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Pie In The Sky
Satellite access to the Internet may bring down sky-high user charges




It takes an hour and a half and adds $8.69 to the phone bill for a fan in the U.K. to download the latest Rolling Stones music clip at 64 kilobits per second — the fastest connection most European consumers can get. But what if it were possible to get the same clip in a minute and a half and reduce the connection cost to pennies?

As early as this autumn, new European "Internet in the Sky" services promise to do just that. The services, which offer high-speed Web access via satellite, should boost e-commerce by making it easier to purchase digitally downloadable products like music and software. They could also help Europe steal a march in the next generation of high-speed Internet linkups. "We have the chance for Europe to leapfrog the rest of the world with broadband Internet," said Candace Johnson, president of Luxembourg-based Europe Online Networks. Her firm plans to launch a mass market "Internet in the Sky" service aimed at the 44 million European homes with cable TV and 27 million homes equipped with satellite dishes.

New high speed satellite-based Internet access services aimed at large and small companies in Europe are also expected to boost business-to-business e-commerce, the kind that allows companies to electronically link with suppliers and customers over the Internet. Most European business to business e-commerce takes place outside areas where there is effective competition on phone line prices. That keeps communication costs high and makes companies reluctant to do business online.

But advances in technology will soon allow companies to bypass terrestrial networks. California-based Tachyon, whose board of directors includes Nicholas Negroponte, founder of the Massachusetts Institute of Technology Media lab, plans to introduce a satellite-based service in Europe in September. European satellite provider Astra says it will launch a similar service in January.

No one is predicting that satellite-based services will replace terrestrial phone lines, but the technology could play an important role in breaking Europe's bandwidth bottleneck. Cable modems offer Net access at speeds of 2 megabits per second but much of Europe is not cabled and never will be. And although Europe's biggest phone companies have plans to offer ADSL (asymmetric digital subscriber line), a technology which permits rapid transmission of big stacks of data over ordinary phone lines, this service will be rolled out neighborhood by neighborhood over a long period of time

In contrast, once a satellite is launched the entire Continent is covered. That is an important plus for both consumers and business customers. While phone consortiums claim to offer multinational customers global service they don't have extensive national networks, meaning consortiums have to pay high access fees to local carriers. The fees are passed on to customers and as a result corporations with far-flung subsidiaries are often asked to pay more for the last five miles to their sites' doorsteps than for the entire link across the ocean.

Banks and businesses have been using satellite services for years to send financial and other types of data to branch offices. But the system suffers from a severe drawback. Although data sent from the satellite down to the user travels at speeds of 500 kilobits to 2 megabits a second, it is not a two-way channel. The user typically must use terrestrial phone lines to send data back to the satellite and that limits the so-called uplink speed to that of a standard 56-kilobit-per-second modem.

The services from Tachyon and Astra will make use of new technology in a different spectrum to offer high speed service on both the uplink and the downlink, avoiding the terrestrial phone network entirely. The full benefits of this new technology are expected to be reaped when several satellite-based global multimedia networks are launched. The most publicized so far is the Teledesic Corp. venture backed by Microsoft's Bill Gates and due to startup in 2003.

Europe's consumers won't have to wait that long to start sampling new satellite services. By September consumers should be able to buy satellite adapter cards priced at $150 to $250 that plug into personal computers.

About then souped up set-top boxes which can store up to 12 gigabytes of data — about four full-length movies — will be rolled out by manufacturers like Nokia and Philips. These set-top boxes will allow consumers to access the Internet over their television sets via the new satellite services like Europe Online. The price tag for the set top boxes will be a hefty $300 to $600, but the theory is that is some consumers will buy these instead of a PC.

Europe Online's new satellite access service for consumers will be available for a maximum monthly fee of $15 through local Internet service providers. Both firms will get the majority of their revenues by taking a percentage of each online sale made using the service. Web surfing via outer space could make the sky the limit when it comes to raking in the profits.






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