Startups offer special challenges that include developing a workable and practical business plan, installing a management team with the right skills and obtaining sufficient financing. All those ingredients are needed for success.

One satellite industry startup that caught my attention is Los Angeles-based Ampliphy, which proposes an all-digital, multichannel subscription service to deliver satellite TV to residence halls at U.S. universities. Ampliphy aims to use recent advances in digital compression and bandwidth delivery to provide students with higher-quality service at a lower cost than currently is available.

The company plans to use existing university broadband networks to equip residence halls with satellite television. Universities that offer high-speed data and voice services will be able to add digital video services in a “triple play” bundle, thus helping to eliminate the use of “archaic analog copper wire,” said Vern Smith, Ampliphy’s president and CEO.

The service would work on a TV display with an IP set-top box or a personal computer. Ampliphy proposes to become a satellite TV service provider at university residence halls by using Video Furnace technology.

For its successful alpha testing, Ampliphy used SES Americom’s AMC-4 satellite, but the company currently is in discussions with a number of satellite providers to fill its Ku- band requirements when the commercial rollout of the service begins in Chicago this August, Smith said.

Experienced Executives

A seasoned stable of managers has been chosen to run Ampliphy, starting with Chairman Michael Targoff, hired just last week. In the past, Targoff served as president and CEO of Loral Space and Communications from its formation in January 1996 through January 1998. Smith spent more than 13 years launching companies, both as an executive and as an investor. He most recently managed corporate ventures for Société Européenne des Satellites, now called SES Global [SES]. Prior to that, he founded DirecTV International.

John Jakubowski, is Ampliphy’s CFO, and he brings more than 15 years of financial and operations experience within high technology, telecommunications and consumer market-based organizations to the table. His background includes senior posts at DirecTV International and Hughes Communications.

The management team’s important technical leadership comes in large part from Nils Lahr, the company’s CTO, who has more than 10 years of experience in digital media, the Internet and streaming content. Lahr founded iBEAM, which completed an initial public stock offering in May 2000; the company ultimately was sold. He also developed and launched CNN’s Web presence while at CNNi.

With a business plan and a management team in place, Ampliphy next needs to obtain sufficient financing. According to Smith, Targoff should be able to bring a “hard-nosed, street-smart” perspective to the company along with his industry credibility and contacts. The hope is that he will be able to open doors to potential customers and to sources of capital.

Amplify still needs to clear a number of obstacles, any of which could block its path to profitability, including: finding a market that offers sufficient revenue potential for a fledging company to gain an identifiable and quantifiable competitive advantage; accurately projecting expenses and capital expenditures; and forecasting cash flow to help ensure adequate returns are delivered to investors.

“The unique challenge is overcoming negative cash flow from fixed bandwidth costs as you grow your subscriber base,” Smith said. “Satellite providers are using creative payment schemes with back-loaded payments to reduce the upfront cash requirements.”

The external factor that may be working most in Ampliphy’s favor is the convergence of multiple technologies and market segments onto one IP-based network, Smith said. “For example, the proliferation of broadband has opened opportunities for alternate distribution platforms — other than DBS or cable — to deliver video programming with high quality and security,” he explained.

Paul Dykewicz is senior editor and senior analyst of Satellite News. He can be reached at 301/354-1769 or at [email protected].