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Wednesday March 17, 6:01 am Eastern Time
Company Press Release
Hughes to Invest $1.4 Billion in Spaceway Broadband Satellite System
Note to Editors: Audio News Conference
EL SEGUNDO, Calif.--(BUSINESS WIRE)--March 17, 1999-- Hughes will hold a media conference call for reporters Wednesday, March 17, at 11 a.m. (ET) to discuss the announcement. Michael T. Smith and Pradman P. Kaul will host the conference call. Reporters can participate in the conference by calling 800/256-6003 prior to 11 a.m. Eastern. A replay of the conference call will be available beginning at 1 p.m. Eastern on Wednesday, March 17, until 1 p.m. Friday, March 19. To access the replay, call 800/633-8625 or 619/812-6450 and enter reservation code 11957591.
A $1.4 billion investment in the first system of the advanced Spaceway(tm) global broadband satellite network was announced Wednesday by Hughes Electronics Corp. (NYSE:GMH - news).
Spaceway will provide affordable, high-bandwidth and high-speed communications for broadband and multimedia applications. The first system is scheduled to begin operation in North America in 2002.
Hughes plans to work with global strategic partners to roll out additional systems with similar capabilities in other regions as the markets develop, including Europe; the Middle East and Africa; Latin America; and Asia, thereby producing an integrated worldwide system. The Federal Communications Commission has already allocated Hughes orbital slots worldwide to operate the Ka-band frequency satellite system.
Once the geosynchronous orbit Spaceway system is operating, the next phase of Hughes' global broadband plans is to introduce a complementary nongeosynchronous system. This system will have satellites operating in lower earth orbits and will expand the network capability to offer additional interactive broadband multimedia communications services in high-traffic markets.
Spaceway will provide bandwidth-on-demand -- the ability to transmit and receive data, video, voice, audio and multimedia with customers using and paying for only the amount of bandwidth needed for the specific application from e-mail to high-bandwidth, high-speed corporate networks.
With Spaceway, large businesses, telecommuters, small office/home office (SOHO) users and consumers will have access to two-way, high-data-rate applications such as desktop video conferencing, interactive distance learning and Internet services operating at speeds faster and at costs less expensive than those provided by such current land-based systems as frame relay.
It will seamlessly integrate with existing land-based systems and will be fully compatible with a wide range of terrestrial transmission standards.
The Spaceway applications will be marketed under variations of the ''Direc'' name already used by Hughes. The initial services to be offered by Spaceway include the next generation of DirecPC(r) broadband Internet services and the DirecWay(tm) family of high-bandwidth, very small aperture terminal (VSAT) services.
Hughes, through its Hughes Network Systems (HNS) unit, is already the market leader in VSAT corporate data networking and satellite broadband Internet services. Existing HNS customers, many of which are Fortune 500 companies, will have the opportunity to transition to Spaceway, which will provide new applications for their businesses, while keeping end-user costs low enough to provide competitive advantages over terrestrial offerings.
The satellite system will employ innovative, on-board digital processing, packet switching and spot beam technology to offer single-hop connectivity throughout the service area regardless of location. This connectivity, for example, will allow customers to communicate directly via satellite with other customers without having to go through a retransmission service, or hub. It also permits direct, full broadcast capability throughout the service area.
''Hughes is constantly advancing the state of technology to meet new market demands,'' said Michael T. Smith, chairman and chief executive officer of Hughes Electronics. ''Through its operating companies Hughes Network Systems, Hughes Space and Communications Co., PanAmSat and DIRECTV, Hughes is uniquely positioned to understand the growing requirements of both business and consumer customers.
Smith continued: ''Hughes is the market leader in satellite business networks, satellite Internet access, satellite manufacturing, satellite-based direct-to-home entertainment and satellite services. With Spaceway, Hughes has harnessed the strengths of those companies to provide the most advanced satellite platform in the world; one that will establish satellites as the pre-eminent means of delivering broadband services.''
Pradman P. Kaul, corporate senior vice president of Hughes Electronics and president and chief operating officer of Hughes Network Systems, has overall responsibility for the Hughes broadband business, and Roderick M. Sherwood III, corporate vice president of Hughes Electronics, is in charge of Spaceway, reporting to Kaul.
The North American network will consist of two HS 702 geosynchronous orbit satellites built by Hughes Space and Communications Co., plus an in-orbit spare.
HNS will lead the development of the user terminals and overall ground infrastructure. Ground stations will range from user terminals with antennas approximately 26 inches in diameter, to larger gateways for connectivity to terrestrial backbone networks.
PanAmSat will operate the telemetry, tracking and control center for the satellites in orbit and will assist HNS in operating the network control center. PanAmSat will also act as a reseller of Spaceway capacity in certain market segments.
DIRECTV will market to its subscribers several of the data services offered by Spaceway.
Smith explained: ''The demand for broadband data is expected to increase dramatically in the foreseeable future with industry estimates projecting the U.S. market alone at $50 billion in 2005. Spaceway's technological advancements in frequency reuse capability will translate into an eight-fold increase in the satellite's revenue generating potential at the wholesale level.
''With these advancements, the Spaceway platform allows Hughes to offer very competitive cost advantages and positions our offerings, such as DirecPC and DirecWay, to capture an increasing share of this rapidly growing broadband market,'' Smith concluded.
Kaul added: ''The power of ubiquitous coverage is unique to satellites. When we combine this advantage with high-quality service and costs 20 to 30 percent lower than those of competing terrestrial systems, Hughes is able to provide consumers and businesses with a robust Ka-band offering that is not only the first service of its kind to market, but also the best service of its kind on the market.''
HNS, of Germantown, Md., is the world leader in providing satellite-based private business networks with more than 300,000 interactive and one-way VSATs installed worldwide. Additionally, HNS manufactures DIRECTV(tm) receivers and provides DirecPC, the only high-speed satellite Internet service available nationwide, as well as in numerous countries around the world.
Hughes Space and Communications of El Segundo is the world's leading manufacturer of geosynchronous orbit communications satellites and has built nearly 40 percent of those in operation today.
PanAmSat Corp., of Greenwich, Conn., is the world's leading provider of satellite-based communications services and operates a global network of 19 satellites. PanAmSat is 81 percent owned by Hughes Electronics.
DIRECTV Inc., of El Segundo, is the nation's leading digital entertainment television service in both residential and commercial markets, delivering access to more than 185 channels of programming to more than 4.6 million subscribers.
The earnings of Hughes Electronics are used to calculate the earnings per share attributable to GMH (NYSE symbol) common stock. Visit Hughes Electronics on the World Wide Web at www.hughes.com. Visit Spaceway on the World Wide Web at www.spaceway.com.
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Contact:
Hughes Electronics Corp., El Segundo
Richard Dore, 310/662-9670
or
Hughes Network Systems, Germantown
Frank Baker, 301/601-4072
Judy Blake, 301/601-4004
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