EchoStar Communications Corp. [DISH], solicited to become a backer in StarBand Communications, has millions of satellite TV customers who would be good candidates to use the same technology for their Internet connections, they explained. EchoStar offers StarBand's satellite Internet service in a package with satellite TV.

One big drawback, however, is the price of satellite Internet service, compared to its terrestrial alternatives' digital subscriber line (DSL) services and cable modems. Christopher Baugh, principal analyst with Cambridge, Mass.- based research firm Northern Sky Research, estimated that two-way satellite Internet service costs $70 per month for consumers. This price is about $15 per month more than DSL, he noted.

Jose del Rosario, a strategic analyst with Frost & Sullivan, concurred that satellite Internet prices are too high. Pricing is a key factor for satellite-based Internet services. The industry needs to price competitively with other technologies to move beyond its role as the gap-filler of communications services.

If Internet via satellite fails, satellites will remain a niche market, Rosario warned. He said DBS has been the driver in the satellite market, amassing 50 percent of that market. Satellite Internet services need to team with DBS providers and corporate VSAT providers.

All the broadband satellite capacity combined would fit on a single fiber-optic strand, Rosario said. Satellite-based Internet will have to find a different business model than competing directly with fiber optics, he added.