EchoStar's iSKY Investment Brings DISH Network Closer to Two-Way Interactivy

In an effort to become more competitive with broadband, EchoStar Communications Corporation (Littleton, CO) has announced a $50 million investment in iSKY, an Englewood, CO-based start-up offering two-way, high-speed Internet access.

EchoStar will distribute iSKY's service, which is expected to begin with the launch of its Ka-band satellite in Q3 2001, along with its DISH network satellite broadcast programming. EchoStar will own up to 12% of iSKY, formerly KaStar Communications Corp., and could increase its stake up to 20.8%. Under the agreement, EchoStar will also receive a substantial revenue-sharing payment and obtain a seat on iSKY's board of directors. iSKY and EchoStar have mutual, long-term bundling rights to sell each other's service.

Customers will need to install a slightly larger, 26-inch dish to receive signals from both EchoStar's and iSKY's satellites. Both companies claim the service will be the first high-speed two-way Internet access provided by Ka-band, an always-on connection capable of delivering data at speeds of 1.5 Mbps or more.

EchoStar signed a similar broadband agreement with Gilat last month and expects to offer limited service from Gilat's platform later this year. DirecTV, which offers its DirecPC broadband service, is also allying with AOL to develop and market its two-way high-speed Internet service.

By Tom Butts