CABLEVISION DBS PLAN MAY BE GRANDER THAN IT SEEMS

One big question hanging over Cablevision Systems Chairman Chuck Dolan’s ambitious plans to launch a direct broadcast satellite business is whether the service will have enough bandwidth for all he envisions. Last year, when EchoStar Communications sought to acquire rival DirecTV, Cablevision’s Rainbow Media proposed that EchoStar transfer some satellite capacity at one orbital location to Rainbow, so Rainbow could launch a service able to compete with the entrenched providers. Now, as it turns out, the frequencies allotted to Rainbow at the 61.5-degree orbital slot — the foundation of Cablevision’s forthcoming VOOM DBS service, but incapable of covering the entire country — appear to preface a far grander scheme. Rainbow DBS, which launched its first satellite in July, on August 27 applied to the Federal Communications Commission to build and launch as many as five additional satellites. The proposed service offerings include interactive data and video applications, streaming switched video applications and broadband data applications. It could take up to six months for the FCC to approve the applications, but two to three years before the company is able to implement its plan; EchoStar and satellite reseller Pegasus have also applied for two of the five slots. Cablevision applied for little used but powerful Ka-band frequencies, seen as the next frontier in the heated competition for spectrum space. “Ka-band is what the industry needs to be able to bring new content to more people,” said Jimmy Schaeffler, president and CEO of the Carmel Group. “I won’t say the existing Ku-band is tapped out, but it is limited. Ka-band is the next generation. What this is really all about is creating more bandwidth to deliver more content.” A unit of Hughes Electronics is readying to launch the SPACEWAY platform next year, which utilizes Ka-band. That service will be capable of providing any combination of data, video, audio and multimedia, according to Hughes. But the cost is steep — at least $1.8 billion to build and launch three satellites. In an e-mailed statement, Cablevision said “we believe there is significant opportunity in the Ka-band spectrum to potentially enhance Rainbow DBS’ satellite service and we are pursuing it,” but declined further comment. Schaeffler said he admires Dolan’s “pushing the envelope a little bit,” but stressed that Rainbow would face challenges in developing its service on Ka-band. Because Ka-band is at the highest end of the spectrum, noted one analyst, it is more vulnerable to disturbances in the atmosphere, so there is some uncertainty about the ability to deliver a reliable signal. The technologies that enable broadcasts from Ka-band are being developed, but are not yet available. Cost will be an issue. Although Cablevision is expected to spin off Rainbow to shareholders later this year, it would need huge amounts of capital, with no certain returns for years.