- The Washington Times - Tuesday, November 7, 2000

A McLean, Va.-based company debuted a new satellite Internet service yesterday, marking the first time high-speed Internet access will be available to virtually everyone in the United States.

StarBand Communications Inc. announced its two-way high-speed satellite service, the first of its kind marketed toward consumers and the first service that may eventually put a dent in the market share of cable Internet and digital subscriber line (DSL) providers.

"We are excited to bring the reality of high-speed Internet service to millions of Americans across the country who have been denied access because their homes are in neighborhoods not served by DSL or cable," said Zur Feldman, co-chairman and chief executive officer of Starband Communications.

The service already is available to everyone in the nation's continental 48 states and can be ordered at selected Dish Network retailers and at RadioShack stores.

StarBand now has a distinct competitive advantage over cable and DSL providers, which serve mostly urban and suburban areas, industry analysts said. Cable and DSL providers are still building the infrastructure necessary to serve many areas, particularly rural ones. Not all cable-TV providers have upgraded their systems to allow for Internet access, and DSL works within only three miles of a central telephone office.

"With [cable and DSL] you literally have to build it out mile by mile," said Michael Goodman, a senior analyst with the Yankee Group in Boston.

StarBand showed off its service last week at an Indian reservation in Arizona so remote it had not been reached by radio or television.

While acknowledging satellite service's edge over DSL and cable, Mr. Goodman said cable and DSL's market share is unlikely to be hurt anytime soon.

"If cable and DSL is not available, it's inconsequential," he said. It will be years before DSL and cable providers build the infrastructure needed to serve everyone, Mr. Goodman said.

At the moment, StarBand's stiffest competition is from other satellite Internet companies set to debut two-way services of their own. Hughes Network Systems, whose DirecTV service leads the satellite-TV market, plans to release a competing service later this year. Already, Hughes sells one-way high-speed satellite Internet with its DirecPC service.

StarBand is a joint venture between several Internet-related companies, all of which seek to gain market share in their respective fields. EchoStar Communications Corp. looks to cash in on satellite Internet by offering it as part of its existing satellite-TV package. And Microsoft Corp., the world's largest software manufacturer, is looking to use StarBand to attract users to its MSN Internet access.

The two-way satellite technology used by StarBand is not new. Gilat Satellite Networks Ltd., the Israeli company that manufactures the satellites for StarBand, has been creating two-way satellite dishes for years, but they have always been enormous, both in terms of cost and size. For years, the belief was that while satellites could send down huge amounts of information to computers rapidly, sending data back up would require a dish too large for consumer use.

But earlier this year, Gilat made some noise by manufacturing smaller satellite dishes measuring 23 inches by 36 inches that cost less than $400.

It remains to be seen whether consumers will latch onto satellite service.

Analysts say it is unlikely to make a dent in markets where cable and DSL is used, because it is slower and more expensive. About 2.2 million persons use a cable modem, while about 800,000 are DSL subscribers. Most of the more than 50 million remaining Internet users go on line via a normal telephone modem.

StarBand claims its download speeds of up to 500 kilobytes per second (kbps) are possible, with upload speeds of 150 kbps. Cable Internet boasts more than 500 kbps download speeds, while most DSL providers offer services capable of downloading up to 1.5 megabyte per second. Cable and DSL generally cost between $40 and $60 per month plus installation.

StarBand has not released the cost for its service, but most analysts say customers can expect to pay at least $60 per month plus $400 for the satellite dish.

Mr. Goodman said high-speed Internet providers will not drop costs anytime soon, because demand for quick connections is still high. But, he said, satellite services like StarBand likely will offer slower connections at a lower price.

"What you will probably see is a variety of services being offered," Mr. Goodman said.

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