AOL speeds toward satellite service

The new service, dubbed "AOLPlus Powered by DirecPC," is the first incarnation of the online giant's $1.5 billion investment in General Motors' Hughes Electronics. That deal gave AOL a foothold to market a satellite version of its service to customers of Hughes' satellite TV service, DirecTV, and a broadband version to Hughes' DirecPC users.

Nearly a year after that deal, AOL's investment is bearing fruit.

Since last week, AOL has been contacting beta testers to try its new service on the DirecPC Internet service, according to emails forwarded to CNET News.com by Inside AOL, a Web site focusing on internal AOL issues.

According to the email, AOL will begin testing the service in sixteen cities including Austin, Texas; Chicago; Los Angeles; New York; Philadelphia; San Francisco; and Washington, D.C.

Beta testers are being offered free two-month subscriptions to AOL Plus Powered by DirecPC and reduced prices for the satellite dish. After the initial testing period, the service will cost $19.95 a month on top of the standard $21.95 monthly subscription fee for AOL, according to the email.

"This is the first opportunity for AOL members to connect to AOL via a broadband satellite connection," the email read.

AOL spokesman Nicholas Graham confirmed the beta test is under way. He declined to elaborate with details, but he said, "It is a product that AOL hopes to roll out to consumers later this year."

AOL's testing of a satellite service is another step in the online giant's efforts to offer its service through multiple pipelines and devices. AOL has signed deals with several local phone companies to offer its members high-speed digital subscriber line (DSL) service, but nothing has hit the market. Its January announcement that it will acquire cable operator Time Warner gave the company a significant foothold in offering cable broadband service.

"AOL is trying to use another form of bandwidth to expand their business," said Jimmy Schaeffler, a subscription TV analyst at the Carmel Group, which researches the satellite industry. "If you look at it, they're the only company in the industry of their size and stature that sees the battle as one of bandwidth as opposed to cable vs. satellite, vs. wireless vs. telephony."

AOL is also focusing on its "AOL Anywhere" strategy, the company's initiative to offer its service on non-PC devices such as cell phones, handheld computers, pagers and Web-enabled appliances. The company recently entered an agreement with Gateway to develop consumer Web devices.

An AOL tie-in could bode well for DirecPC's efforts to boost subscriptions. The service offers Internet access at speeds of up to 400 kbps but only for one-way connections. Data downloading and Web surfing benefit from the speedy connections, but to send data such as email, subscribers must use standard dial-up telephone lines at slower speeds.

Subscribers interested in testing the service must apply for it on AOL's beta site, the email read. In addition, the email said testers can only use Windows 98, a Pentium processor, an analog modem and an "unobstructed southwestern view."