News

Nothing But Net/Mark McFadden: Bandwidth Battles

• By Scott Bekker
• 04/13/2000

It’s easy to be convinced that the broadband revolution is a fierce competition between two technologies: Digital Subscriber Line (DSL) from traditional telephone companies and broadband modem services from cable television companies. I’m here to tell you it’s not true -- there’s an important third technology out there. And with the glacial pace that cable and telecommunications companies are deploying their services, both businesses and consumers should be watching for broadband by bird.

That’s right: broadband services delivered by satellite. Most of us think of satellite-based Internet access as a niche for rural residential customers only. In fact, some estimates suggest that nearly 3 million businesses and 13.5 million residential subscribers will get high-speed access via satellite by 2004.

The problem with today’s satellite services is that they have a distinct disadvantage in bandwidth. Satellite services are hamstrung by modest downlink speeds -- rarely the 400,000bps so often advertised -- and reliance on traditional dial-up services for upstream traffic. That’s about to change.

One of the key competitors in the market is Hughes Network Systems whose DirecPC Internet access service is set to transform into a two-way service later this year. Later this summer the skies in North America will finally be opened to competition when an Israeli company, Gilat, moves into the market with inexpensive satellite dishes and a partnership with Spacenet, a former subsidiary of General Electric. Gilat is working with Microsoft Network (MSN) to reach residential customers. Not to be outdone, America Online has invested $1.5 billion in Hughes Network Systems.

The market should really heat up when a new generation of satellites is launched. Called Ka-band satellites, these new satellites focus signal strength on small regions of coverage. If you imagine a camera with a zoom lens, the Ka-band satellites allow a signal to be "zoomed" into a region. This results in signal strengths that allow companies to avoid the costs of an enormous, unwieldy satellite dish on their roof.

One pair of competitors in the market, iSKY of Denver and NetSat28 of Annapolis, intend to start delivering services in the next two years. Both plan to build and launch their satellites in a shorter time and at lower cost than their competitors. Another project, called Astrolink and financed by Telecom Italia, Lockheed Martin and TRW, promises to deliver uplink services at 20 Mb/sec and downlink at an astounding 226Mbsec. Naturally, the primary targets of these services are businesses.

While broadband satellite services will be especially attractive in rural and suburban markets, businesses should also carefully watch developments overhead. It’s likely that satellite-based services will account for a growing segment of the traditional Internet access market. If networking companies can approach the lofty goals they’ve set for themselves, then, well . . . the sky’s the limit for this third broadband delivery strategy.