Page 72 - Communication Commerce and Power The Political Economy of America and the Direct Broadcast Satellite

60 Communication, Commerce and Power

increasing the demand for the liberalisation of equipment.
Alliances formed between large users, equipment manufacturers
and computer service companies in opposition to AT&T. 86

Nevertheless, by 1980, four of the eight companies that had been
granted telesatellite licenses by the FCC in 1972 had abandoned their
projects and had collectively lost approximately $576 million. Those
87
companies that successfully established telesatellite systems in the
1970s - RCA and Western Union - found that persistent techno-
logical difficulties and AT&T's ongoing control over local networks
and interconnection facilities provided them with little or no real
opportunity to compete in the telephone services market. The most
significant of their technological problems involved the inability to
provide two-way voice communications exclusively over telesatellite
transponders due to the presence of voice echoes. As such, until the
development of an echo-cancelling technology, telesatellites practi-
cally could only be used in one-way communications, such as the
transmission of a television signal. 88 As an unexpected result of
these shortcomings, long-distance television signals enjoyed excess
transmission capacities. This capacity glut unexpectedly stimulated
the rapid development of US cable television services beginning with
the Home Box Office (HBO) movie channel. By the end of 1979,
twenty of the twenty-four RCA Satcom I system transponders dis-
tributed cable television programing to cable distributors located
throughout tqe country. 89 This largely accidental impact on the US
cable television industry, the entrenched anti-competitive interests of
the NAB, and the remarkable growth of in-home videotape technol-
ogies beginning at the end of the 1970s, coalesced in the early 1980s to
retard the economic feasibility of America's first DBS services.

3.4 THE RISE AND FALL OF DOMESTIC DBS: 1980-1984

In 1980, the first telesatellite to make use of Ku band frequencies was
a company jointly owned by IBM, Comsat and Aetna Life Insurance,
called Satellite Business Systems (SBS). The SBS venture hoped to
provide customers with integrated intra-corporate computer and voice
telecommunications through the use of relatively sophisticated roof-
top receivers. Opposition by both AT&T - which recognized its
potential large-scale revenue losses resulting from this type of service
- and other computer manufacturers (who feared the perpetual