Hughes Brings Satellite Experience to Information Superhighway

By Britt, Russ | THE JOURNAL RECORD, June 23, 1994 | Go to article overview
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Hughes Brings Satellite Experience to Information Superhighway


Los Angeles Daily News

LOS ANGELES _ While most companies are scrambling to build access lines to the information superhighway by land, Hughes Aircraft Co. is taking to the sky in a billion dollar venture to offer cable services directly to viewers.

Los Angeles-based Hughes thinks it can get a jump on the competition by using its satellite-building expertise it acquired through Pentagon contracts to wire the U.S. from the air, not on land through fiber-optic cables.

Hughes began selling satellite dishes to customers in the first of five initial markets, in Jackson, Miss., on Friday. Service was available to Jackson residents when they purchased dishes, spokesman Tom Bracken said.

Service is expected to be available nationwide this fall.

Eventually, other Hughes entities are expected to begin offering such products as computer data transmissions and video telephone services via satellite.

"Once you get this system up, you can cover anywhere in America," said Jerry Farrell, executive vice president for Hughes Communications Inc., which oversees most of the company's activities in this field. "With fiber optic, you have to start at one end and go to the other."

The company's venture in satellite-driven consumer technology has captured the attention of the corporate chieftains of Hughes's parent, General Motors Corp. GM decided to hold its annual shareholders' meeting in one of DirecTV's first markets, Shreveport, La., on May 20.

The "information superhighway" _ a euphemism for an expected explosion in entertainment and data routed to homes and businesses via cable, telephone and computers _ is causing numerous companies to invest heavily to provide such services.

Pacific Bell, for example, is spending $21 billion to rewire 8.5 million California homes with fiber-optic lines _ essentially the superhighway's infrastructure. While some homes in a handful of communities will be ready this year, Pacific Bell said it will take until 2010 to rewire the whole state.

"We're not going to get to everyone right now," said Steve Harris, Pac Bell spokesman. "For some folks, satellites may make sense for a while."

But Harris and analysts say there are several disadvantages for consumers in taking the satellite route. Consumers must invest in satellite dishes or antennas costing up to $1,000 apiece before getting on line.

And once Pacific Bell's services are available, it will be easier for users to interact or hold two-way communications with one another than they would over the airwaves, Harris said. Using airwaves could create interference that users will not get on fiber-optic cable, he added.

Analysts say Hughes must address additional problems before it can successfully offer satellite television services or get its data services off the ground.

The first is Hughes' lack of expertise in cost-driven commercial markets. The company has $9 billion in annual sales, $7 billion of which is in Pentagon contracts.

"The aerospace/defense industry has never estimated anything correct in terms of time or in terms of money," said A. Michael Noll, professor at the University of Southern California Annenberg School of Communications.

But with the downturn in defense spending, the company has shifted to commercial work.

Hughes's first trip on the superhighway _ the launching of DirecTV service _ will begin in five initial markets. Along with Shreveport, they are Tulsa; Little Rock; Jackson, Miss.; and Albuquerque, N.M.

DirecTV will offer satellite television service that includes an array of cable channels, sports programming and pay-per-view movies. DirecTV launched one of its two satellites in December and will launch the other in July. Nationwide service with 150 channels is scheduled to begin in September or October.

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