HOUSTON -- Japan and South Korea are both finding it difficult to make profitable businesses from satellite broadband services without heavy government subsidies, according to satellite operators from both nations.

Part of the problem is stiff competition from ground-based firms. While not giving up on the idea, officials of Korea Telecom and JSAT Corp. of Tokyo, said they are focusing their attention on the business market and are continuing tests of two-way satellite links to businesses.

"There is no consumer market for satellite broadband," said Yutaka Nagai, senior executive officer for business development at JSAT Corp. of Tokyo, which operates eight telecommunications satellites.

JSAT initiated its MegaWave consumer broadband satellite service in mid-1999 hoping to fit 50,000 subscribers on a single 30-megabit per second satellite transponder. To compete with terrestrial broadband offerings, the company was forced to offer a flat rate of $33.70 per month for the service.

It forecast that each user's average demand would be around 6 kilobits per second.

JSAT assumed that, at peak periods, 10 percent of its subscribers would be using the system at once.

Had those assumptions been correct, the service would be profitable, Nagai said. Unfortunately, they were not.

Savvy users quickly took advantage of the flat monthly fee to open multiple sessions and proceed with hefty downloads. The prediction that 10 percent of users would be the maximum amount on the system at a given time was proved correct, but the average use was nearly 10 times the predicted rate.

Space Communications Corp. (SCC) of Tokyo, which operates the four Superbid telecommunications satellites, also has no intention of introducing consumer broadband, said Hiroshi Kimura, the company's executive vice president. But SCC is using Ka-band transponders on its satellites to provide broadband to Japanese government agencies, especially those involved in disaster management and emergency services, Kimura said.

South Korea's Korea Telecom has had a similar experience in trying to introduce satellite broadband. Like Japan, Korea Telecom introduced a service at a time of fierce competition among companies offering digital subscriber line and cable-modem services. Prices for these offerings dropped to $25 per month and, more recently, to as low as $10-$15 per month.

The result is that more than half of South Korea's population is expected to be hooked up to the Internet by the end of this year, and the broadband market is seen as nearing saturation.

"It is extremely difficult to compete with these prices," said Gwang-Ju Seo, Korea Telecom vice president for satellite operations.

Backed by government subsidies to Korea Telecom in exchange for providing broadband service to rural areas -- including military installations out of the reach of terrestrial service -- Korea Telecom's Megapass satellite Internet service now has about 12,000 subscribers receiving one-way satellite service.

"It is not profitable for us," Seo said. A two-way satellite service for gas stations to permit credit-card verifications is now in operation at 3,000 outlets, with commercial service expected to start late this year, Seo said.