WASHINGTON – With the Internet economy about as solid as landfill during an earthquake, you may think that there's no longer any money to be made in the online world.
But how about hundreds of miles above it?
During the fourth annual "Internet via Satellite" conference this week, representatives of Net satellite firms gathered to wrestle with the vexing question of how to stay aloft in a free-falling economy.
Last year, by all accounts, speakers and audience members had sky-high hopes. Now those have given way to a subdued sense of optimism about the prospects of this business, which has not remained immune from the state of the tech economy.
"How many of you were here last year?" asked Amy Cosper, publisher of Satellite Broadband, on Monday.
Seeing only a smattering of raised hands, she laughed and said: "A lot has changed."
Christopher Baugh, an analyst for Northern Sky Research, agreed. "The market is still taking shape at this point," he said. "Business models are now the most important part of this market."
Baugh said that "funding has become a major issue. There are companies that have been in the market for five and 10 years who are having a hard time securing their next round of funding."
Net access through satellites is already available, of course, but it's not as cheap as terrestrial options like DSL or cable modems.
A+NET Internet Services of San Diego sells a Tachyon uplink on a monthly basis to customers looking for a temporary, high-speed connection for trade shows or conventions.
A modest connection – 64 Kbps uplink and 300 Kbps downlink and a 1 GB monthly allotment – costs $279 plus setup fees. You'll pay around $2,000 a month for the speedier 256 Kbps uplink and 2 Mbps downlink.
StarBand takes a different approach by aiming at the consumer market. It sells a 24x36-inch dish that they say gives anyone in the continental U.S. download speeds up to 500 Kbps and upload speeds of up to 150 Kbps at $70 a month.
But StarBand and Tachyon rely on fixed-position satellites – StarBand works with satellites at 101 degrees and 129 degrees west longitude – that don't reach beyond the United States. And most customers seem happy with faster connections that aren't as expensive and won't drop off during thunderstorms.
At the two-day conference, attendees wondered where they might find customers for satellite service in a slowing economy.
Northern Sky Research's Baugh defined what he saw as some of the "low-hanging fruit," including people who already get television from satellite services, isolated Internet-using homes without options for terrestrial broadband service, and mobile and airborne broadband users.
Other speakers pointed to markets outside the United States as big growth opportunities.
Burt Liebowitz, a consultant to NetSat Express, proposed that the Middle East could be an ideal market for satellite Internet services. "You have some countries that have some money, but don't have the infrastructure and may never," he said.
Also, Liebowitz said, there is a great demand for such services from reporters covering conflict in the region. "That's a real sweet spot," he said.
Liebowitz's comments are hardly surprising; NetSat Express, which has secured investment from Globix, George Soros, and Reuters, has targeted developing regions. In February, it signed a $5.7-million contract with a Saudi firm to provide connectivity to subscribers in the Middle East.
Perhaps the one point of agreement was that to attract consumer business, Net satellite prices would have to fall.
"You can't say 'You're at a remote location, you can pay $30 more,'" said D.M. Prakash Chitre of Lockheed Martin Global Telecommunications. "The location that is remote now won't be in three years."
"I'm not an economist," Chitre said. "But it's what has to happen."
