The Greenwich, Conn.-based firm, a major figure in satellite-based broadcast television and paging services, yesterday launched a service designed to distribute multimedia for "rich media" content and Internet service providers. PanAmSat underlined the debut by announcing deals with streaming audio and video pioneer RealNetworks and local phone giant and digital subscriber line provider US West.
Once primarily known for distributing television programming, the satellite industry has been reshaped by high-profile telephone and Internet companies. Some plan futuristic Net access offerings, while others plan to beam satellite-based music and talk radio shows directly into consumers' cars.
But the industry has been set back by Iridium's spectacular failure in the satellite phone business.
PanAmSat and its rivals hope to reduce congestion on the public Internet. The company's streaming media service, called NET/36, will compete against pre-IPO start-ups Cidera, iBeam Broadcasting and Edgix.
"By putting (satellite) receiver equipment and routers at the ISPs, we put only one router between the content and the user, thus eliminating the congestion delays that are common across the Net," said Robert Bednarek, chief technology officer for PanAmSat. "The PC and other devices are becoming as popular as TVs for entertainment, so we clearly see a trend in the industry toward distributing high-quality video in both mediums. We think this is a logical extension of our business."
Wall Street seemed less than convinced. PanAmSat shares tumbled more than 24 percent yesterday amid confusion over the company's depreciation schedules and how much of its investment will be written off as losses. Executives said the company will spend $250 million over the next two years to deploy the NET/36 system, making it capable of handling 3 million simultaneous broadband video users by late 2002.
Owned by General Motors subsidiary Hughes Electronics, PanAmSat is not exactly new to the Internet. The company supplied point-to-point Net connections for the National Science Foundation in South America in the early 1990s and offered international ISPs satellite-based connectivity to the U.S. Internet backbone via its Spotbytes service in the middle of the decade.
But the strategy pits PanAmSat squarely against at least two other satellite streaming video distributors, Cidera and iBeam Broadcasting, both of which offer similar space-based content distribution networks.
Both iBeam and Cidera also are planning initial public stock offerings. Coupled with PanAmSat's new service and a recent $50 million investment by Echostar Communications in iSky, the flurry of activity underscores the growing interest in using satellites for certain Net applications. A handful of other satellite companies, such as Teledesic, Astrolink and SkyBridge, plan Internet services in several years.
"Satellite-based distribution of content is real," said Peter Zaballos, director of system marketing for RealNetworks. "If you can bypass the congestion points, then you can create a much better experience for the user so you don't get bumpy, scratchy content by going over the random paths on the Internet."
PanAmSat has recently encountered difficulties in its core satellite businesses, including launch failures, paging satellite outages and battery problems.
NET/36 derives its name from the certain specifications inherent in geosynchronous satellites. Geosynchronous satellites are positioned in orbit 22,300 miles, or 36,000 kilometers--hence NET/36--above Earth. That orbital slot allows the satellites to maintain a relatively fixed position over Earth, rotating at roughly the same rate as the globe below.
Also yesterday, PanAmSat announced that it expanded its role as satellite capacity provider for Hughes' DirecPC Net service. PanAmSat said it will broadcast America Online's AOL Plus service as a result of the DirecPC alliance.