Satellite distributor PanAmSat unveiled a new
service to carry digital video for Web content and Internet service
providers and signed agreements with two established online players.
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
"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
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
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.