken various initiatives with respect to our conditional access the extent we are required to do so, and any modifications we make in the course
system to further enhance the security of the DIRECTV signal. To help combat of coordination, or any inability to successfully coordinate, may materially adversely
signal theft, we provide our subscribers with more advanced access cards that we affect our ability to generate revenue. In addition, the FCC is currently conducting
believe significantly enhance the security of our signal. Currently, we believe these a rulemaking proceeding to consider, among other things, the adoption of operating
access cards have not been compromised. However, we cannot guarantee that those parameters under which such ‘‘tweener’’ systems would be automatically deemed
advanced access cards will prevent the theft of our satellite programming signals in coordinated.
the future. Furthermore, there can be no assurance that we will succeed in
developing the technology we need to effectively restrict or eliminate signal theft. If Other regulatory risks include, among others:
our current access cards are compromised, our revenue and our ability to contract • the relocation of satellites to different orbital locations if the FCC
for video and audio services provided by programmers could be materially adversely determines that relocation is in the public interest;
affected. In addition, our operating costs could increase if we attempt to implement
additional measures to combat signal theft. • the denial by the FCC of an application to replace an existing satellite with
a new satellite, or to operate a satellite beyond the term of its current
The ability to maintain FCC licenses and other regulatory approvals is critical authorization, or to operate an earth station to communicate with such
to our business. satellite;
If we do not obtain all requisite U.S. regulatory approvals for the construction, • the loss of authorizations to operate satellites on certain frequencies at
launch and operation of any of our existing or future satellites for the use of certain locations if we do not construct, launch and operate satellites for
frequencies at the orbital locations planned for these satellites or for the provision those locations by certain dates; and
of service, or the licenses obtained impose operational restrictions on us, our ability • the authorization by the United States or foreign governments of the use of
to generate revenue and profits could be materially adversely affected. In addition, frequencies by third party satellite or terrestrial facilities that have the
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