By: idiscover $$
Reply To: None Sunday, 30 Jul 2000 at 1:43 PM EDT
Post # of 5409
iSKY Forges Ahead
Denver-based company seeks more investors
By Karen Brown
Aiming to be the "@Home in the Sky" a new startup company is proposing a satellite high-speed Internet service targeting residential customers.
Denver-based iSKY will base its system initially on two geostationary Ka-band satellites, offering two-way high-speed Internet access for most of North America when it comes on line in the third quarter of 2001. The target downstream rate is 1.5 Megabits per second, while the upstream will be about 400 Kilobits per second.
iSKY will cost an estimated $700 million to $750 million. Company CEO Tom Moore said the company has gathered about a third of that amount, and recently gained an extra $50 million investment from Liberty Media, TV Guide and Kleiner Perkins Caufield & Byers. iSky has hired Morgan Stanley Dean Witter to arrange the remainder of the needed funding during the next 18 months.
When financing is complete, TV Guide will own 19%, Kleiner Perkins 18% and Liberty Media 17%.
Although it sounds pricey, iSKY's projected start-up costs are lower than rival competitors averaging $1.25 billion to $1.35 billion. That's because iSKY will use relatively simple satellites that concentrate on relaying data rather than processing, with most of the network brains located on the ground in operations control and customers' satellite modems, Moore said.
Unlike other proposed satellite services fielded by Hughes Network System and Lockheed Martin targeting business, iSKY is targeting the 25 to 30 million American households where cable modem and DSL technology will not reach in 2001. While the company is not disclosing specifics, prices for the 26-inch satellite dish, the satellite modem and the monthly service will be in line with competing DBS and broadband providers, according to Brad Greenwald, VP-Marketing.
"Realistically, unless you can get these price points you can't get the consumer traction you need," he said.
A prime target will be the estimated 12 million satellite television customers. The iSKY service can be funneled into the home using a DBS dish, which can handle both Ku-band video and iSKY's Ka-band signals.
Because the customer owns the dish, iSKY does not need to enter into any agreements with DBS providers, but the company is in talks to see if marketing deals are possible, Greenwald said.
Although cable modem and DSL competitors will be able to increase market shares by 2001, Moore sees this as an advantage rather than a problem.
"Our belief and a big part of our market plan is cable modems and DSL are going to be successful," Moore said. While broadband Internet access is still a relative novelty, "three to four years from now it will be necessary and from a market standpoint we don't anticipate driving that demand," he added.
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