DBS Convergence

3 converging technologies:

• DBS & Multimedia
• Hughes, EchoStar moving ahead
• Ka-band and 2-way Ku-band service
• Two-way set for Fall 2000
• DirecPC will migrate to Ka-band
• Starband tied to EchoStar
• Terrestrial is going digital

Convergence...

• Isn't the same thing for everyone
• Isn't a change in consumer behavior
• The den & living room won't merge
• Entertainment will remain passive
• Is deal driven
• DirecTv & AOL, AT&T & TCI
• Is where the cash flows converge

U.S. DBS sub projections

DirecTv & Multimedia

• Four levels of TV-centric service
• Basic box with Wink layer
• Web-TV with PVR, Internet access
• Tivo PVR with 30 plus hours of capacity
• AOL-TV service
• Pegasus getting into game
• Pegasus Broadband/DirecPC
• NRTC offers DTN

Several EchoStar platforms

• Dishplayer a hit
• HDTV receiver shipping
• Can it keep up with demand?
• WebTV integrated at set top box
• OpenTV OS integrated into boxes
• Wink-capable, Wx service up now
• Proprietary & legacy, PC & TV-centric

Satellite Radio Systems

• DAB/DARS systems
• U.S. systems S-band, conditional access
• Sirius will use 3 satellite Molniya orbit
• Two satellites are up
• Satellites & cars will move
• XM using standard GEO orbit
• 2 satellite constellation
• WorldSpace GEO
• Free to air system

Targets existing high demand need

• Critical to a consumer electronics hit
• Lessons learned from DBS & GPS
• DBS just offered more and better TV
• GPS not a luxury in Japan
• New needs are built slowly
• Research supports DARS demand
• Half of regular listeners to CD-quality audio interested in buying DARS for car or home [CEMA]

Satellite radio, 31 Dec 2005

• Tellus: 16 mil SDARS subs in U.S.
• 10.6 mil light vehicles, most aftermarket
• 1.8 mil RV's and trucks, 3.6 mil homes
• Other projections vary
• Yankee Group: 33 mil subs
• Investment analysts: 17 to 19 mil subs

U.S. SDARS sub projections

U.S. DBS data market growing

• Tellus Venture Associates projections show by Year End 2003...
• 338 Mbps of U.S. DBS bandwidth allocated to data & multimedia services
• 2.1 million DBS PC households
• Approximately 10% penetration of DBS HHs
• 166K HHs will have satellite Internet access - numbers could be revised
• Ka-band systems will spur jump

DirecPC hasn't caught fire

• Estimate 40 to 50K SOHO subs
• In market for 4 years
• Telco return, metering problematic
• Consumer offer continues to improve
• Missed window of opportunity?
• DSL, cable modems compelling
• Could follow Metricom's path
• Two-way service in Fall

Gilat is entering US market

• Put together impressive team
• Microsoft Network basic platform
• Co-located & sold with EchoStar
• Radio Shack will also sell Starband
• Similar selling proposition to DirecPC
• Always on
• ~400 Mbps downstream, ~200 up
• Promises availability 17 Oct 2000

Two-way considerations