Industry Experts Assess Global Rise of DTH

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Denver -- The global market share of direct-to-home
platforms is expected to grow at a brisk pace for the remainder of 1999, and to continue
its steady rise into the new millennium, with France, Spain and the United Kingdom
projected to lead the continued international migration to DTH.

That's according to some industry leaders involved in DTH,
or direct broadcast-satellite, as it is also known.

At the sixth annual Denver DBS Summit here last month,
statistics were released projecting that DTH's reach will grow from about 12 million
households worldwide today to 100 million digital-DTH subscribers by 2007.

Top industry leaders gathered at the summit to discuss
DTH's growing presence in the U.S. and world markets -- particularly Europe, which is at
the forefront of DTH's international growth.

"Europe has the highest number of digital platforms,
with 166 million television households and a 3.2 percent-penetration rate for
digital-satellite service, while cable television is at 28 percent-penetration," said
Mariangela Bisi, senior analyst for The Carmel Group, a Carmel, Calif.-based
media-research and consulting group.

Of the five largest European markets, France is expected to
lead the region's DTH growth with a 32 percent market share of the satellite business,
Bisi said.

And the projection for the remainder of 1999 looks
promising for Spain, the United Kingdom and particularly those countries with relatively
small numbers of cable subscribers.

"DBS should grow faster in lower cable-penetrated
countries. Those countries will do better, since cable is not a reality there," Bisi
said.

DTH's growth is greatest in the U.S. market, which is
projected to reach 25 million DTH households by 2007. However, Europe and Japan should
continue as the "hot markets," according to Steve Blum, president of Tellus
Venture Associates, an education, science and technology center in Monterrey, Calif.

"Japan and Europe should come close to the United
States" in market penetration, Blum added.

Mixed with the talk of DTH's global growth, however, is the
reality of transitioning from analog to digital technology and other critical issues the
DTH industry expects to face well into the next century.

"In Europe, there are lots of analog subscribers. How
do you move them from analog to [digital] satellite? And lots of digital that's being
rolled out is on new satellites, and transponders are expensive," said George
Monaster, managing director of World Link Network. His comments came during the
"DBS/DTH Growth: The View from Europe" session.

Sharing content is another issue that Monaster suggested
would be important to Europe's DTH advancement. "Europe provides its own content, and
it is reluctant to sell to other providers. There needs to be more coproduction of
content," he suggested.

However, the biggest issue for the satellite industry --
according to Vincent Dureau, chief technical officer for OpenTV Inc., a joint venture
between Sun Microsystems Inc. and South African multimedia company MIH Ltd. -- is
satellites' lack of capacity. Diminishing DTH bandwidth makes it difficult to offer
Internet services and to compete with cable. As the number of subscribers increases, a
satellite still has the same amount of bandwidth, which narrows the bandwidth per user.

"They can't use a lot of what's available, so it's
hard to compete," Dureau said. "In Europe, there's lots of competition between
horizontal and vertical markets."

Among the European platforms, France's Television Par
Satellite and British Sky Broadcasting Group plc's OpenTV service are projected to lead
the way to a developing interactive business for the satellite industry, Dureau said.

"[A total of] 80 percent of the set-top boxes in
Europe are interactive, and [BSkyB] plans to migrate all of its subscribers to
digital," he added. "It will be the largest interactive infrastructure in
Europe."

BSkyB, Dureau said, is planning to spend $800 million
during the next three years on Internet infrastructure. "Its strategy is to have one
bill for interactive, programming and phone service. If subscribers want Internet access
to their PCs [personal computers], they get it for free. [BSkyB subscribers get free
Internet access as a way to keep them loyal. The company intends to make it up with
interactive-TV services and advertising.] It's a very pragmatic and interesting
approach."

Europe's overall approach to interactive services is
fascinating, as well, Dureau said. "The great thing about Europe is that it's a great
laboratory to test diverse services to a diverse market. The consumer in Spain is much
different than the consumer in Norway."

Monaster agreed. "Interactive service is the real
sleeper. With [automated teller machines] too costly in Europe, satellite and banking
services could be very important, so how do you build a business around that?"

OpenTV, Dureau noted, is already providing smart-card slots
in its set-top boxes to offer home banking services.

Blum also noted the rise of pay satellite radio, which, he
said, could reach 83 million households by 2004.

"In some markets, radio is more important than
television. News Corp. and Hughes [Electronics Corp.] are involved, but the market is
mostly served by a stand-alone set of players," he said. "Worldspace [Management
Corp.] is the leading satellite-radio player, but there's a high possibility of global
groups acquiring stand-alones. They're ripe for acquisition."

At the end of the day, however, most agreed that questions
about DTH's ability to move smoothly from analog to digital; its skill at providing
diverse and compelling content from multiple sources; and the industry's thirst for
developing the Internet as a viable business must be answered before the satellite
business can establish a firm global footprint.

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