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MSN's next big heave – broadband access from space

Can Microsoft grab a lead over the Hughes-AOL combo?

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Microsoft's numerous attempts to build market share for the Microsoft Network have failed so far, but the company keeps coming, and the latest heave, broadband satellite access, could just turn into MSN into a 'must have' success. The new service will be available in the US initially, will only be available for MSN on Win9x operating systems, and will only be sold by Microsoft and by MSN retailers. But as MSN isn't a monopoly by a long chalk, that's OK, right? Microsoft is building the service via a $50 million investment in a 26 per cent stake in Israeli company Gilat Satellite Networks, and is promising two-way satellite communication in most of the US. Although details are scanty, it is claimed that users will get "always on" access at speeds "up to ten times faster than normal modem speeds". Microsoft spokesman Tom Pilla has confirmed that only complete packages will be offered, and that there are no plans to sell Internet access separately. But we'll see about this, and about the longevity of the Win9x-only restriction. At the moment it's perfectly possible just to use MSN as an ISP without putting any of the client software on your machine (which needn't be a Windows PC), so Microsoft would have to introduce new roadblocks if it were to make this impossible in the future. MSN also has plans for a CE-based MSN Web Companion, so there's another operating system for you. But an MSN-only access appliance bundled with an MSN-only broadband satellite network could nevertheless turn out to be the winning package Microsoft's Consumer Group is looking for. So long as it can ramp the service faster than rival systems. We note, en passant, that the Hughes-AOL DirecTV-AOL TV satellite offering is supposed to be happening "by early 2000." In support of its own satellite plans, Microsoft plans to purchase an unspecified number of VSAT (very small aperture terminal) satellite earth stations over four years, if some technology milestones are passed. These Skyblaster products, which have a 0.75 metre indoor/outdoor dish and provide a satellite return path, will come from the wholly-owned Gilat subsidiary Spacenet of Princeton, acquired in September 1998 from GE Americom, a GE subsidiary. Gilat says it is band-agnostic and will offer Ku-band initially and enhance the product for Ka band in due course. Shelly Revkin, president of Spacenet, claimed that Gilat had "the only two-way satellite product that offers broadband capability and optimisation for IP traffic". Microsoft consumer group svp Jon DeVaan will join the board of newly-formed company Gilat-to-Home, which will be headquartered in McLean, Virginia, with former Packard Bell executive Zur Feldman as CEO. In a frank comment as to why Gilat chose Microsoft as its partner, the company said "Microsoft is the ultimate partner for anyone in the technology field". As for why Microsoft chose Gilat, Gilat says that its mission "aligns well with Microsoft's over-arching MSN broadband strategy". With 40 million US households able to receive DSL service, and 42 million mainly overlapping households with cable access, there is still a significant number of potential subscribers living in areas where there is no present broadband access. The US has around 104 million households. A study has also suggested that if there were a prospect of a $10 saving per month, 38 per cent of existing broadband customers would consider switching to satellite, so it is quite likely that the market will have fierce competition. Gilat has not revealed pricing. The target is to get a million subscribers by 2002/2003, and approaching 3 million in 2005. ® Related Story Teledesic's McCaw to buy Iridium assets

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