DIRECTV 2011 Annual Report Download - page 31

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DIRECTV
• More closely align a channel’s value with the costs we pay. failure could have on our ability to provide service. However, programming
continuity cannot be assured in all instances or in the event of multiple satellite
• Obtain rights for new value-added video services such as rights to losses. Launch insurance typically covers the time frame from ignition of the launch
offer our customers 3D, mobile and streaming services. vehicle through separation of the satellite from the launch vehicle. In the past, we
• Package channels to better align the programming that our have launched satellites without insurance. As of December 31, 2011, the net book
customers want to watch with what they are willing to pay for. value of DIRECTV U.S.’ in-orbit satellites was $1,528 million, all of which was
uninsured.
• Secure greater flexibility regarding tiering and packaging of
content and/or channels. Digital Broadcast Centers. To gather programming content, ensure its
digital quality, and transmit content to our satellites, we have two digital broadcast
• Discontinue carrying less popular channels if we are unable to centers, located in Castle Rock, Colorado and Los Angeles, California. These
negotiate fair terms and conditions. facilities provide the majority of our national and local standard-definition and HD
•Capture Enterprise-Wide Productivity Improvements. Our objective is to programming. We also have six uplink facilities which are used to provide HD local
deliver the best video experience at the lowest possible cost. Our goal is channels. Our broadcast centers receive programming from content providers via
to manage our costs and in particular to capture productivity satellite, fiber optic cable and/or special tape. Most satellite-delivered programming
improvements which will not only reduce costs, but also improve call is then digitized, encoded and transmitted to our satellites. We designed each
center performance, field operations such as installations and repairs, broadcast center and uplink facility with redundant systems to minimize service
retention and customer satisfaction. interruptions.
Installation Network. The DIRECTV Home Service Provider, or HSP,
Infrastructure
network performs customer installation, upgrade, and service call work for us. From
Satellites. We currently have a fleet of twelve geosynchronous satellites, 2008 to 2010, we completed several transactions that brought a significant portion
including eleven owned satellites and one leased satellite. We have seven Ku-Band of this HSP network activity in-house. We now directly employ nearly 5,000
satellites at the following orbital locations: 101WL (three), 110WL (one), 119technicians and utilize an additional 10,000 technicians from five outsourced
WL (one), 95WL (one-leased) and one spare satellite that is currently moving companies around the United States. The combined workforce completed
from 72.5WL to 110WL. We also have five Ka-Band satellites at our 99WL approximately 90% of all in-home visits in 2011. We set quality standards for all
(two) and 103WL (three) orbital locations. installation, upgrade, and service work, perform quality control procedures against
those standards, manage network inventory levels, and monitor overall network
We have entered into contracts for the construction and launch of two new
performance for nearly all of the installation and service network.
satellites: D14, which we expect to launch in the first quarter of 2014, and D15,
which we expect to launch in the fourth quarter of 2014. D14 and D15 are Customer Service Centers. As of December 31, 2011, we utilized 49
expected to provide additional HD, replacement and backup capacity. customer service centers employing over 18,000 customer service representatives.
Most of these customer service centers are operated by Convergys Customer
Satellite Risk Management. We may purchase in-orbit and launch insurance
Management Group, Inc., Alorica, Inc., Sitel Operating Corporation, N.E.W.
to mitigate the potential financial impact of in-orbit and satellite launch failures
Customer Service Companies, Inc., VXI Global Solutions, Inc. and
unless the premium costs are considered to be uneconomical relative to the risk of
Teleperformance. We currently own and operate six customer service centers located
satellite failure. The insurance generally covers the unamortized book value of
in: Boise, Idaho; Tulsa, Oklahoma; Huntsville, Alabama; Missoula, Montana;
covered satellites. We do not insure against lost revenues in the event of a total or
Huntington, West Virginia; and Denver, Colorado that employ approximately 4,000
partial loss of the capacity of a satellite. We generally rely on in-orbit spare satellites
customer service representatives. Potential and existing subscribers can call a single
and excess transponder capacity at key orbital slots to mitigate the impact a satellite
7