BellSouth Corp. is breaking into the satellite TV business with a service it plans to launch with GE Americom in selected markets by early next year.
Initially aiming the 160-channel service at its customer base of 14 million households, by 2002, BellSouth intends to build a service of several hundred channels to as many as 50 million households as far west as Texas and along the East Coast.
"We think we're going to have a very competitive offering," said Bob Frame, president of BellSouth Entertainment, citing strong customer demand for BellSouth's Americast digital TV service, which currently reaches 120,000 customers. They pay an average of $54 per month for service, he said.
Reacting to a published projection that the new service could produce annual revenue of $3 billion, Frame said, "Ultimately, we believe we can build a business that has that kind of scale."
The satellite service, to be delivered on a GE Americom satellite launching later this year, will basically mirror the Americast service, which comprises digital basic and pay cable channels. But BellSouth envisions adding interactive TV functions through digital set-top boxes equipped with hard drives and capable of caching movies and Internet content. "It's a fundamental shift," said Frame. "We're going to take the lead in how people watch TV and what they use TV for."
For starters, BellSouth will stick to basics, planning to deliver local TV signals along with the cable signals to approximately 90% of the markets in its service area, according to Frame, who expressed confidence in the telco's ability to negotiate retransmission agreements.
Negotiations with prospective set-top makers and other hardware suppliers are under way, according to Frame. Zenith Electronics and Pace Micro supply the set-tops that BellSouth's Americast customers use. BellSouth satellite customers will also need 30-inch Ku-band dishes to receive the service.
The GE Americom satellite and two birds that will be subsequently launched to support the service will have a national footprint but will use "focused power" to deliver signals to the Southeast and contiguous areas.