Shaw 2011 Annual Report Download - page 11

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Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2011
B. Description of the business
(i) Cable
Shaw’s Cable operations provide Cable television, Internet, and Digital Phone services to
residential and business customers. These services are delivered through an extensive fibre
optic and co-axial cable distribution network.
Shaw’s strategy is to leverage its network by providing additional services beyond traditional
cable television. 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 enabled Shaw to leverage its
existing network and expand its service offerings to include digital programming, On Demand
programming, High Definition (“HD”) television including three dimensional (“3D”) HD,
Internet, and Digital Phone. During 2011 Shaw commenced a major upgrade of its network to
convert television analog tiers to digital (the Digital Network Upgrade “DNU”). This upgrade is
expected to triple the capacity of the Shaw network and allow the Company to expand its
Internet, HD and On Demand offerings. Shaw’s investments in plant infrastructure will
accommodate further growth opportunities. Shaw continues to invest in technology initiatives to
recapture bandwidth and optimize its network, including increasing the number of nodes on the
network and using advanced encoding and digital compression technologies such as MPEG-4.
To take advantage of potential administrative, operating and marketing synergies that arise from
larger, focused operations, Shaw has consolidated its position as the dominant provider of cable
services in Western Canada. Approximately 71% of the Company’s cable television subscribers
are clustered in and around five major urban markets in Western Canada: Vancouver and
Victoria, British Columbia; Calgary and Edmonton, Alberta; and Winnipeg, Manitoba. The
balance of Shaw’s subscribers are mainly in smaller regional 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/ Hamilton, Ontario.
Shaw continues to acquire cable systems to complement its cable “clustering” strategy. During
fiscal 2011 Shaw completed the acquisition of Lake Broadcasting and Sun Country Cablevision
cable systems located in the interior region of British Columbia. During fiscal 2010 Shaw
completed the acquisition of Mountain Cablevision, a cable system located in Hamilton,
Ontario, and in 2009 Shaw acquired the cable system located in and around Campbell River,
British Columbia.
Shaw has a customer-centric strategy designed to deliver high-quality customer service,
simplicity and value to its customers through various bundled service offerings for its video,
Internet and Digital Phone services. 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 additional services offered in a bundle; and operational efficiencies
through centralized billing and customer care.
A more detailed description of each of the principal operations comprising the Company’s Cable
Segment is set forth below.
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