Dishing out millions

Michael Schuppenhauer, a biotechnology consultant, lives in an idyllic canyon off the Pacific Ocean near Half Moon Bay, Calif. On the other side of the Santa Cruz Mountains, just 40 minutes away, lies the heartland of the Internet: Google’s headquarters and Silicon Valley.

Yet the Internet has passed by Schuppenhauer’s ranch. It’s too far from the local telephone hub for a digital subscriber line, or DSL. There’s no cable. Even cell phones don’t work, because of the rugged terrain. He could use dial-up, but that’s too slow for much of today’s Internet; handling large files such as online video is difficult.

So Schuppenhauer gets broadband Internet service through a coffee-table-sized satellite dish on the side of his house that sends his Google search requests on a 44,600-mile round trip into space.

Compared to cable or DSL, it’s slow and expensive — $85 a month — but it allows Schuppenhauer to work full-time from home.

“We have three horses and do competitive riding,” he said. “We moved out here and we’re going to stay here.”

Schuppenhauer has plenty of company. Satellites are the only broadband Internet choice available to as many as 10 percent of U.S. households, according to the largest consumer satellite broadband provider, Hughes Communications Inc.

“As people start realizing that there will be Internet haves and have-nots, they will be setting up satellite dishes,” Schuppenhauer said.

HughesNet and its main competitor, WildBlue Communications Inc., are betting hundreds of millions of dollars that their lock on that market will last. They’re more than doubling their capacity this year with two new satellites.

That’s good news for second-homers, farmers, long-distance commuters and others who are looking to get connected. However, the new satellites will do little or nothing to improve on the quality of service, which is handicapped by the capacity of the satellites and their distance from Earth.

Schuppenhauer calls his current HughesNet service “bearable.” He tried WildBlue earlier but had problems with slow uploads.

HughesNet, based in Germantown, Md., launched two-way satellite service for consumers and small businesses in 2001. It had 327,500 such subscribers in the U.S. at the end of last year, and has been signing up 11,000 a month since then, according to marketing head Arunas Slekys.

HughesNet has been leasing capacity on a few different satellites. In August, it will launch its own satellite, the Spaceway 3.

WildBlue, which is based in Greenwood Village, Colo., serves about 160,000 customers. It has been using spare bandwidth on a Canadian TV satellite, but in March, it turned on a new dedicated broadband satellite that will boost its potential total capacity to a million subscribers, according to chief executive Dave Leonard.

A third service, StarBand, has about 30,000 home and small-business satellite broadband subscribers in the U.S. It’s a subsidiary of Gilat Satellite Networks Ltd., an Israeli company.

Part of the problem with satellite Internet service is that the users are all competing for time on the satellite. When WildBlue service launched in 2005, the first users were often ecstatic about it, because they weren’t so many as to slow each other down.

“It was really neat, because everything just worked. I would really call it ‘real broadband’ back then,” said Jeff Cashman, who uses the service to edit the Beaver Beacon monthly newspaper and to update Web sites from Beaver Island in Lake Michigan. The sandy island, a little more than 2 hours by ferry from Charlevoix, Mich., has about 600 permanent residents.

But WildBlue’s satellite started filling up, and in November last year, the company changed the way it divided the satellite’s capacity. The move allowed the satellite to accommodate more people, but slowed down response times.