Hughes Galaxy Licensed by FCC for DBS—SCG Journal January 1985 transcribed by Faith MacPherson

“Round two” of the regulatory bouts to establish DBS licensees ended at the Federal Communications Commission last month, and when the bell sounded, four more firms won permits for DBS space systems and two were asked to amend their filings.

Hughes Communications Galaxy was among the four firms granted DBS licenses by the FCC as it passed judgment on the second group of applications from companies seeking the right to establish TV direct broadcast satellite systems.

The permit authorizes Hughes Communications Galaxy to build a direct broadcast satellite system with 32 channels of television programming from a single orbital location. Two 16-channel satellites will be used, each one covering half of the continental Unites States (CONUS). HCG wants to position the system at 101 degrees west longitude.

The construction permit was granted in December, after which HCG submitted a construction contract for the two-satellite system with Space and Communications Group to show due diligence. Orbital slot and frequencies for the colocated spacecraft will be assigned after the FCC approves the due diligence showing.

In announcing the license, HCG President Steve Dorfman said, “Our unique approach to direct broadcast service provides a different approach to the technical and marketing questions faced by prior applicants. We will be able to offer an unprecedented diversity of programming at lower cost per channel by placing two 16-channel, medium power satellites in the same orbital slot. “

Hughes Communications Galaxy plans to operate its DBS system on a condominium basis, as it has successfully with cable TV distributors on Galaxy I. “The closest analogy would be to Galaxy I,” Dorfman told an industry newsletter in December. “The general plan is that we would not be a programmer. We would provide capacity to programmers. It wouldn’t necessarily be the cable TV people we have on Galaxy.”

Among the possible candidates to start a DBS service aboard a Hughes DBS system would be such current Galaxy transponder owners as Home Box Office and Showtime/The Movie Channel; both of which are important producers and suppliers of premium cable TV entertainment.

Bob Waldron, HCG senior vice president who’s managing Hughes Communications Galaxy’s new business efforts, said that the success of HCG’s DBS venture lies in program diversity. “We think the key is to give the customers a good selection of programming, so now we’re actively marketing the service with programmers to build a DBS ‘Galaxy Club’ similar to the group of distributors who transmit over the Galaxy I spacecraft,” he said.

Waldron said the target market for a Galaxy-type DBS service would be non-cabled areas or locations where geography interferes with good reception of over-the-air television transmission, or where the quality of cable systems is marginal.

The three organizations which were licensed with HCG were:

• Advanced Communications Corp., which plans two six-channel satellites at 101 degrees and 148 degrees west. ACC plans to program its satellites with entertainment and educational services, while leasing some transponders to other programmers.

• National Christian Network Inc., which applied for six half-CONUS channels each at 101 and 148 degrees to offer free-to-the viewer religious, cultural, educational, and other programming. The company plans to operate as both programmer and common carrier.

• Satellite Syndicated Systems Inc., which wants six half-CONUS channels each at 101 and 148 degrees west or alternatively at 110 and 157 degrees.

The construction permits give the holders license to build, launch, own and operate direct broadcast satellite systems to transmit television to residence-mounted antenna dishes approximately 1.5 meters or less in diameter. The quartet join the three “first round” firms sanctioned by the commission in July 1984: Comsat’s Satellite Television Corp. (STC), Dominion Video Satellite which has a contract with Hughes SCG, and Unites States Satellite Broadcasting.

The FCC gave two of the other second round filers – National Exchange Inc. and Satellite Development Trust – 45 days to amend their filings to address FCC concerns about relatively low power levels they proposed to use.

The FCC has opened a third round of DBS applications, setting Feb. 4, 1985, as the cutoff date – 45 days from the commission’s Dec. 20 public notice.

Ironically, the announcement of the new licensees came on the heels of the announcement of a casualty among the first-round DBS hopefuls. STC, the first company to file for a DBS license back in 1981 and viewed by many within the industry as the company with the best chance of making a go of its proposed venture, dropped out.

STC said that it was “redirecting” its approach to DBS, declared as a loss $24 million already spent on STC’s non-satellite assets; and said that it had terminated merger discussion with United Satellite Communications, the company which has been using the SCG-built Anik C3 for a medium power direct-to-home service in parts of the Midwest and northeastern United States. Earlier in 1984, joint venture talks between STC and CBS (itself a DBS dropout) also ended unsuccessfully.

In 1982, STC contracted with RCA Astro-Electronics for two high-power DBS satellites. Comsat has told the FCC that construction will be completed on the satellites, but how the company intends to use the vehicles is not clear.

STC is the latest in a series of first-round dropouts. Last summer CBS decided to bow out, citing costs and risks. Western Union singled out market uncertainties in conceding the business to the entertainment industry. And RCA Americom disclosed that it was discarding its high-power system plans and would refile for a medium powered system similar to the Hughes approach.

Despite the risks inherent in starting business in a new marketplace, SCG’s DBS satellite customers are moving forward with confidence. A Dominion Video spokesman said that the Naples, Fla. – based outfit intends to broadcast religious, family-oriented, educational, news and public affairs programming. It wants to lease its channels at cost to programmers and sell earth stations to viewers. With other companies supplying the programming, Dominion will be able to concentrate on building a base of earth station owners for the special DBS service. “We think we will be the first to put a large audience in place,” the spokesman said.

I can’t guarantee there will be a market-place for DBS but I think we have the best chance of succeeding,” Hughes Communications Galaxy President Steve Dorfman told Satellite Week. He said Hughes will be successful if it wins one-third of the noncabled market, said to be 15 to 20 million TV households, but “five million customers is more than enough to support DBS.” Programmers “have a lot of interest” in the opportunity to market satellite-delivered services directly to home viewers – “interest tempered with caution because [of the major investment necessary] to enter a new and relatively costly marketplace.”

HCG wants to orbit its birds in July 1989 and December 1989 – “thereby giving us time to do the planning necessary to get a successful DBS business going. If it looks good, we will consider accelerating.”

“It’s a question of timing,” SCG President Albert Wheelon explained. “Direct broadcast TV, like many other technical innovations and emerging services, is taking longer to evolve than its advocates had hoped, and perhaps less time than its detractors imagined. The technology is ready. It offers a highly efficient means of distributing TV over a wide geographical area. What is retarding the emergence of DBS is largely a business issue. When it becomes evident that DBS offers a service at a competitive price for a suitable-sized market, the business will take root. The financing which is now so elusive will be there. Then the merits of the concept will be judged where they should be – in the marketplace.”

 

 

 

 

 

 

One thought on “Hughes Galaxy Licensed by FCC for DBS—SCG Journal January 1985 transcribed by Faith MacPherson

  1. I didn’t know it at the time but the DBS satellite (later renamed DirecTV by Eddy Hartenstein who carried the business to fruition) was to change Hughes Aircraft forever. But it took 10 years to get into the business and start collecting revenues. By then competitors were offering half a billion dollars for DBS orbit slots which we got for free. Jerry Farrell took the lead in putting our application together in 1984.