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Start-up puts broadband plans into orbit

WildBlue launches a satellite carrying its high-speed Net access gear into outer space. Can it succeed where others failed?

Start-up WildBlue Communications was given another lease on life this weekend, when a satellite carrying its broadband Internet access equipment successfully launched into outer space.

The launch of a Telesat Anik F2 satellite in French Guiana on Saturday sent into orbit WildBlue's latest attempt to beam high-speed Internet to subscribers in the United States.

Satellite companies such as DirecTV have tried similar strategies, with limited success. But strong demand for broadband, especially in rural areas outside the reach of cable and phone companies, could give WildBlue another shot at making it work, the company said.

"WildBlue's key value is in offering broadband Internet service to markets that wouldn't otherwise have this advanced access available," Tom Moore, WildBlue's CEO, said in a statement.

The company will begin offering Internet access in early 2005 at a much higher rate than cable or DSL (digital subscriber line) services in urban areas. Service will start at $49.95 a month for a 512kbps (kilobits per second) download speed and 256kbps upstream. On top of that, WildBlue customers will have to pay between $300 and $400 to buy a rooftop satellite dish and hire a technician to install it.

In contrast, cable Internet typically sells for $45 for up to 3mbps (megabits per second) on the downstream, while DSL goes for as low as $30 for up to 1.5mbps. Analysts wonder if the costs will hamper WildBlue's ambitions.

"It's tough to say whether this will work or not," Rob Sanderson, an analyst at American Technology Research, said in an e-mail interview. "It has been largely subscriber economics--cost of equipment, cost of customer acquisition, cost of satellite capacity per subscriber--that have prevented this from working in the past."

Indeed, previous attempts by other satellite providers have given analysts pause on WildBlue's plan. DirecTV made the most notable step into broadband when it launched a satellite-delivered service called Direcway but watched its growth sputter due to high equipment and subscription costs. Direcway is now available mainly to rural small businesses.

But DirecTV plans another stab as well, when it launches Spaceway, which will use more advanced satellite technology, in 2005.

WildBlue is already building its own satellite, called WildBlue-1, but will launch it only if there is demand for more service.

The company was revived in 2003, when it roped in $156 million in funding from John Malone's Liberty Media, Silicon Valley venture capital scion Kleiner Perkins Caufield & Byers and others.