Broadband Access Aims for the Sky

You'd think getting Internet access from a satellite service would free you from the troubles and limitations of earthbound services like cable or DSL. Think again.

Until recently, getting online via satellite required a dial-up connection for at least part of the service. Satellites simply couldn't handle two-way Internet traffic.

Now two satellite outfits have at least figured out a way to eliminate this terrestrial stumbling block. Hughes Electronics' DirecPC and StarBand (a partnership among EchoStar Communications, Gilat Satellite Networks, and Microsoft) debut this winter, and more players are on the way.

But there are still serious problems. Satellites are not ready to carry huge numbers of subscribers, so the satellite providers are pitching their services mainly for people in rural areas who can't get cable or DSL. And both new services say they plan to restrict users from excessive downloading of data-heavy files like MP3s, since that can choke the limited satellite networks.

But the biggest hurdle for these two-way services will be the satellites themselves. Right now, the systems support only speeds of up to 150 kbps on the return path from the satellite--a bit faster than dial-up modems. That is much slower than other broadband services, even though the price is expected to be about $70 a month for satellite service--or $20 to $30 more than most cable or DSL services.

Still, the satellite purveyors plow ahead because the potential market is huge. Yankee Group analysts estimate that 46 percent of U.S. households have no land-based broadband connectivity options. But if that market takes off, it could overwhelm the capacity of existing satellites. On the other hand, it might start a new race to get more satellites into the sky.