CTA Centennial Part 6c: Platform Wars – Airways (Part II)

18.07.2024 16:00

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(image credit: Vsatinet / Wikipedia)

This year marks the 100th anniversary of the founding of the CTA (Consumer Technology Association), which started out as the RMA (Radio Manufacturers Association). This is the fifth in a series of essays exploring and celebrating CTA’s and our industry’s first century of invention, innovation, and entrepreneurship, assembled from varying technology historical research and writings I have done over the course of 20-plus years, including from an annually updated industry history for CTA’s now-defunct Digital America, 20-plus years of CTA Hall of Fame inductee biographies, and numerous tech history articles for a variety of publications over the years.

Here are the previous chapters:

Last week in Part I of this chapter on airways platform wars we explored terrestrial wireless service (cellular) and the first direct consumer access to satellite technology – GPS.

This week we’ll explore how the satellite platform wars battles brought us TV and radio from the sky.

Big vs. Small Dishes

(image credit: DISH Network)

Fifteen years after Clark’s satellite TV prediction, the first satellite TV signal was finally transmitted, relayed from Europe via Telstar to North America. The first U.S. TV satellite was the Hughes Syncom-3, launched in August 1964, a geostationary satellite that sent TV pictures from the Tokyo Summer Olympic games back to the U.S., the first TV transmission to cross the Pacific Ocean.

The first global satellite TV transmission occurred on June 27, 1967, with the broadcast of “Our World,” a two-hour broadcast featuring global live look-ins and performances from 14 countries, capped off by the U.K. with a live performance by the Beatles of their new song, “All You Need is Love.” Our World was watched by an estimated 400-700 million people around the world, the largest TV audience at the time.

As it did with Sputnik, the Soviet Union also beat the West to direct-to-home geostationary satellite TV with Ekran, which beamed TV signals that could be received with a plain yagi antenna to homes in Siberia. England followed in 1989 with its Sky Television service.

(image credit: Radio World)

But the effort to bring satellite TV to U.S. homes was already well underway. Several million subscribers already received TV via C-band satellite. Except C-band TV required a receiving antenna dish up to 16 feet wide not affectionally dubbed BUD – Big Ugly Dish – expensively mounted in a huge, treeless yard. In 1991, a cable-owned subscription analog satellite program supplier called PrimeStar launched a Ku-band service that would become generally referred to as DBS (Direct Broadcast Satellite), but even this system needed a three-foot-diameter dish.

In 1981 Stanley S. Hubbard, CEO and chair of the Minnesota-based Hubbard Broadcasting founded by his father, created United States Satellite Broadcasting (USSB) to create a new satellite TV business that employed more practically sized receiving dishes.

Hubbard and his son, Stanley E., then established the first satellite news-gathering company, Conus Communications, and became the first broadcaster to own a Ku-band transponder at a time when the three major networks pronounced that satellite news gathering would never work. At its height, Conus serviced more than 150 television stations around the world.

See also: CTA Centennial Part 5d: A Decade of Disruption – 1984 ‘Phones It In’

Confident that the satellite TV business would be a big part of television’s future, Hubbard gathered investors as digital video technology improved to make the concept of satellite TV increasingly viable. In 1991, Hubbard bought five transponders on General Motors’ Hughes Aircraft broadcast satellite for more than $100 million.

Meanwhile, in 1987, Hughes Communications senior VP Eddy Hartenstein also saw potential in satellite TV. Hartenstein had joined Hughes Aircraft in 1972 while earning his master’s in applied mechanics from Cal Tech, rising to VP by 1981. In 1984, Hartenstein left Hughes to become president of Equatorial Communications Service. He returned to Hughes Communications in 1987 as a senior VP.

Eddy Hartenstein (Photo by Branimir Kvartuc)

Back at Hughes, and also working with NASA’s Jet Propulsion Laboratory, Hartenstein demonstrated a knack for anticipating and actualizing future trends and held a number of increasingly high-profile positions. One such position was expanding Hughes’ acquisition and deployment of commercial communications satellites. He directed the development and marketing of the original Galaxy satellite fleet, which served the fast-developing broadcast television and cable programming industries.

Mirroring Hubbard’s efforts, Hartenstein was named president of a new Hughes-owned subsidiary to develop direct-to-home satellite TV service in 1990. Hartenstein organized the new business, assembled the executive team, and transformed a mere concept into DirecTV, then formed a three-way partnership to create DSS (Digital Satellite Services). DirecTV would build the DSS satellites that would be launched by Hughes. Hubbard and USSB, along with DirecTV, would supply subscription digital TV services.

Also, Thomson Consumer Electronics won a bidding war to develop, manufacture, market, and sell the consumer 18-inch consumer dish and receivers under the still-potent RCA brand. DSS’ DBS service effort would be backed by all three partners with a $50 million market development program. On December 17, 1993, Hughes launched the first DirectTV satellite.

Under the direction of ebullient Thomson executive VP of sales Joe Clayton, DirecTV went on sale on a sweltering Friday, June 17, 1994, at a gala media event at Cowboy Maloney’s Electric City Super Store in Jacksonville, MS. This relatively rural location was chosen since DSS was designed to appeal to more remote consumers unable to get wired for cable service or receive decent over-the-air broadcasts. The first DSS system was sold to local car dealer Lemoyne Martin, a friend of the Maloney family.

The DirecTV dish-receiver system Martin bought cost $699 plus installation. Service started at $21.95 a month. Subscribers could access up to 75 digital basic and pay channels, 150 after Hughes launched a second DirecTV satellite in August 1994.

Within a year, DirecTV had more than a million subscribers and more than 8.5 million by August 2000, posing a direct competitive threat to the expanding cable TV business. In 1996, an IPO earned USSB $224.1 million and a value of $3 billion. Other manufacturers, including Sony, soon began to sell DirecTV gear.

But DirecTV quickly had DSS platform competition. Before DirecTV had even sold its first consumer system, PrimeStar claimed to be “America’s first fully digital television service,” a claim DirecTV vehemently disputed. Rather than sell directly to consumers through retail channels, PrimeStar sold its satellite TV system through existing cable TV distributors, with the consumer paying a subscription fee that covered both programming and hardware rental.

(image credit: Reddit / Reno62793)

PrimeStar, however, didn’t fare well against DirecTV and its more familiar and trustworthy array of hardware brands, or against another DBS platform created not by existing satellite or TV corporate giants, but by, shall we say, a less likely set of bootstrap entrepreneurs.

In 1980, former CPA and Frito-Lay financial analyst Charlie Ergen and a friend, Jim DeFranco, drifted to Las Vegas to make their way as professional gamblers but were soon evicted from a Las Vegas casino for card counting. At loose ends, DeFranco spotted a truck carrying a large C-band satellite dish and he and Ergen saw a business opportunity. DeFranco, Ergen, and Ergen’s wife, Cantey – known as Candy – started EchoSphere, a door-to-door C-band satellite TV sales and installation business.

The trio pooled $60,000 in savings, bought two satellite dishes, and headed to Colorado – they figured folks got poor over-the-air reception in the mountainous state. But a strong gust of wind blew their trailer off the highway and into a ditch, destroying one dish and leaving them with only one working sample, which proved to be enough.

Operating on a shoestring, Ergen and DeFranco would drive their truck to rural towns to deliver the C-band dishes for up to $15,000 plus $600 for installation, a dollar per mile more past 50 miles from Denver – unless the pair was allowed to spend the night at the customer’s home. By 1985, EchoSphere had earned more than $100 million in revenue.

But Ergen believed the only real path to growth was to launch his own satellite TV service. In 1987, Ergen and DeFranco applied to the FCC for a DBS license, which was approved in 1992.

Ergen contracted with China to launch his bird, then watched nervously as two rockets crashed and burned. But Ergen gambled and, on December 28, 1995, the third rocket bearing EchoStar I was launched successfully from Xichang, China. DISH, with a newly built satellite uplink center in Cheyenne, WY, began broadcasting in March of the following year. A second satellite was launched and a second customer service center opened later that year.

Within four months, DISH reached the 100,000 subscriber milestone. That rapid growth continued into the next year when the company celebrated its millionth customer following the launch of EchoStar III on October 5, 1997, from Cape Canaveral, FL.

Two years later, EchoStar bought the broadcasting assets of a satellite broadcasting joint venture of News Corporation’s ASkyB and MCI Worldcom, more than doubling DISH’s continental U.S. broadcasting capacity. In 1999, the company acquired more satellite capacity. Later that year, DISH unveiled the DISH 500, the world’s first satellite TV system with more than 500 channels. By 2000, DISH programming reached 5.2 million subscribers.

To keep pace with EchoStar, in successive deals in January 1999, DirecTV first bought PrimeStar for $1.82 billion then USSB for $1.3 billion. A proposed DirecTV-EchoStar merger was engineered but denied by the FCC in 2002. As a result, the bulk of the DirecTV v. DISH satellite TV platform battle would play out during the first decade of the new century.

Satellite Radio

If digital video could be transmitted from satellites directly to consumers, why not digital audio?

The seed for satellite radio was planted in 1992 when the FCC allocated spectrum in the so-called “S-band,” 2320-2345 MHz, for Satellite Digital Audio Radio Service (SDARS), which would be split to accommodate two operators.

Several companies immediately petitioned the FCC for the two SDARS licenses. The FCC decided to hold an auction between April and October 1997, then announced that American Mobile Radio, renamed XM, and CD Radio, which would change its name to Sirius in 1999, had submitted the winning SDARS bids. The two companies developed and then implemented the first major advancement in radio since Edwin Howard Armstrong invented FM radio, revitalizing the radio industry.

Work on what would become Sirius actually started nearly a decade earlier, however, and today’s satellite radio service was largely created by pioneering satellite engineer Robert Briskman.

Already a satellite communications legend by this time, like Qualcomm’s Irwin Jacobs, Briskman could have been contemplating retirement as he approached his 60th birthday in 1990.

Born in New York City on October 15, 1932, Briskman earned his B.S. in engineering from Princeton University in 1954, and his master’s degree in electrical engineering from the A. James Clark School of Engineering at the University of Maryland in 1961. Even before he was out of school, Briskman started innovating. While chief of program support for NASA’s Office of Tracking and Data Acquisition during the early years of the U.S. space program (1959 to 1963), he invented the unified S-band microwave communications system used by the International Space Station, receiving NASA’s Apollo Achievement Award for his work.

Robert Briskman

After leaving NASA, Briskman worked for the Communications Satellite Corporation and then COMSAT, holding a wide variety of positions until 1985. Briskman was responsible for or was involved in a long list of satellite communication firsts, innovations, and implementations, including satellite command and control for the launch of INTELSAT I (nicknamed Early Bird, the first commercial communications satellite), the development and implementation of the INTELSAT global communications system, the COMSTAR satellite system, and the first TDMA system used for voice and data communications services.

Briskman then served as senior VP of engineering for Geostar from 1986 to 1990, where he was responsible for the development, design, implementation, and operation of the company’s Radio Determination Satellite Service (RDSS), which enabled positioning and message communications between mobile users and dispatch centers.

(image credit: Radio World)

In 1990, former Geostar president Martin Rothblatt founded MARCOR, an incubator company, and asked Briskman to come aboard to assist in several of the proposed development ventures. One venture was helping Hartenstein launch DirecTV, with Briskman suggesting that while satellite TV service would serve consumers at home, perhaps there ought to be a companion satellite radio service for drivers. Perhaps not coincidentally, another incubator company, Satellite CD Radio, was established to discover if the idea of satellite radio was feasible. Briskman obviously thought it was.

During the first years of the Satellite CD Radio venture, Briskman transformed his satellite radio theories into patented developments on satellite spatial and time diversity, which enables mobile users to receive satellite audio transmissions with almost no outages. He implemented the entire satellite radio technology infrastructure – the satellites, earth stations, terrestrial repeaters and consumer receivers – to make satellite radio practical. His efforts also included SDARS.

Briskman also designed low-cost nearly outage-proof consumer satellite receivers for homes and cars, and designed and built the earth stations and satellite control facility technologies to complete the Sirius system.

On the business side, Briskman helped procure the radio frequency allocations from the FCC, and aided CD Radio CEO, David Margolese, in raising the needed $1.4 billion to launch the service. In 1999, the company was re-named Sirius Satellite Radio.

(image credit: SiriusXM)

Both XM and Sirius launched their satellites in 2000. XM’s two Hughes-made geostationary satellites were nicknamed “Rock” and “Roll” for use in the 2320-2345 MHz band, while Sirius’ three Briskman-designed geosynchronous birds transmitted in the 2320-2332.5 MHz band. To avoid satellite signals being blocked by trees or buildings, Briskman devised unique “figure 8” elliptical geosynchronous orbits to achieve the highest possible elevation angle of the satellites to the mobile receivers and ensure continuous coverage.

Ironically, despite Briskman’s work, XM actually beat Sirius to the airways when it went live on September 25, 2001, available nationally two months later. Sirius inaugurated its service in four states the following February, then nationwide on July 1, 2002. Both companies partnered with a variety of hardware makers – once again, forced to choose between competing non-compatible platforms – to manufacture and sell home, car, and portable satellite radio receiving devices.

The satellite radio platform war was played out mostly in the new century and was delightfully short, thank-you-very-much. Sirius licensed Briskman’s superior technology to XM, then the two competitors merged to form SiriusXM Radio in July 2008.

Of course, transmitting digital audio and video in their purest forms through the air or cables is difficult if not impossible – the digital files are just too enormous to effectively travel through available wireless bandwidth or through metaphorically thin copper or even fiber optic pipes. To make the transmission of digital audio and video possible, the data had to be compressed. Next week we’ll explore the varying visual and audio compression technologies developed during the late 1980s and 1990s that make today’s digital multimedia entertainment possible.