Hughes Electronics Corp. announced Friday that its subsidiary, DirecTV
Broadband Inc., would close its high-speed Internet service business in
approximately 90 days and work toward transitioning existing customers to
alternative service providers.
DirecTV Broadband, based in Cupertino, Calif., was acquired by Hughes in
April 2001 and currently serves approximately 160,000 customers with its
"DirecTV DSL" digital-subscriber-line service.
"Hughes and its subsidiaries have worked steadily over the past months to
improve our businesses in anticipation of the merger with EchoStar," Hughes
president and CEO Jack A. Shaw said in a release.
"When the merger agreement was terminated earlier this week, we promised our
shareholders and customers that we would move quickly to strengthen the
profitability and efficiency of our company," he added. "This decision by
DirecTV Broadband is the first of those moves."
Hughes will continue to offer its "DIRECWAY" satellite-delivered consumer
broadband service, which currently has approximately 160,000 subscribers.
The company will continue to add new DIRECWAY customers, but it will not
increase its subscriber base aggressively in the near term to avoid cash
requirements from subscriber-acquisition costs.
In addition, Hughes and DirecTV Inc. will explore other strategic
relationships that would allow the companies to offer future broadband services
via both terrestrial and satellite technologies.
Roughly one-half of DirecTV Broadband's 400 employees were notified of
layoffs Friday, with a minimum of 60 days' notice during which time they will
continue to be paid, followed by receipt of a severance package.
The remaining employees will work with customers during the approximate
90-day transition process and to wind down business operations.
Current DirecTV DSL customers should check the company's Web site (http://www.directvdsl.com/) for complete
information on transition plans for their Internet service.