Shaw 2009 Annual Report Download - page 11

2.3 million cable television customers in five provinces (British Columbia, Alberta, Saskatchewan,
Manitoba and northwestern Ontario), representing approximately 30% of the Canadian cable
television market.
The Canadian cable television industry has moved from a highly price regulated environment to one
based on fair and sustainable competition. In such a competitive environment, cable companies
have adopted “clustering” strategies, consolidating and realigning geographically to take
advantage of potential administrative, operating and marketing synergies that arise from larger,
focused operations. In executing its own clustering strategy, the Company has consolidated its
position as the dominant provider of cable television services in Western Canada.
Approximately 75% of the Company’s cable television subscribers are clustered in and around five
major urban markets in Western Canada: Vancouver and Victoria (Vancouver Island), British
Columbia; Calgary and Edmonton, Alberta; and Winnipeg, Manitoba. The balance of its subscribers
are mainly in smaller clusters, linked via fibre either to each other or to larger markets. These
markets include the Okanagan region, British Columbia (Kamloops, Kelowna, Penticton, Vernon);
Saskatoon/Prince Albert/Moose Jaw/Swift Current, Saskatchewan; and Thunder Bay/Sault Ste.
Marie, Ontario.
Over a number of years, Shaw has acquired and divested various cable systems to complement its
cable clusters. During fiscal 2009, Shaw announced that it had entered into an agreement to
purchase Mountain Cable, a cable system located in Hamilton, Ontario. The closing was completed
in October 2009 upon receipt of the necessary regulatory approvals. In 2009, Shaw acquired the
cable system located in and around Campbell River, British Columbia and in 2007 Shaw completed
the acquisitions of several cable systems, including Whistler Cable, Grand Forks, Wood Lake,
Lumby and Pender Island, all in British Columbia, as well as Norcom Telecommunications Limited
operating in Kenora, Ontario.
The Company’s cable television business is operated through its extensive fibre optic and co-axial
cable distribution network. Shaw’s fibre backbone and interconnect network links its cable systems
and subscribers together. Shaw receives originating television signals at its head-end sites through
satellite, transmitters, off-air antennae and microwave systems and re-transmits these signals via
its network to customers’ homes in its licensed areas. Digital cable customers receive additional
services via digital cable terminals (“DCTs”) which translate encrypted signals delivered to
customers’ homes over Shaw’s network.
Shaw’s strategy is to leverage its network by providing additional services beyond traditional cable.
In past years, it enhanced the quality, depth and capacity of its plant and network infrastructure
through significant capital investments, and the plant and network is essentially fully digital and
two-way capable. These investments have enabled Shaw to leverage its existing network and expand
its service offerings to include digital programming, Pay-Per-View (“PPV), Video-on-Demand
(“VOD”), High Definition Television (“HD”), Internet, and Digital Phone. Shaw’s continued
investment in plant infrastructure will accommodate further growth opportunities. The home
entertainment experience continues to improve with on-demand and personalization of products
and services and the Company continues to ensure that its broadband network and interactive
capabilities are being used to their full potential.
The Company offers customers attractively priced combinations of its analog video, digital video,
Internet and Digital Phone. The benefits of bundling to customers include the convenience of “one-
stop shopping” and value pricing. The benefits to Shaw include retention of existing customers
(churn reduction); attraction of new customers; incremental penetration as customers upgrade to
7
Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2009