Satellite

Out of Space, Onto the Ground

2/03/2006 7:11 PM Eastern

DirecTV Inc. is developing technology that would allow it to combine a wireless network on Earth with communications via satellite to offer customers high-speed Internet and telephone services.

The company, owned primarily by global media magnate Rupert Murdoch’s News Corp., could even bring rival EchoStar Communications Corp. along for the ride, in a joint venture.

One of the biggest challenges in combining broadcasting from a satellite with the over-the-air transmission of wireless signals near the ground is the interference that can result.

PATENTED APPROACH

A WiMax antenna attached to a satellite dish, for instance, must separate out which bits of information to pluck out of the air. On Dec. 13, DirecTV won a U.S. patent for technology that would reduce interference in a combined satellite-terrestrial network.

“The present invention discloses a system and method for reducing interference between terrestrially based and space-based communications systems,” DirecTV wrote in the patent.

The patent was issued a few weeks before News Corp. chairman Murdoch told analysts that DirecTV may soon announce plans to spend about $1 billion for a new broadband network. News Corp. controls DirecTV.

Murdoch said that WiMax, a wireless communications technology that can transmit data at the rate of 40 Megabits per second, is one alternative for creating that network. That speed is 10 times faster than that found in the fastest Internet services marketed by cable and telephone companies — and about twice the throughput of AT&T’s much-touted Project Lightspeed (see “The $20 Billion Question,” page 23).

“We have a lot of people on this full-time at the moment. And you’ll be hearing from us, I would think, within probably two months with [a] very clear plan [on] what will happen. And it’s not as expensive as you might think,” Murdoch said at a Citigroup conference on Jan. 9.

London-based WiNetworks told Multichannel News in September that it was working closely with the two satellite services to develop WiMax products. “We have a solution that has been designed over a period of three years, in very close collaboration with EchoStar and DirecTV,’’ Benjamin Finzi, president of Wi’s Americas operations, said. DirecTV and EchoStar could team up on a joint venture to use WiMax or other technology to market high-speed Internet and phone service.

Financial Web site TheStreet.com reported Jan. 30 that the two satellite services were working together to create a wireless communications network on the ground, which would allow them to better compete with cable operators’ successful “triple-play” bundle of television programming, Internet access and telephone service. An EchoStar executive told Multichannel News Thursday that his company would be willing to work with its satellite rival, DirecTV, if it would help it compete with cable and telephone providers.

“The new leadership of DirecTV is more willing to consider [joint] initiatives,” the EchoStar executive said.

EchoStar CEO Charlie Ergen in November also said he would be willing to team up with DirecTV or other competitors to improve efficiencies.

“If there’s any of our competitors out there in some form that we can work with that benefit us and also benefit them, without changing the dynamics, then obviously we’re interested in that,” Ergen said during the company’s third-quarter earnings call.

DirecTV declined to comment last week on any of its broadband plans.

“We’re exploring a number of opportunities in that area,” communications director Robert Mercer said.

TheStreet.com reported that DirecTV has set aside $1 billion to create a broadband wireless project. But money alone won’t make the land-based network happen. That’s because the use of America’s wireless spectrum has become highly competitive, as new text, video, photo and voice services gain adherents, according to Adlane Fellah, principal analyst for Maravedis Inc., a Toronto-based analyst firm that specializes in WiMax market research.

If WiMax is the chosen technology, DirecTV, EchoStar or both will have to apply for or acquire licenses in one of three bands of spectrum that adhere to the 802.16 technical standard established by the Institute of Electrical and Electronics Engineers: Radio waves that oscillate at a frequency of 2.5 billion, 3.5 billion or 5.8 billion cycles per second. Outside of the standard’s three bands, there is a stew of different slices of spectrum —ranging from the old multichannel multipoint distribution service band, starting at 2.1 Gigahertz, to the wireless-communications service spectrum at 2.3 GHz, already earmarked for wireless data services — that could be used.

But that would require EchoStar and DirecTV to find vendors offering one-off, proprietary gear that doesn’t conform to the 802.16 standard, Fellah said.

Even sticking with the standard, finding spectrum to span the nation will be tough. For example, there are about 380 licensees claiming spectrum in the 3.5 GHz band, Fellah said. With few exceptions, these owners have licenses only in certain cities. “So you have a lot of license holders, and yet only a few have a national footprint,” Fellah said.

One exception is Sprint Nextel Corp., which has locked up 2.5 GHz footprint in 80% of the United States — the result of the merger of Sprint Corp. and Nextel Communications Inc., both of which owned licenses in that band.

But Sprint Nextel is developing its own WiMax network, so it would be unlikely share its frequency with a potential competitor, Fellah noted.

Given that most spectrum is already claimed, it would be difficult for a new player to get going, Fellah noted. “The only way for the satellite providers to do this is to lease spectrum, because there are no auctions at this point — it has already been auctioned,” Fellah said.

MVDDS DISCOUNTED

EchoStar does have a partial ownership stake in another license band called multichannel video distribution and data service (MVDDS), but it is doubtful it could be used for a two-way data service. This service uses the same spectrum as transmission to and from satellites, but bounces the signals between Earth-bound points, such as towers or receivers mounted on buildings.

But while the FCC allows MVDDs licensees to develop high-speed Internet services, they are restricted to offering only downstream connections from the network to the user. If EchoStar and DirecTV chose the MVDDS route, they would have to find a separate link from the user back to the network, such as a phone line.

The DBS players also would have to locate sites for the WiMax base stations, either through existing tower owners or co-location agreements with utilities or other wireless-network providers. On top of that, WiMax technology is young. Finding reliable equipment may take some time.

“We’re still a year and a half away from commercial-equipment development, let alone the mobile version, which I would say is two years,” Fellah said.