Page 73 - Communication Commerce and Power The Political Economy of America and the Direct Broadcast Satellite

Telesatellite Policy and DBS, 1962-1984 61

dominance of IBM hardware) 90 succeeded in having the introduction
of SBS services delayed on antitrust grounds for almost five years
until federal courts finally permitted its operation. Having invested
approximately $1.26 billion in its new telesatellite system while failing
to attain its anticipated customer base, SBS narrowed its service
offerings to intra-corporate telephone services only. Nevertheless,
SBS established the first competitive challenge to AT&T's national
long-distance monopoly. 91 Significant for DBS, however, was the
successful establishment of commercial Ku band applications. As
discussed below, one of SBS's parent companies, Comsat, sub-
sequently filed America's first DBS license application with the FCC.
Comsat officials recognized that a DBS service in the United States
was a risky proposition. In addition to the high overhead costs
involved in establishing such a system, 92 millions of household con-
sumers would have to be convinced to pay several hundred dollars for
a reception unit accommodating just four or five new television chan-
nels. The rapid growth in the early 1980s of cable distribution services
in urban centers, the emergence of alternative microwave relay ser-
vices in rural areas, the initial use of large backyard dishes mounted to
receive telesatellite signals intended for cable redistribution compa-
nies, and the introduction of household VCR technologies collectively
made DBS an unlikely economic success at that time. Nevertheless,
93
Comsat estimated that the potential benefits of establishing a contin-
ental television system (at a fraction of the set-up costs of terrestrial-
based networks) justified the risk. It would cost approximately $683.6
million to put its DBS project into operation by 1986. Its initial plan
94
involved the use four high-power telesatellites to provide North Amer-
icans with transmissions using a 2 or 3 foot reception dish. As project
costs rose and other difficulties developed, Comsat modified its plans
several times. 95
As discussed in Chapter 4, the ITU's World Administrative Radio
Conference (W ARC) had set aside parts of the Ku band for DBS
services in 1971. In 1977, however, when nation-state officials met
again to allocate specific geostationary orbital positions, US officials
convinced most of its regional neighbors (in North, Central and South
America) that these allocations should be delayed until technological
advancements enabled (presumably private sector) officials to make
more 'rational' evaluations as to how best the resource should be
exploited. Thus, in 1977, the United States orchestrated a postpone-
ment of W ARC assignments for Greenland and the Americas
(referred to as Region 2) until1983. However, these six years provided