Microsoft and Gilat Satellite Networks are partnering for delivery of two-way Internet access to consumers, marking another entry into the rapidly-developing satellite broadband business. The high-speed Internet offering will be delivered via two-way satellite connections. Trials of the product have started, and availability of the service is expected at the end of 2000. Gilat formed a new company, Gilat-To-Home, to deliver the broadband service. After receiving all necessary approvals, Microsoft expects to invest $50 million in the effort, and it will initially hold a 26 percent stake in the new company. In addition to its cash investment, Microsoft will purchase "a significant number" of VSAT units over a four-year period. The software giant also will lend its MSN brand to the partnership.

---

DISH Eyeing Data and Spot-Beam Birds?

Reports that EchoStar may announce its data and spot-beam strategy next week pushed the stock up more than $2 to $91.44 Wednesday. Rob Kaimowitz of ING Barings said EchoStar is putting together plans for several new spot-beam satellites. Those birds could provide more local channels and coverage of additional markets. They also will help the company meet must-carry requirements that become effective in 2002. In addition to more local channels, new satellites will allow EchoStar to further develop its interactive and Internet businesses. Those offerings could help EchoStar with sales of its interactive DISHPlayer receiver, Kaimowitz said. Kaimowitz, one of EchoStar's biggest fans on Wall Street, reiterated his "Strong Buy" rating and placed a $110 year-end price target on the DISH stock. "However, we see the potential for significant upside to our price target," he said Wednesday. "These upside catalysts include EchoStar's data strategy, accelerated subscriber growth due to local channel availability and the potential for industry consolidation." Kaimowitz also projected that EchoStar will capture roughly 50 percent of the market share in DBS, resulting in 1.7 million new subscribers in 2000 and roughly 15 million total subscribers by 2009. He also said DBS should capture 30 percent of the domestic pay TV market in the United States during the next 10 years, resulting in more than 35 million total DBS subscribers by 2009.

---

XM-Sirius Unite For DARS Standard

The nation's two DARS platforms have agreed to develop a unified standard for satellite radios, an effort that will allow consumers to purchase one unit capable of receiving broadcasts from both companies. XM Radio and Sirius said they will jointly fund development of the technology and work together to proliferate the new standard by creating a service mark for satellite radio. As part of the agreement, each company will contribute its intellectual property to the initiative and have agreed to resolve any pending patent litigation. Both companies also will work with their respective automobile and radio manufacturing partners to integrate the new standard into future equipment. The unified standard should show up in the second generation of satellite radios. Sirius is set to launch its satellite-based radio service later this year. XM may make its debut in early 2001.

---

House Committee Passes Rural TV Bill

The House Agriculture Committee approved legislation containing a $1.25 billion loan guarantee to assist non-profit organizations in providing local broadcast television services to rural areas. The bill now moves to the full House. House Speaker Dennis Hastert has voiced support for the bill and may seek an expedited vote on the measure. "The House Agriculture Committee sent a clear message today - rural Americans are not second class citizens and they deserve access to the same news and information services as urban Americans," Bob Phillips, president and CEO of the National Rural Telecommunications Cooperative, said. "H.R. 3615 is the right bill at the right time to address the lack of access to broadcast signals in vast areas of the country." Republican Bob Goodlatte and Democrat Rick Boucher, both House members from Virginia, are sponsoring the measure. Their legislation, the Rural Local Broadcast Signal Act, was introduced last week with 110 co-signors. The two lawmakers began working on a rural TV program in the fall.

---

Pegasus Reports 1999

Pegasus Communications, the largest independent distributor of DirecTV in the National Rural Telecommunications Cooperative, reported that net revenues jumped 76 percent to $343 million and pre-marketing cash flow rose 68 percent to $102 million during 1999. The company also said that its DBS operations are serving more than 1.1 million subscribers on a pro-forma basis as of Jan. 31. Those numbers include customers served by Golden Sky Systems, Pegasus' pending acquisition. In addition to year-end numbers, the company reported results for the quarter that ended Dec. 31. Pegasus' net revenues were $104.4 million for the three-month period, an increase of $40.2 million over numbers reported during the same period in 1998. The company's net loss applicable to common shares increased $6.1 million to $50.5 million. DBS net revenues increased $36.7 million, or 71 percent, for the quarter ended Dec. 31 when compared to the same period in 1998. Net revenues were $88.172 million. The average monthly revenue per subscriber increased $3.97 to $45.37 during the 1999 quarter.

---

INTL: Bell ExpressVu Chases MDU Market