December 12, 2002 1:51 PM PST
Satellite TV firm may nix Web services
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EchoStar, Hughes scrap merger plansDecember 10, 2002
The Wall Street Journal reported Thursday that Hughes is revisiting plans to let its 11 million DirecTV subscribers use the satellite network for Web services, after a proposed merger with rival EchoStar unraveled this week. Hughes may now curtail the reach of a $1.8 billion plan, dubbed Spaceway, to provide broadband Web services over a satellite network rather than telephone or cable networks, the newspaper said.
Spaceway had always been designed primarily for businesses, but Hughes hoped to spin out a residential service to increase its revenue.
A Hughes representative said the company had no immediate comment on the report and intends to release additional details about its plans on Friday.
The possible retrenching follows news this week that an expected merger between Hughes and rival EchoStar has been put off. That leaves Hughes without an anticipated cash influx and raises new questions about the viability of offering Spaceway to home subscribers for now.
Hughes and EchoStar had hoped a combination 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.
The Hughes representative said the Spaceway service as a whole is still on track for introduction sometime in 2004.
Satellites, digital subscriber lines and cable modems are the three major ways Web providers deliver broadband to homes and offices. Cable modems are expected to rule the broadband age for at least the next five years, according to The Yankee Group. Trailing in popularity are DSL (digital subscriber line) services and the handful of satellite companies jockeying for customers.