Firms tap potential of high-speed Web access via satellite

GERMANTOWN, Maryland (AP) -- For consumers in remote areas of the nation, the brightest hope for quickly joining the next Internet revolution is sky-high.

A handful of companies are behind an aggressive effort to use satellites to beam down Web pages at speeds dozens of times faster than standard dial-up connections.

Satellites, with their high capacity and nearly blanket coverage, could increase the stakes in the race toward "always on" Internet services for homes and businesses. That market is now dominated by cable and phone companies that use their lines to link consumers to the Web at quick speeds.

Satellite Internet providers still see an open playing field. Many areas now lack the upgraded cable lines needed for two-way online access or are too far for the phone company to offer high-speed Internet services known as digital subscriber line service, or DSL, to consumers.

That leaves out millions of potential consumers living outside major metropolitan areas.

"Many people can't get DSL and cable where they are and satellite provides them with that option," said Sean Badding of the market research firm The Carmel Group. "It's very, very attractive right now for people in rural areas."

The companies also are looking to combine Internet access with the already popular satellite television packages that offer hundreds of channels to viewers.

"It's a very dynamic world we want to head toward," said Paul Gaske, general manager at the consumer division of Hughes Network Systems, the makers of the DirecPC Internet satellite service.

At the Hughes facility in this Washington suburb, the company has developed a new two-way version of DirecPC to let users send and receive Web content via satellite.

Consumers transmit information to an orbiting satellite that passes it along to the Germantown operations center. The center retrieves information from the Internet and sends it back to the consumer's dish antenna via satellite. From the dish, cables run to a special satellite modem hooked up to the computer.

The existing DirecPC model, which costs $149.99 for the dish and modem, is only one way and still requires consumers to use a phone line to send out material. The most popular Internet access plan costs an additional $49.99 a month.

Another dish, priced at $199.99 and called the DirecDuo, can receive both Internet and programming from DirecTV -- the satellite TV service offered by Hughes. Prices have not been set yet for the two-way Internet service, which will be available by year's end.

As time goes on, and through the use of bigger networks of satellites, companies hope to boost their speeds even higher. The only major prerequisite is a clear view of the southern sky.

"The only thing they need to do to qualify for our service is just look up," said Zur Feldman, chief executive officer of StarBand Communications, which unveiled its satellite Internet service last week.

StarBand is a joint venture of Gilat Satellite Networks, Microsoft and EchoStar Communications, the nation's No. 2 satellite television company.

EchoStar is introducing a package that combines its Dish satellite television service with StarBand Internet access, both delivered to consumers via an oblong-shaped antenna dish that measures 24 inches by 36 inches.

The dish and modem cost $399, with installations beginning at $199, and will be available from retailers around Thanksgiving. Internet access costs $69 a month, with discounts for Dish subscribers. StarBand also is sold through RadioShack, which packages the service with a PC specially equipped to receive satellite transmission.

In the short term, price could be a barrier to widespread adoption of satellite service, analysts say, even though the companies might be offering a product in areas consumers cannot currently get them.

"The price points have to come down dramatically to entice people who reside on the other side of the divide," said Jose Del Rosario, strategic analyst at Frost & Sullivan. "Currently it's expensive relative to dial-up modems."

The Carmel Group estimates that satellite service will capture 10 percent of the U.S. high-speed Internet market by 2005, with more than 3 million subscribers.

The potential for international use could be even greater, particularly in countries that don't have existing phone or cable lines in the ground to offer Internet service.

Copyright 2000 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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The Carmel Group
Hughes Network Systems
StarBand Communications Inc.
Gilat Satellite Networks
Microsoft
EchoStar Communications Corporation
Frost & Sullivan

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