Hughes shutdown strands DSL users

Satellite television company Hughes Electronics will shut down its DirecTV DSL service in the next few months, forcing about 160,000 customers to find broadband services elsewhere, the company announced Friday.

A Hughes representative said the company has created a Web site to help displaced subscribers find another provider.

Hughes Chief Executive Jack Shaw, in a statement, blamed the move on the failure of Hughes and chief rival EchoStar to merge. The deal was scuttled earlier this week, forcing Hughes executives to search for ways to cut costs.

Shaw said the first decision was to close the money-losing DirecTV Broadband division and shutter its DirecTV DSL service. About 200 workers were told Friday they will lose their jobs as a result, the company said. Hughes purchased DirecTV Broadband, then based in Cupertino, in April 2001.

"When the merger agreement was terminated earlier this week, we promised our shareholders and customers that we would move quickly to strengthen the profitability and efficiency of our company," Shaw said in a prepared statement. "This decision by DirecTV Broadband is the first of those moves."

Satellites, digital subscriber lines and cable modems are the three major ways Web providers deliver broadband to homes and offices. The shutdown does nothing to counter assertions from research firm The Yankee Group, which expects satellite broadband service to be a distant third in popularity to cable modems.

Hughes and EchoStar had hoped a merger would bolster their competitive edge against cable operators and improve their ability to carry local TV programming. Antitrust regulators and the Federal Communications Commission argued that the union would greatly decrease competition for paid television service. The FCC blocked the deal in October.

The companies canceled their merger plans when they determined that the deal could not be completed within the time allowed under the merger agreement, the two parties said in a statement.