Star Choice founder gets into broadband satellite game with new venture, LinCsat

The founder of Star Choice Communications Inc. is getting back into the satellite game to provide two-way high-speed Internet access via satellite to under-served communities in Canada. Toronto-based LinCsat Communications Inc., founded by Brian Neill, has already begun offering the DirecWay broadband access service in several Canadian communities, and plans to officially launch service by the end of the first quarter, supported by an anticipated network of thousands of dealers. By the end of the first quarter of this year, the company expects to be in about 50 regions across the country. No specifics have been divulged, but Neill says arrangements are being finalized within the next week. He adds that within the first six months of this year, LinCsat will have between 3,000-4,000 dealer locations across the country selling the systems and service. LinCsat was launched last November as a subsidiary of iMark Corp., a digital media company developing content for broadband networks. Neill, chair and CEO at LinCsat, says the company began contemplating selling Hughes Network Systems’ DirecWay service shortly before LinCsat’s founding, and the decision to move forward on that front was made a short time following the beginning of negotiations with the satellite giant. "It wasn’t quite that quickly, although we really only started talking to Hughes about this particular application probably a month before (the launch)," Neill tells Report on Wireless. "(But) by November we had a path set and we knew what we wanted to do so it was appropriate to get a name and a subsidiary organized to do it and all that stuff." LinCsat will market directly the DirecWay service, but will also sign up thousands of retail dealers to sell the equipment and service. The company is targeting all three major market segments: residential, small and home office settings, and larger commercial operations. Using previous connections to pick dealer locationsUnder Neill’s leadership, Star Choice’s dealer network grew to be one of the most extensive in the country. Even at the company’s outset, it was able to capitalize on using retail outlets, out-dueling ExpressVu in the early days of satellite TV (for more on this, see the March 13/96 edition of RoW affiliate publication, Canadian Communications Reports). The Star Choice satellite TV service is now sold by a network of 4,000 retail outlets across the country, and much of that comes from Neill’s efforts to expand the reach of Star Choice. Getting this type of service into as many homes or businesses as possible depends on a solid network of dealers with sufficient knowledge of the system, making training a significant element to the strategy. For the past couple of months, the company has been conducting training sessions with a select group of dealers that will be an integral element in LinCsat’s official launch over the coming months. Neill notes that some sessions still remain to be completed. The initial 50 locations were selected based on several factors, says Neill. "We wanted to start with (a particular set of dealers) because of their locations and because of their history," he says, referring to their previous relationship with Neill and Star Choice. "And they also have a pent up demand for the product (and services)." Competition is good for businessIn Canada, C-COM Satellite Systems Inc., Ottawa, is the only other provider of DirecWay services, and Neill says that competing with it will only make LinCsat work harder to get customers. While some end-users will be more comfortable with one dealer over another, he says that at the end of the day an increased level of competition will only serve to expand broadband services into the under-served regions of the country. "It doesn’t matter what business you’re in, you’ll probably do a better job if you have competition," Neill says. "You get more brand awareness and you get more noise going on in the marketplace." The competition will also help to speed up a decrease in equipment prices. As more people sign up for the service and more satellite dishes and set-top boxes get deployed, the whole package will become cheaper, explains Neill. "These services over the next couple of years will all get cheaper, the hardware in particular always gets cheaper because once you mass produce it, you can buy it cheaper," he says. Marketplace will support pricesBoth LinCsat and C-COM offer broadband Internet access services that exceed the $125/month range, and both believe that there is a segment of the market that will support those relatively high prices. Neill recognizes that LinCsat’s residential service offering at $129/month (plus equipment, installation and licensing) is more than double the rates offered by incumbent DSL and cable providers. But what many forget, he says, is that residential DSL services in Canada are subsidized by the phone company, creating a large pricing gap between the two services. That’s not true, he says, of the business access market where competition among satellite, wireless, and wired systems such as DSL and cable is fought on a more level playing field because existing high-speed services aren’t subsidized by incumbent players. In many cases, signing up small businesses to the DirecWay broadband satellite offering is no more expensive than using DSL services. The only difference is that the satellite offering can be used in more rural and remote locations, explains Neill. "So if you’re talking about a five to 10 person office, remote office or doctor’s office that would have the need for high-speed online access, this is just as cheap if they could get DSL," he says. "And we think there are going to be many cases where somebody who has a multi-office setup (with) 10 offices across the country and they’re all relatively small, this would be a cheaper solution for them rather than having 10 DSL hookups in 10 different communities." Neill explains that there are many situations where DirecWay is a superior alternative to wired solutions, which creates a significant market upside. "Assuming we don’t get into the subsidy game like we did in the TV business, it really doesn’t take a huge market share for us to become pretty successful," he says.

Star Choice founder gets into broadband satellite game with new venture, LinCsat

News | January 22, 2002

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