Hughes Network Systems (HNS) reported last week that it had a record year in 2004 in terms of subscriber growth for its Direcway satellite broadband product, ending the year with more than 220,000 residential and small business subscribers. The approximately 40,000 subs added during the year was a single year record for HNS.

HNS Vice President of Consumer Marketing Peter Gulla attributed the record year for Direcway to three main reasons. “We really made it easier to get connected and to use the product,” Gulla told Satellite News. “We made it easier for our channels to go out and buy the product, and we’ve done a pretty good job in building the awareness of Direcway.”

The biggest change this year for making the product easier to use came in the form of the company’s DW6000 modem. Prior to the release of that modem, “we had a modem that required users to install software onto their PCs,” Gulla explained. “The software had a tendency to slow down the PC, so we basically got all the software off the PC. This turned the modem into a plug-and-play device.”

On the sellers’ end, Gulla said the company did some “tweaking” to the back end processes “to help orders flow better and help reconcile inventory and payment” to make it easier for the channels to sell the device. The other improvement sellers’ saw was the offering of Direcway’s Small Office Business Internet product. “Now the local dealers can sell to a business or someone who has a business need,” Gulla said. “It’s broadened our ability to serve the customers who have been overlooked by the DSL and cable companies.”

In getting the word out, Direcway leveraged its relationship with DirecTV (HNS is a wholly owned subsidiary of The DirecTV Group Inc.). “We have an infomercial on DirecTV that runs during a good portion of the day,” Gulla said. “We are seeing a good number of people that are learning about [Direcway], considering it and now they are coming to the table and buying it.” He noted that Direcway is able to track the number of subs generated from DirecTV advertising, but did not disclose what percentage of subs come from the DirecTV subscriber base.

A Record 2005?

So how will HNS follow up its record 2004? With another record year, Gulla believes.

“I am pretty optimistic we are going to continue to have that same aggressive growth rate this year,” Gulla said. ‘We believe there are a lot of opportunities coming ahead of us [which will enable us] to do even better. I really think there is nothing to stop us from continuing the same kind of growth level” that HNS experienced in 2004. But while Gulla expressed his optimism over the continued growth of the Direcway business, he declined to say exactly how many subscriber HNS is targeting to acquire in 2005.

To help maintain that growth level, Gulla said he HNS will be pursuing people that have dial-up. “I am looking for any customer that has been overlooked by cable and DSL.”

And that customer hunt is not limited to rural markets. “Everyone likes to think immediately about the guy who lives way out in the middle of nowhere,” Gulla said. “But there is strong demand where broadband is prevalent, but potential customers have been overlooked by competing services. “In terms of geography, its people who not only live in remote areas, but also people who live just outside major urban areas.”

Gulla noted that maintaining the growth won’t come without its own challenges.

“We challenge ourselves to improve our customer service and to improve the actual experience that the broadband customer get, as well as maintaining focus on the fact that there are plenty of people” that could be served by Direcway service, Gulla said. He hinted at future improvements to products and services, but declined to provide any details on what was forthcoming and how that would help drive adoption and maintain customers.

“I think we are well positioned to face whatever [comes our way] in 2005,” Gulla said.

–Gregory Twachtman

(Jessica Jobe, Brodeur Worldwide for HNS, 202/775-2675)