Satellites Bridge Internet Service Gap
By Peter S. Goodman
Washington Post Staff Writer
Monday, November 6, 2000; Page A01
**"The sweet spot is the 50 million households not passed by a cable or DSL line," said David C. Trachtenberg, StarBand's president and chief marketing officer. "But there's also going to be customers out there who just don't want to deal with the local telephone company or the cable company, or are frustrated with installation problems."**
SUPAI, Ariz. – The first thing that happened after the high-speed Internet arrived in this Indian village was that some people started listening to the radio.
An unremarkable occurrence, until one considers that the Havasupai Indian reservation sits at the bottom of the Grand Canyon, a two-hour drive and an eight-mile walk from anything resembling a town. Its squat wooden houses are encased by the canyon walls. Radio never reached here before.
"If you don't know me by now. . . ." The song seeps through the tinny speakers of a desktop computer in the child welfare office. It has traveled from an oldies station in El Paso, Tex., through the wires of the Internet to a data center in Marietta, Ga., and up to a satellite 23,000 miles above the earth. Then down to a rooftop satellite dish in this creek-side settlement in the cottonwoods, home to 500 people on the red dirt of the canyon floor.
Radio is now here, along with the rest of the World Wide Web, because of a two-way satellite Internet service run by a McLean-based company called StarBand Communications Inc.
Today, StarBand is launching its venture on a national scale – the first such service ever directed at consumers. The company is seeking to establish satellites as a leading route for the high-speed Internet, alongside souped-up cable television on wires and DSL, a technology that rides over phone lines.
Though StarBand began its service here, amid the sagebrush and prickly pear cactus of this Indian reservation, it chose the venue merely to prove the point that its system can deliver a signal far from the domain of cable and DSL. It aims to sell service on less remote ground, in suburban and semirural areas that sit beyond major population centers. It is targeting the 50 million U.S. households that now have no links to the high-speed Internet, or "broadband," a medium expected to enable a host of data-intensive services such as interactive television, digital music and video on demand.
"It's the only technology that you can put anywhere in the U.S.," StarBand chief executive Zur Feldman said. "If you can see the southern sky, we can put in a terminal."
But formidable issues confront the launch of StarBand – for one, the specter of competition from such industry heavyweights as Hughes Network Systems, which has grabbed the lead in the delivery of satellite television service with DirecTV. Hughes plans to introduce a competing service later this year.
Though wires on the ground are not foolproof conduits for the high-speed Internet either, satellite systems entail tricky technical problems. Lightning can impede transmission and wind can blow the dishes out of alignment. Two of the dishes in Supai, for example, were recently put out of order for this reason.
Not least, StarBand must confront fundamental questions about the role of space in the communications universe and the economics of satellite technology. Once viewed as an elegant means to transcend basic geographic limits, some consumer satellite services have more recently gained infamy for the great expense it takes to deploy them before the revenue can start to roll in.
But if these challenges can be navigated, analysts say StarBand could gain rapid success for the simple reason that great stretches of the map are now devoid of links to the high-speed Internet.
Cable television systems upgraded for two-way Internet traffic are the leading route, but they don't go everywhere. DSL only works within three miles of a telephone central office, where the switches and other equipment are kept, leaving millions of households and businesses out of reach.
"There's so much hype around broadband, but when you look at it in terms of its penetration of total households, it's less than 4 percent," said Fritz McCormick, an analyst at Yankee Group in Boston. "There's a lot of ground to be covered still in the market and a lot of very interested consumers."
An Internet Education
It was Sally Tilousi who first dreamed up the idea of bringing broadband to Supai. The director of the village Head Start office, she is facing federal requirements to ensure that her teachers are all certified by 2005. Trouble is, only two Havasupai tribal members have ever graduated from college, Tilousi being one of them. The degree programs are far away in Flagstaff, Phoenix and Las Vegas. Family obligations and lean finances keep her staff rooted here.
Tilousi went looking for help at Northern Arizona University, which uses videoconferencing and the Internet to broadcast higher-education classes to the isolated tribes of the high desert.
An administrator there made inquiries at StarBand, which is a joint venture between an Israeli satellite maker, EchoStar Communications Corp., whose Dish network sells satellite television service, and Microsoft Corp., which views the enterprise as a key way to deliver its MSN Internet access to customers in rural areas.
The university tapped into a federal grant to pay for the installation, and two months ago a team of StarBand technicians arrived. They affixed six satellite dishes on the rooftops – one at the Head Start office, another across the path at the Indian Child Welfare Act office, a third at the tribal court, another up the road at the tourist lodge and two at the school.
Tilousi is working to get the degree programs beamed in to Supai. At the tribal court, the clerk plans to use the Web to explore substance-abuse programs to address a widespread drug and alcohol problem, a factor in 90 percent of the criminal cases on her docket.
The principal at the school, Ronald Arias, is pursuing plans to use the Internet to give his eighth graders a sense of the outside world, before they venture off to boarding schools scattered across the West. It is a trip that often ends badly: Disconnected from home and family, many students turn to drink and drugs. Three of four students return without a diploma.
Some wonder if the Internet might be harnessed to create a kind of virtual high school so children won't have to leave at all.
"This is a turning point for our community," Tilousi said. "Now we're able to access resources on the outside."
Shrinking the Satellite Dish
The deployment in Supai also was a kind of turning point for StarBand. In tandem with the launch there, StarBand set up a dish on the Upper East Side of Manhattan, illustrating the point that its technology can work pretty much anywhere.
"The sweet spot is the 50 million households not passed by a cable or DSL line," said David C. Trachtenberg, StarBand's president and chief marketing officer. "But there's also going to be customers out there who just don't want to deal with the local telephone company or the cable company, or are frustrated with installation problems."
StarBand's chief selling point, though, will be its availability in remote areas and not necessarily its price. Cable or DSL service typically costs $40 to $60 a month, depending on the provider and speed of service.
StarBand has yet to detail its prices. But MSN has been quietly offering the satellite service at kiosks inside RadioShack stores across the country, selling it for about $60 a month as part of the purchase of a computer and a $395 satellite dish. EchoStar now plans to begin selling StarBand Internet service in a package with its Dish network television service for at least $60 a month. A special satellite antenna capable of handing both services is required and is to be be sold for about $400.
For years the industry assumed that satellites would be no more than one-way vehicles to transmit the Internet. They were well suited for bringing vast quantities of video and computer data down from space at rapid speed, but sending up information was another matter: It would require a huge dish, far larger than the pizza-size contraptions that made satellite television an appealing option.
DirecPC, a unit of Hughes, now sells one-way high-speed Internet access using satellites. When the customer transmits a signal out – for example, sending e-mail or requesting a Web page – the data travel over a phone line, which requires a dial-in connection. That undercuts one of the chief selling points of broadband – its "always on" connection, meaning a user need not dial in and wait for modems to connect before venturing online.
The Israeli satellite maker leading StarBand, Gilat Satellite Networks Ltd., has built two-way satellite dishes for years, but they typically cost thousands of dollars and are much larger than the consumer variety. StarBand owes its launch to an engineering achievement: Gilat shrank the dishes and dropped the price to less than $400.
The company now claims the much-coveted distinction of being the first to market with a two-way system for consumers, but it isn't likely to last long. DirecPC already is trying out its new two-way system. Once DirecPC formally begins the service later this year, its powerful brand name and marketing muscle will count as considerable assets.
But if satellites are to become profitable conduits for broadband, they will have to overcome a recent history that is rich in disappointment.
Last year Iridium LLC, a global telephone venture backed by Motorola Inc., landed in bankruptcy and elected to let billions of dollars in satellites burn in space. ICOGlobal Communications Ltd., another telephone enterprise, met a similar fate. Globalstar, a business backed by defense giant Loral Space & Communications Ltd., could well be next: Its stock has plummet this year, to less than $3 at one point from more than $53, as it struggles to gain customers. The stock closed Friday at $6 a share, up 6 cents.
Analysts say these disasters all share something in common – the unexpectedly rapid spread of terrestrial technologies. As cell towers proliferated farther away from major cities, they brought customers within reach of their cheaper technologies, carving into the market for satellite telephone service.
The question now is whether DSL and cable will similarly be introduced fast enough to take a big chunk of the market away from the satellite companies.
"There have been so many issues in the satellite space lately that there's almost a tendency to say, 'Let's not bother with that,' " said Andy Belt, an analyst at Adventis Corp. "There are pockets out there that are highly attractive," he said, referring to sophisticated users and people with real needs. "The question is, does it amount to something sufficient to pay for these high-cost satellite services? There's a significant fixed cost in keeping these things flying."
washingtonpost.com
© 2000 The Washington Post Company |
