SEARCH:

advertisement


High-Speed Internet Market Race To Go Into Orbit
By Mary Motta

Senior Business Correspondent

posted: 03:16 pm ET
28 April 2000

internet_satellite_000428

WASHINGTON – The worldwide wait for getting high-speed internet access through satellites is nearly over as companies begin to roll out new services.

The most recent to enter the race for market dominance is Hughes Network Systems (HNS), a unit of Hughes Electronics. On Thursday the company said it plans to begin marketing its high-speed, two-way satellite internet service called DirecPC.

The service, to be launched by year’s end, will link personal computers on the America Online network, to the internet by satellite.

Americans’ hunger is huge for high-speed access to the internet to deliver large amounts of data over the Web for graphics, pictures, video and audio.

The number of high-speed internet users in the U.S. has more than tripled last year to 1.4 million, according to a recent study by the Yankee Group in Cambridge, Massachusetts. By 2004, the number should jump to 15.6 million.
   More Stories

Boeing To Add Net Hook-Ups to Jets


High-Flying Stock: A Public Offering For Mir

Companies have been trying to find innovative ways to provide customers with a bundled package that includes TV, internet access and eventually phone service.

While cable and Direct Subscriber Line (DSL) [phone-line] access has dominated the market, tapping into the internet via satellite could gain a significant foothold in the marketplace, analysts said.

"I am not sure if it will pull ahead of DSL and cable," said Matthew Davis, an analyst with the Yankee Group. "However, it’s a hot area and the analyst community is starting to pay attention to it."

Although cable and the DSL are veteran high-speed internet access systems, they do have vulnerable spots.

Internet service by phone would seem to be easy to install. After all, data is transmitted over copper wiring that’s already in your home.

But the problem is that the DSL is not widespread because its requires subscribers to live within at least three miles of a switching station. Such a station distributes phones lines to a local area.

What's more, older cities often have pre-World War 2 phone lines that are forcing the phone company to dig up streets and sidewalks to put in new lines.

Cable also has its unique problems. While you may already have cable-TV service, the hardware for wiring to the internet must be upgraded to get data over the same fiber-optic line.

"Satellites fit for so many people because they don’t depend on how many people there are in the area," said Bill Pitkin, an analyst at Merrill Lynch in New York.

"There are about 25 [million] to 30 million people in the U.S. who will never have access the DSL and cable," he said.

Hughes has already started its foray into areas that DSLs and cable can’t reach, like rural towns and under-developed countries.

"We are employing this technology throughout the world," said Paul Gaske, executive vice president of the consumer division of HNS.

Already, India-based Skumars.com has ordered 50,000 DirecPC terminals to offer access throughout that nation.

Hughes Network Systems has the added advantage of a subscriber base through DirecTV and AOL, Pitkin said.

The company plans to market the service to its 8 million customers who have DirecTV as well as tap into AOL’s customer base.

"Hughes has an competitive edge off its established DirecTV and AOL customer base," Pitkin said. "They have the added experience of knowing how to provide a subscription business with DirecTV"

Hughes said that its DirecTV customers will have to buy a new dish to get both TV and high-speed internet service.

Analysts are predicting that the monthly fee for the service will be between $40 and $50. The dish that gets both TV and internet access will cost about $400 while the internet-only dish will cost about $200.

By comparison, cable costs about $40 to $60 a month on average, with a one-time installation fee of $150. DSL costs about $50 a month and about $300 to install.

Echostar Communications of Littleton, Colorado announced similar plans a few months ago.

Israeli company Gilat Satellite Networks plans to offer these services to U.S. customers by mid-year.

The company is targeting homes in rural and suburban areas whose internet providers do not offer flat rates for high-speed links.


     about us | FREE Email Newsletter | message boards | register at SPACE.com | contact us | advertise with us | terms & conditions | privacy policy      DMCA/Copyright

     © Imaginova Corp. All rights reserved.