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GM's Hughes Unit Widens Satellite-to-PC Data Service

By JEFF COLE Staff Reporter of THE WALL STREET JOURNAL

Hughes Electronics Corp. will roll out its high-speed, satellite-to-home computer data service for consumers beginning Thursday, in its first test of retail demand among heavy Internet users.

But some analysts question whether the service's relatively high purchase price, combined with impending improvements in cable modems and other less-expensive access systems, will limit the new offering's popularity. "Hughes is going after the very high end of the market," said John Aronsohn, an analyst at Yankee Group, Boston.

Industry and company officials said the service, dubbed DirecPC, will be able to download data from the Internet more than 10 times faster than standard computer modems using conventional telephone lines. Initially, Hughes will offer the packages only in CompUSA Inc.'s computer stores in California. But by late next month, the General Motors Corp. unit intends to sell the packages through more than 100 CompUSA outlets nationwide.

Cost Is a Test

Affordability will be the primary test for Hughes, which previously offered similar services at nearly double the hardware price for commercial customers. The new service will compete with less-expensive alternatives such as advanced digital phone lines and the prospect of widespread cable connections to the Internet.

The question is how many Internet addicts, looking for faster and easier access to the World Wide Web from home, will be willing to pay $699 for new hardware plus monthly service charges ranging from about $40 to $130 a month. In addition, users still will need to pay current Internet-access charges.

Company promotions say a 400-page document can be downloaded in less than one minute on DirecPC. "We are the ideal choice for people who regularly download large files and can't wait for future technologies because they need greater speed now," said C.P. Shankar, head of sales and marketing for DirecPC.

Indeed, some analysts describe the Hughes move as a temporary technological fix, primarily designed to serve a niche market until less-costly alternatives become widely available. "Hughes isn't going to attract the majority of the market with an entry fee that's so high," Mr. Aronsohn said.

Other analysts, on the other hand, stressed that the Hughes offering will have broader appeal, partly because it will be only slightly more expensive, yet roughly three times faster, than relying on equipment using so-called ISDN advanced digital phone lines. Moreover, Hughes said it has signed licensing agreements with Netscape Communications Corp. and Microsoft Corp. for compatible Internet-browser software.

Mimicking DirecTV

DirecPC mimics the basic design of the company's popular DirecTV service for direct-to-home television programming and movies, using a regular phone line out from the home to summon large volumes of data quickly via satellite. In DirecPC's case, the calls are initiated by modem and routed to a control center.

For now, the service is about as close as the satellite industry can come to offering computer interactivity for personal-computer users accessing the Internet. Future generations of satellites and systems are expected to offer two-way service that can both send and receive by satellite. For Hughes, the long-term solution could be a system that manages to link DirecTV with faster Internet-access methods.

Unlike its less-expensive DirecTV cousin offering 200 channels of TV service, DirecPC requires users to buy a $699 package of hardware, including a 21-inch-wide elliptical dish and related equipment. After a flat $9.95 standard monthly fee, the cost of service charges range from about $40 a month for unlimited evening and weekend use to about $130 for daytime use. In each case, users must pay extra for accessing the system during times not covered by their specific packages.

Hughes hopes to lure users by promising installation of its new system within 48 hours. Users of DirecPC won't be able to use their round 18-inch DirecTV dishes for the computer service, said Paul Gaskey, assistant general manager of the Hughes division in charge of DirecPC.

This article is in Wall Street Journal's interactive edition, 10/10/96