Shaw 2014 Annual Report Download - page 11

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014
During 2014, Shaw announced changes to the structure of its operating divisions to improve
overall efficiency while enhancing its ability to grow as the leading network and content
experience company. Shaw’s existing residential and enterprise services will be reorganized into
new Consumer and Business units, respectively, with no changes to the Media division. In
addition, in September 2014 the Company closed the acquisition of ViaWest, Inc. (“ViaWest”),
a US-based provider of data centre infrastructure, cloud technology and managed IT solutions.
ViaWest will continue to operate as a standalone unit. The Company expects to commence
reporting on the new divisions of Consumer, Shaw Business, ViaWest and Media in fiscal 2015.
The description of the Company’s operating business segments, including more specific details
for the last two fiscal years follows.
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 products and 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 have enabled Shaw to expand
its service offerings to include digital programming, On Demand programming, High Definition
(“HD”) television, Internet, WiFi, various on-line or over-the-top (“OTT”) offerings, and Digital
Phone. In 2013 Shaw substantially completed a major upgrade of its co-axial cable network to
convert analog television tier services to digital and reuse the spectrum on the cable plant for
other purposes. The reclamation initiative was referred to as the Digital Network Upgrade
(“DNU”).
This upgrade significantly increased the capacity of the Shaw network and allows the Company
to expand its Internet, HD and On Demand offerings. Shaw’s investments in plant infrastructure
will also accommodate further growth opportunities. Shaw continues to invest in technology
initiatives to reclaim bandwidth and optimize the capacity and efficiency of its network,
including increasing the number of nodes in 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 70% 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, Ontario.
In 2013, Shaw completed the disposition of Mountain Cablevision Limited (“Mountain Cable”),
a cable system located in Hamilton, Ontario.
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 Cable
television, Internet and Digital Phone services. The benefits of bundling to customers include
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