Satellite Broadband: More Competition in North America
Maryland-based Hughes Network Systems (HNS) intends to hold on to its lead position in the satellite broadband market via the Direcway 7000, which began shipping in early September. Of the four new Direcway broadband service plans, two are aimed specifically at residential and professional home office customers with downlink speeds from 700 kilobits per second (Kbps) to 1 megabit per second, and uplink speeds from 128 Kbps to 200 Kbps. "The Direcway 7000 falls under the major reengineering category," says Michael Cook, senior vice president of the North American division at HNS. "Satellite broadband service is our business. We are cash positive with 10,000 new subscribers per month. We will continue to drive costs down, and speeds and bandwidth up."
Among other things, HNS has reduced its subscriber acquisition costs by 50 percent throughout the last three or four years, according to Cook. The HNS Spaceway 3 satellite goes up at the end of 2006, and service will start in mid-2007. This Ka-band platform will include board packet switching in a full mesh configuration. A new standard known as RSM-A, which stands for Regenerative (satellite payload) Satellite (return channel) Mesh topology, is ready to go too. "RSM-A addresses processing or regenerative satellites with mesh connectivity and serving lots of spot beams. It includes capacity protection, a necessity for on-board, bandwidth-on-demand processing," says Anthony Noerpel, advisory engineer at HNS.
In mid-2005, HNS began to face more competition, as Wildblue Communications finally entered the consumer satellite broadband market in the United States, starting in Colorado. Wildblue is not shy when it comes to admitting that its door is open to Direcway customers. "We think in the long run that we need to offer a more consistent level of quality of service to grow our business," says Brad Greenwald, Wildblue's vice president of sales and marketing. "We expect to improve the value we offer our customers going forward, but we have not yet determined what that will be or the timing."
"If timing was a gift, Wildblue came in at the right moment, although late, and at the right price -- $49 to $79 per month. This price point is tolerable, a bit higher than the giveaways now by SBC, Verizon and Comcast, but because it is a standalone service and not bundled, it meets a definite need," says Serafin, although at press time Wildblue was not yet available in California. Serafin is watching for any potential consumer backlash stemming from the Fair Access Policy restrictions -- essentially bandwidth usage caps -- imposed by Wildblue, which he describes as similar to those used by Direcway.
Both Direcway and Wildblue leave the home networking component to the customer. At its Web site, http://www.mydirecway.com, HNS offers its subscribers free optimization software that sets browser settings to optimize the link. Neither Direcway nor Wildblue supports voice-over-IP at this time.
"Many of our customers are choosing to take advantage of our easy plug-and-play ethernet connection to use a wireless networking router," says Greenwald. Wildblue offers a free 30-day money back guarantee. It will soon begin offering a free year of anti-spyware to go along with the anti-virus software from F-Secure that is already provided to customer.
Conclusion: Consumers Are Demanding More
All eyes are on Japan and Korea in 2005 as supporters of satellite-based digital multimedia broadcast (DMB) technology try to open a new chapter in rich media delivery. Using 4Caster MPEG-4 AVC encoders from California-based Envivio Inc., Tokyo-based Mobile Broadcasting Corp. (MBCO) launched its new MobaHO! service throughout Japan last year after the successful launch of the MBSat satellite. MBCO was followed by SK Telecom and TU Media in Korea.
MBCO offers eight video programs, 30 audio programs and a single data broadcasting service to subscribers now via handy type terminals, in-vehicle receivers and PC-card tuners. Toshiba, Sharp and MBCO supply receivers. A cell phone receiver will be introduced in 2006.
In Korea, SK Telecom offers about a dozen TV and music channels for $13 per month. Samsung introduced one of four DMB phones. Its SCH-B200 has a screen that slides up and rotates horizontally, and it offers a variety of multimedia functions with a TV-out function as well. The new feature-rich Samsung YM-PD1 DMB portable media player was introduced in late September.
The DMB business faces considerable competition as terrestrial wireless service providers worldwide push videogaming and other features that the public seems to relish. Add it all up and the race is definitely on. Satellite service providers must keep prices low while minding their subscriber acquisition costs. DBS, with churn at almost record levels, cannot turn a blind eye to that phenomenon either especially with telco TV launching. Verizon's fiber optic TV service will be rolling out in perhaps as many as a half dozen markets by the end of the year, and more IPTV is on the way. Innovating and aggressive product development has made a difference, and besides, consumers are still giving a big thumbs up to satellite.
Peter Brown is Via Satellite's senior Multimedia & Homeland Security editor.
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