Hughes sweetens satellite sound, sights

What's in a name? Hughes Network Systems Inc. hopes a new moniker will bring a fresh start to its struggling satellite Internet access division DirecPC--now rechristened DirecWay. With the change comes streamlined packaging of services and a few new consumer offerings.

DirecWay satellite services will be sold via consumer electronics retailers like Best Buy Co. Inc. as well as resellers America Online Inc., EarthLink Inc., and Pegasus Solutions Inc. Hughes will sell the business services, says Pradma Kaul, chairman and chief executive officer (CEO) of Hughes.

The company plans to continue to enhance its satellite services throughout the year, Kaul says. It will add music services for consumers and business this month. In August, DirecWay plans to add caching services for downloading Web sites and multimedia content for later viewing. This fall, it will add a software client called Looking Glass for playing broadcast-quality video and audio content over Hughes' private network.

Prices retained amid upgrades

Hughes continues to upgrade its satellite technology, announcing plans to launch three new satellites. By 2003 the company says the new satellites will deliver 30 megabit-per-second download speeds and will support 500-kilobit-per-second upload speeds.

To date Hughes has acquired 116,000 subscribers for its satellite services; 43,000 of them are businesses.

The DirecWay two-way satellite service costs approximately US$499 for equipment plus $200 installation and $60 to $70 monthly. DirecWay satellite systems can also receive the DirecTV satellite TV service, but the satellite receiver and monthly service cost extra. Like its predecessor DirecPC 4.0, DirecWeb pledges transfer rates up to 400 kbps downstream and 125 kbps upstream. Its sole competitor, StarBand, promises download speeds up to 500 kbps and uploads at 150 kbps for about the same price.

Hughes says it will continue to sell $150 versions of its one-way satellite service that depend on a dial-up modem return path for sending data and making page requests.

Thursday's rebranding comes as speculation mounts that media conglomerate News Corp. or satellite competitor EchoStar will buy Hughes. Kaul declined to comment on the status of its talks with suitors.

Scanning for satellite converts

Hughes also plans to step up its marketing and target customers in remote areas. Prime potential customers are the estimated 37 percent of U.S. homes that are unlikely to ever get high-speed Internet access from their cable television provider or through a telephone company's digital subscriber line service.

Cable and DSL (digital subscriber line) are widely viewed as the best buy per kilobit for customers in residential areas. But satellite broadband may be the only way for people in the middle of nowhere to get fast downloads.

Hughes also took the opportunity to trumpet its 86 percent customer satisfaction rate with installations. The announcement was a backhanded way to slight DSL competitors who are notorious for troubled or delayed installations.

"Cable can get congested and DSL gets bogged down," Kaul notes. Broadband satellite has escaped its competitors' availability problems, primarily because DirecWay is widely available in the United States.

Satellite is expected to grow significantly in the next few years, say market researchers at Dataquest. The firm forecasts that the number of satellite terminals in the world's three major economic regions will increase from 293,500 terminals in 2000 to 7.2 million terminals in 2005. Most of these terminals are in North America now, and most of the remainder is in Europe and the Asia-Pacific region.

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