WASHINGTON — For a long time now, the Information Revolution has seemed like so much pie in the sky--a stream of announcements about fancy technologies like high-definition TV and new wireless communicators that remain perennially a year or more away from reality.
But next month, the DirecTv unit of Hughes Aircraft Co. plans to launch a 6,000-pound satellite that will transmit as many as 150 television channels to home antennas no larger than bicycle wheels.
Most Americans aren't familiar with the technology, known as direct-broadcast satellite TV--or DBS for short. But the prospect of such a huge expansion of video programming is sending shivers through the cable television and video rental industries. At a time when the typical cable system still offers only about 35 channels, DBS represents a quantum leap toward the 500-channel video universe that some cable systems have promised but not yet delivered.
Hughes and its partners are betting that there are enough non-wired households and disgruntled cable customers--many of whom have long complained about high prices and poor service--to make their investment of nearly $1 billion pay off.
"We like our odds; we believe we are delivering a revolution in the way entertainment and information is distributed," said Eddy Hartstein, president of El Segundo-based DirecTv. "No one has delivered this much programming to consumers at anything near this price point."
DBS has attracted keen interest overseas, where it has been available for about two years. But Hughes estimates that for the gamble to succeed in the United States, it must persuade more than 3 million households by 1997 to pay about $700 each for DBS receiving antennas and set-top decoder boxes, plus $25 to $30 a month to receive up to 150 channels of programming.
Hughes' quest to launch DBS represents an ambitious but financially risky effort by one of America's leading defense contractors to transform itself into a key player in the burgeoning telecommunications and entertainment industries.
As part of the unfolding "wireless revolution" that is melding the telephone, fax machine and computer into a single portable device, DBS faces competition from other emerging video services. Cable programming by microwave transmission is now available in about 140 communities at prices as much as 20% less than regular cable, according to Robert L. Schmidt, president of the Wireless Cable Assn. And an experimental cellular-style video delivery system was approved by the Federal Communications Commission last year.
Hughes, a unit of General Motors, is investing some $600 million in its DBS venture. United States Satellite Broadcasting, a unit of Hubbard Broadcasting of St. Paul, Minn., is kicking in another $150 million. The National Rural Telecommunications Cooperative, a suburban Washington group that raises money to provide telephone service in rural areas, will invest roughly $150 million in exchange for some of the DBS programming revenue.
The existing system of commercial communications satellites, which orbit the Earth 23,000 miles above the Equator, was established, in part, to transmit video from broadcast networks and cable programming services to local TV stations and cable system operators.
The signals those satellites transmit are relatively weak, making it necessary to purchase expensive large-dish antennas to receive them. And many of the channels they carry are scrambled so home users cannot tune in without first obtaining a signal decoder and paying a fee to subscribe to the program.
Like regular satellite programs, DBS signals will be scrambled to protect them from piracy. But because DBS signals are more powerful, they can be picked up by dishes as small as 18 inches in diameter.
DBS technology got off the ground in 1982, when the FCC authorized orbital slots for eight additional satellites that would deliver low-cost DBS video programming to unobtrusive home receiving dishes.
A host of entrepreneurs--including an earlier Hughes-backed joint venture, Sky Cable, and Seattle-based SkyPix Corp.--announced DBS ventures with great fanfare, only to later stumble over financial or technological obstacles.
Officials of some of the upstarts bitterly complained about video programmers balking at selling them popular cable fare such as Home Box Office and MTV.
Last year, though, Congress came to the rescue, passing a tough new law re-regulating the cable industry. In addition to setting ceilings on monthly cable rates, the law requires video programmers to offer their shows to DBS operators on a non-discriminatory basis.
"That legislation put DBS in the position to get all of the brand-name programming that cable now has," said Michael Wirth, a cable industry consultant who is chairman of the mass communications department at the University of Denver. As a result, Wirth said, "this time around, there's a business out there for DBS" to exploit.
