Shaw 2012 Annual Report Download - page 37

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Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2012
ŠReliance on suppliers
ŠProgramming expenses
ŠUnionized labour
ŠHolding company structure
ŠControl of the Company by the Shaw family
ŠInformation systems and internal business processes
ŠDividend payments
ŠAcquisitions and other strategic transactions
i) Competition and technological change
Cable and satellite providers and television broadcasters operate in an open and competitive
marketplace. Shaw’s businesses face competition from regulated and unregulated entities
utilizing existing or new communications technologies and from illegal services. In addition, the
rapid deployment of new technologies, services and products has reduced the traditional lines
between telecommunications, Internet and broadcasting services and expands further the
competitive landscape. Shaw may face competition in the future from other technologies being
developed or yet to be developed. While Shaw continually seeks to enhance its competitive
position through investments in infrastructure, technology, programming and customer service,
there can be no assurance that these investments will be sufficient to maintain Shaw’s market
share or performance in the future.
CABLE TELEVISION AND DTH
Shaw’s cable television and DTH systems currently compete or may in the future compete with
other distributors of video and audio signals, including other DTH satellite services, satellite
master antenna systems, multipoint distribution systems (“MDS”), other competitive cable
television undertakings and telephone companies offering video service. To a lesser extent,
Shaw’s cable television systems compete with the direct reception by antenna of unencrypted
OTA local and regional broadcast television signals. As noted above, Shaw also competes with
unregulated internet services, illegal satellite services including grey and black market
offerings, and unregulated video services and offerings available over high-speed internet
connections.
Almost all of Shaw’s cable television systems are concentrated in major urban markets, having
favourable demographics and growth potential, with most of the remainder in smaller clusters,
linked by fibre optic distribution systems to each other or to larger markets. Through this
clustering strategy, Shaw maximizes the benefits of operating efficiencies to strengthen its
competitive position in smaller markets. In addition, Shaw continues to invest in technologies
to increase channel capacity, to expand the range and quality of its services, and to enhance its
programming and communication service offerings. Shaw’s ability to offer its cable, internet
and telecommunications services in bundles allows for strong competitive offerings. The
Company expects that competition will continue to increase and there can be no assurance that
such increased competition will not have a material adverse effect on Shaw’s results of
operations. The Company also expects increased IPTV competition across Canada with respect
to its DTH Satellite services.
INTERNET
There are a number of different types of ISPs offering residential and business Internet services
that compete or may compete in the future with Shaw’s Internet services. These include
independent service providers, ILECs, wireless providers and electricity transmission and
distribution companies.
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