Shaw 2014 Annual Report Download - page 12

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014
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.
Cable Television
The Company’s initial core business was cable television services, which today continues to
provide the customer base and physical infrastructure for much of the Company’s distribution
service businesses. The Company is one of the largest cable television providers in Canada. As
at August 31, 2014, Shaw served approximately 2.0 million cable television customers in five
provinces (British Columbia, Alberta, Saskatchewan, Manitoba and certain portions of Ontario).
The Company’s cable television business is operated through its extensive fibre optic and co-
axial cable distribution network. Shaw’s long haul fibre backbone and regional and metro
interconnect networks link its cable systems and subscribers together. Shaw receives originating
television signals at its various signal acquisition sites, then processes and distributes these
signals via its networks to customers’ homes in its cable serving areas. Digital cable customers
receive additional services via digital cable terminals (“DCTs”) which translate encrypted
signals delivered to customers’ homes over Shaw’s network. With the substantial completion of
the DNU, only legacy basic cable service is delivered via analog signals. Currently,
approximately 95% of Shaw’s cable customers are Digital cable customers.
Digital cable significantly expands the range of services that may be offered to a subscriber and
extends programming capacity. Digital cable also enhances picture and sound quality and
provides the platform from which Shaw has launched, and expects to continue to launch, new
revenue-generating video and interactive services. Shaw offers customers a variety of DCTs for
purchase or rent.
For its Digital subscribers, Shaw offers On Demand viewing options, including Pay-Per-View
(“PPV”), Video-on-Demand (“VOD”), and Subscription VOD (“SVOD”) services. The PPV service
allows customers to select and pay for specific programs which are available on various
channels with set start times. The VOD and SVOD services enable customers to select
programming from a library of titles through an on-line ordering system or directly through the
set-top interactive program guide, and to view the programming on their television or on-line at
a time of their choosing, with pause, skip backward and skip forward functionality. On Demand
programming includes movies, sports, concerts and other special events, with prices dependent
on the nature of the programming. Shaw also offers a wide variety of free On Demand
programming including hit TV series, movies, events, music videos and more.
Of the Company’s cable television customers, over 1.3 million have HD capabilities. Shaw
continues to launch HD channels which offer superior picture detail and sound quality in a
format that fully utilizes the capabilities of wide screen, HD ready televisions. In support of HD,
Shaw offers for purchase or rent DCTs which support the decoding and processing of HD
content, as well as DCTs which incorporate HD and Personal Video Recorder (“PVR”) features
including the Gateway whole home HDPVR solution that connects to up to six TVs in a home.
In 2012, Shaw launched the first phase of its TV Everywhere service, Shaw Go, which allows
customers streaming access to TV shows, sporting events and movies on popular mobile
devices, including WiFi enabled tablets and smartphones. The Company now has more than 10
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