DBS Data Services Need Satellite Return

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Denver -- Direct-broadcast satellite services will
accelerate as a high-speed-data platform once the cost of two-way satellite access drops
significantly, panelists said during last week's Denver DBS Summit.

Although DBS should experience significant growth as a
consumer platform for such services as Internet access and interactive television, the
lack of a cheap way to provide a satellite-return path for data could limit its appeal
primarily to corporate users in the near term.

Steve Blum, president of satellite-consulting firm Tellus
Venture Associates, estimated that by year-end 2003, some 2.1 million U.S. households
would have DBS Internet access on their personal computers, amounting to about 10 percent
of total DBS households expected by that time.

The average bandwidth devoted to data and multimedia by DBS
should be 338 megabits per second.

But those households will still predominantly have one-way
satellite access, with the return path provided by a 56-kilobit-per-second modem over a
terrestrial phone line, due to the cost of equipment necessary for two-way satellite
access, he added.

Blum said about 166,000 households would have full two-way
DBS Internet access by 2003. That's largely due to the growth of incipient Ka-band
systems such as Hughes Electronics Corp.'s planned "Spaceway" network,
which would deliver data at downlink speeds of 400 mbps and uplink speeds of up to 16
mbps.

Most users of satellite-return capabilities will be
enterprise customers. Blum noted that of the roughly 100,000 units shipped so far of
Hughes' existing "DirecPC" product -- which offers a 24-mbps downlink and a
phone-line return path -- only about 20,000 to 30,000 were for consumer and small-business
subscribers, with corporate networks making up the rest.

That balance could change soon, according to Toby Ferrand,
president of broadband-computer-communications-hardware manufacturer BroadLogic Inc.

Ferrand said two-way with a telco-return path had limited
transitional appeal, and his company expects an installed base of 1 million two-way
satellite-return receivers in the next three years.

Those systems will mostly provide an alternative to
consumers and businesses in areas not reached by two-way cable or digital-subscriber-line
telephone service, he added.

Both major DBS providers -- EchoStar Communications
Corp.'s Dish Network and Hughes Electronics Corp.'s DirecTV Inc. -- have already
announced plans to expand their Internet-access and other data or interactive offerings.

Later this month, EchoStar expects to start selling its
"DISHPlayer" receiver at retail, incorporating the WebTV Networks
Internet-access platform with a 56-kbps modem return.

EchoStar is also developing an integrated DBS receiver for
Gateway 2000's "Destination" line of home-theater computers.

DirecTV plans a fourth-quarter launch of
interactive-television services from Wink Communications Inc., and it outlined plans last
week to develop TV connectivity for America Online Inc.

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