DirecTV Dumps Broadband Internet Plans for HDTV

On September 8 direct broadcast satellite provider DirecTV Inc. announced plans to add more than 500 local and national high-definition television (HDTV) channels to its service in 2005. DirecTV said it would launch two new satellites -- Spaceway 1 and Spaceway 2 -- to support its expanded HDTV offering. The catch is, these Ka-band satellites were originally slated by DirecTV affiliate Hughes Network Systems (HNS) to support a next-generation broadband Internet service called Spaceway, capable of providing downstream broadband connections at up to 16 Mbps. This compares to the maximum 1 Mbps connections now supported by its Direcway service for enterprise customers. For residential users, Direcway offers access at less than 500 Kbps. Even with the allocation of the Spaceway 1 and 2 satellites to HDTV, some thought a portion of the capacity would still be allocated for broadband Internet services. Not so, according to an October 22 SEC filing by DirecTV Group Inc. In the filing DirecTV said it would take a non-cash impairment charge of $1.4 billion to $1.6 billion in its third quarter 2004 operating costs as a write down for the abandonment of its broadband Internet plans. The move by DirecTV is bad news for MSOs, which face an increasingly formidable video competitor, but great news for broadband Internet start-up WildBlue Communications Inc., which plans to launch a DOCSIS-based Ka-band high-speed Internet satellite service in 2005. With DirecTV out of the game, WildBlue will be the only Ka-band Internet player targeting the North American residential and business market.
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