EchoStar Buys Stake in Gilat's Internet Venture
Satellite television company EchoStar Communications (Nasdaq:
DISH) said today that it's investing
$50 million for a 17.6% stake in Gilat-to-Home, a
joint venture that will offer consumers two-way broadband
Internet service starting later this
year.
EchoStar's partners in the venture are Israel-based Gilat
Satellite Networks (Nasdaq: GILTF) and
Microsoft (Nasdaq: MSFT) . Under terms of the deal,
EchoStar will distribute the service via its satellite
television network. Gilat will provide
the Internet connection services, and Microsoft, which is
also investing $50 million in the new venture, will
provide Web portal software as well as
its MSN Internet brand. Trials of the service, which is
the first two-way consumer satellite broadband service,
have already begun.
A little explanation would probably help right about now.
Current satellite Internet offerings
aren't two-way. This means the signal travels straight
from the satellite to a rooftop antenna on the downlink,
then back through terrestrial wires
for the uplink. This slows the process down. Therefore,
the two-way nature of the Gilat system, which doesn't use
terrestrial lines on the uplink,
speeds up the service and provides two other advantages --
the link is always on and consumers don't need a second
phone line to get it.
So how fast is the system? Well, information varies. Gilat says
it's up to 10 times faster than creaky
old dial-up modems. That's not hard to believe,
but it's trickier comparing it to cable modem or DSL
lines.
A Morgan Stanley analyst figures the Gilat system will offer
downlink speeds
around 400 Kbps and uplink speeds of 128 Kbps. This
compares to downlink speeds of about
2,000 Kbps and uplink speeds of 300 Kbps for cable modems,
according to a recent Merrill Lynch report. The Merrill
report, however, estimates the Gilat
system will perform better -- at downlink speeds from
1,000-2,000 Kbps, and uplink speeds of 128-300 Kbps. Who
knows, though it's clear terrestrial
has the edge. (For handy definitions of Kbps, bandwidth,
and other nasty technical terms, check out whatis.com).
