Satellite broadband from Freebox

Freebox -- the firm that promised to tackle the digital divide by giving away free Net-enabled set-top boxes -- is rolling out a satellite broadband service.

Unlike the set-top box service, this service will not be free. Installation of the satellite disk will cost £249 and there will be a monthly charge of £14.99. For this users will get download speeds of 128kbps and an always-on Internet connection.

While the promise of broadband may be appealing, satellite systems are restricted in that most are only one-way. To upload data users have to employ a conventional modem.

James Eibisch, analyst with research firm IDC, believes satellite broadband services will only be useful in remote areas. "Satellite tends to be more expensive than ADSL or cable for the same amount of bandwidth and bi-directional services are even more expensive." He thinks satellite will become a useful substitute for users unable to get their hands on either ADSL or cable.

Chris Miles, business development manager of Globalwave -- the company implementing Freebox's service -- believes Eibisch has missed the most compelling reason to use satellite: "You can get digital quality TV and content delivered direct to your hard drive," he says. "ADSL and cable are not very good at delivering huge amounts of multimedia content."

Freebox also announces that the £10 registration fee for its multimedia set-top box has been waived. Demand for the boxes -- which provide Internet connectivity, DVD player and access to digital TV -- has created a six month waiting list. Freebox plans to make money from content deals but IDC analyst Jason Armitage is not entirely convinced by Freebox' decision to offer so many functions on the box. "It raises questions in my mind about why it is offering so much functionality rather than online capabilities," he says.

Armitage believes firms that choose to give away set-top boxes are caught in something of a Catch 22 situation. "You have to build a substantial user base of several hundred thousand before you can start making advertising deals. How can they subsidise all these boxes before they have started making money from advertising and other content deals?" he asks.

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