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December 5, 2008

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Satellite Services for Internet Access in Rural Areas1
Hans Kruse
McClure School of Communication Systems Management
Ohio University

Executive Summary
This report examines the use of direct satellite services for internet access in rural areas. The
broad success of direct to home broadcast service (DirecTV and Dish Network have a combined 17%
national market share for cable service) has provided an incentive for service providers to put together
satellite internet access packages. At the same time, established VSAT services are being adapted to
provide internet access packages in additional to their traditional role in closed corporate networks.
We examine the attributes of rural environments that create a need for unique internet access
services, and then describe a number of satellite services available for this purpose. We review
several current service offerings including pricing, performance, and availability. Projected future
services are outlined briefly.
We conclude that satellite services are a viable option for consumers and businesses in rural
areas. However, users must expect to pay a premium price for these services, compared to DSL or

CATV based service in metropolitan areas.
This report should be viewed as a snapshot. The satellite internet marketplace is changing
rapidly. Schedules for the roll-out of new services are changing constantly. An up-to-date version of
this report will be maintained at http://www.csm.ohiou.edu/kruse/SatelliteInternet.
1 This report was produced under contract for Communication Network Services at Ohio University

This section will provide some basic information on satellite services, applicable to most service
providers. Images of ground stations in this section are not vendor specific, but are drawn from
experimental and test projects, courtesy of the NASA Glenn Research Center.
Internet Access Options in Rural Areas
The same internet services available in metropolitan areas can be deployed in rural areas as well;
and they usually are. However, the two most effective access services – DSL (Digital Subscriber
Line) and Cable Modem service – require that subscribers reside in relative proximity to the
switching offices of the service provider. DSL service can only be deployed within 15,000 feet of a
telephone company central office. In rural areas this requirement creates service islands around
switching offices, with many areas outside large towns not being serviceable.

Cable modem services require that the customer be within the service area of the Cable
Television CATV) distribution system. The CATV system structure requires that the areas served
have a minimum density of potential subscribers to be cost effective. Therefore, CATV systems are
again clustered within larger towns and cities, and are not available outside these areas.
Business internet services, such as T1, are generally available in rural areas, but these services are
also generally priced based on the distance between the customer and the switching office. They are
therefore more expensive than in metropolitan areas, and they are ususally only available from one
provider due to the lack of local telephone service competition in rural areas.
Even basic modem service tends to be less effective in rural areas. Due to the longer average
lengths of the local loops serving rural customers, these telephone lines carry more noise than shorter
lines. This extra noise is not noticeable in voice conversations, and these telephones lines meet all
technical standards and requirements for voice telephone lines. Modern modems, such as the popular
56 kbps modems, rely on the fact that many telephone lines, particularly in metropolitan areas, work
much better, with much less noise, than is required by the standards. For that reason, these modems
rarely achieve their top performance when used in rural areas.

This document describes the use of direct satellite services to provide high-speed internet access
comparable to DSL and Cable Modems. It should be noted that other approaches such as terrestrial
wireless services, and airborne radio relays, can be used to provide internet services. These
approaches may be inferior, complementary, or superior to the use of satellite services, depending on
the terrain in question. However, an analysis of these alternatives is outside the scope of this report.

Satellite Services – “One-Way”

Direct Broadcast Satellite (DBS) services such as DirecTV (which has absorbed PrimeStar) and
Dish Network have become very popular in areas without CATV service, or in areas where customers
perceive CATV services to be deficient. It is therefore not surprising that an attempt has been made
to translate this success into an internet access service based on the same technology. Two
companies, Hughes and Gilat, introduced products several years ago which are referred to as oneway,
or hybrid systems. Figure 1 shows the basic structure of these services. They are based on a
regular modem connection to the internet; in addition to this connection they use a DBS satellite to
send data from a central site to the remote system. Since the satellite link is much faster than the
modem connection, downloads from the internet to the remote sites are much more efficient. Data
from the remote site to the internet uses the modem connection and shows no improvement.

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Figure 1
Most computer operating systems and internet components are not normally set up to return data
to a remote site along a different path form the one taken by data from the remote site to the internet.
Figure 2 shows the hardware and software components of these systems. There is a certain amount of
complexity associated with the software changes needed to make these systems work, with an
associated increase in the effort needed to support them.

Figure 2
A one-way internet service can be shared on a local area network, but due to the modifications in
the networking software of the computer attached to the satellite service, special “router” software is
required. Since the link towards the internet travels over the modem, the utility of sharing this type of
connection is very limited.

Operating System
Pseudo Device Driver
Rewrites Address
Modem Driver
Proprietary Satellite
Receiver Interface Satellite

Satellite Services – “Two-Way”
It would appear natural to use the satellite for both directions of the internet access path. VSAT
(Very Small Aperture Terminal) services have indeed been used for enterprise networking for many
years. Figure 3 shows the parts of a typical VSAT Ground Station. To understand the economics of
two-way satellite service, it is necessary to review some of the technical aspects of these systems.

Figure 3a
A typical large VSAT installation2

Figure 3b
An ultra-small earth station, in this case a suitcase model3
2 Photo provided by the NASA Glenn Research Center, http://acts.grc.nasa.gov
3 Photo provided by Air Force Research Lab, Rome/Canadian Research Centre
Reflector: Typical VSAT
reflectors are 3-4 feet in
diameter, newer ultra-small
model are 18-24 inches.
Feedhorn: contains both a
transmitter and a low-noise
Mount: Consists of a central
mounting post which can be
attached to a building, buried for
a ground-level system, or
attached to a non-penetrating
base as in this example

The satellite modem (at either the hub site or the remote terminal) encodes the data stream into an
analog signal. This signal is then modulated onto a high frequency carrier wave. This carrier
frequency must fall inside the range of frequencies assigned by the FCC for fixed satellite services;
the exact frequency is assigned by the satellite services provider. The modulated signal occupies a
range of frequencies around the carrier signal, this is referred to as the bandwidth of the signal. The
maximum bandwidth is of course limited by the amount of spectrum assigned by the FCC, and by the
need to share this bandwidth among different users. The maximum data rate that can be transmitted
over the assigned bandwidth depends on the specifics of the encoding used in the satellite modem. In
practical applications, the data rate typically tops out at 1 bit/sec for every Hz of bandwidth.
However, in addition to the encoding, the maximum data rate is also limited by the need to
maintain a reasonably error-free signal. The combination of the satellite modems, the transmit and
receive electronics, the antennas, and the characteristics of the satellite used, determine the quality of
the signal at the receiver. Technical documents will refer to the “Eb/No” of the signal, describing the
signal energy received in the actual data bits, compared to the background noise. The higher this
signal quality figure, the closer one can come to the upper limit of the data rate defined by the
bandwidth. To make this value larger, one can increase the power of the transmitter and the size of
the antenna. Both of these steps increase cost, and most providers make a tradeoff between data rate
and cost. Two-way satellite services are therefore often asymmetric, just like ADSL and cable
modems. The small dish and inexpensive transmitter deployed at the user’s remote site limit the
uplink, or outbound, data rate to a relatively modest number. Services that rely on a large central hub
site can use a large antenna and expensive transmitter for the data transmission towards the user, and
achieve much higher data rates in this direction compared to the uplink. This is the approach used by
most satellite internet access providers.

Aside from the need to manufacture low-cost satellite earth stations, providers of two-way
satellite service face another hurdle. Two-way satellite service requires a transmitter at the customer
site. In the US, the FCC has jurisdiction over all equipment that transmits radio waves. In some
cases, such as cordless phones and wireless local area networks, the FCC provides a blanket
authorization for the use of a particular set of frequencies. Satellite services are not handled in this
way. Satellite service providers must obtain an FCC license to operate the transmitters at their
customers’ sites, and the providers are responsible to the FCC for the correct installation and
operation of these transmitters (the FCC is mostly concerned with preventing interference between
authorized users). Instead of providing self-installation kits as in the case of one-way, receive only,
equipment, two-way service providers must use professional installers. Expect the initial installation
costs of these services to remain fairly high for this reason. Equipment prices will also remain well
above the one-way equipment due to the need for the amplifier and transmitter in the two-way setup.

Special Issues in Satellite Use for Internet Services
VSAT services have been used for data communications for many years. Most corporate VSAT
networks have been deployed to extend proprietary data networks to remote locations. Today,
interest in satellite networks naturally focuses on the provisioning of Internet access services to
remote or mobile locations.

There are many conflicting statements regarding the use of satellite links for Internet services.
Competitors to satellite service providers will claim that Internet access over satellite does not work.
Satellite service providers attempt to distinguish their offerings from other satellite systems by
claiming to have “fixed” these problems. Contrary to many marketing claims, the TCP/IP protocols
that form the basis of the Internet will work correctly over a satellite link. However, depending on
the intended use of the service, TCP/IP may not work very efficiently unless some modifications are
made. This is especially true for single-user applications that involve large file transfers.
Two issues complicate (but do not prevent) the use of TCP/IP over satellite links4. First, a
transmission over a satellite requires about ¼ of a second to travel from the sender to the receiver, due
to the physical distance between the satellite and the earth. TCP/IP relies on a complex system of
queries and responses to determine an appropriate rate at which to send data. Too fast, and the
transmission overloads one or more links inside the network. Too slow, and the link is not used
efficiently. This mechanism needs several query/response cycles between sender and receiver to
converge to a proper data rate. The transmission delay over a satellite link slows this convergence
process down. In addition, the default values for TCP/IP tunable parameters in many operating
systems will prevent this process from converging to the full link speed. Different vendors take
somewhat different approaches to deal with this issue. Systems designed to serve a single PC will
“tune” the TCP/IP implementation on that PC based on the IETF recommendations. Users who share
this type of satellite link among multiple PC have to insure that this tuning step is performed on each
PC in the local network. Other vendors, especially those targeting larger sites, provide a protocol
gateway which interrupts the normal flow of data and uses proprietary methods to efficiently transmit
over the satellite link to a matching gateway at the hub site. This approach does not require retuning
of local PCs, and works well for a defined set of applications. However, a gateway approach such as
this one can be problematic when the user attempts to deploy a new application; it is likely that the
gateway will have to be updated before a new application can be supported.

The second satellite specific issue arises from the fact that any wireless link will suffer from
occasional transmission errors. These errors will usually occur at a higher rate than the typical error
rate on a wired connection. TCP/IP interprets any packet loss as an indication of congestion, and
reacts by reducing its data transfer rate. If the packet was really lost due to a transmission error, this
reduction in data rate will not only harm overall throughput, but also slow down the recovery from
the transmission error. Fortunately, most modern satellite modems employ very sophisticated error
correction software, so transmission errors should be as rare on a satellite link as they are on a wired
link, at least during normal operating conditions. Wireless links are effected by weather, so error
rates can go up during heavy rain storms and at times when ice or snow accumulates on the satellite
dish. There is little that can be done to prevent these effects, but users need to be aware that they can

Currently Available Options
The list below is not intended to be comprehensive. The providers below are currently offering
service, and are making an effort to serve the rural and underserved areas we are interested in. New
services and service providers appear frequently. Please check our web site for updates.
In reviewing these and other services, it is useful to remember that the satellite service industry
consists of two separate parts. A relatively small number of companies actually build, launch, and
operate satellites. These include Hughes, Gilat, INMARSAT, PanAmSat, and others. Many more
companies manufacture, sell, install, and support ground equipment. Many of these service providers
set up one or more central hub locations with large antennas and transmitters. Their customer traffic
flows through one of these hubs to and from the terrestrial network.

Traditionally, customers have purchased ground equipment from one or more manufacturers, and
contracted with a VSAT service provider for installation, hub, and transmission service. More
recently, system integration companies have begun to offer turn-key solutions, especially in the home
or small business market.
4 A technical description of these issues along with recommended mitigation strategies has been adopted by the
Internet Engineering task Force (IETF) as a “Best Current Practice” document. This document is known as
BCP 28 and RFC 2488 and may be retrieved from the web at http://www.ietf.org/rfc/rfc2488.txt.
Residential and SOHO Service

Two companies have set up the infrastructure to support home and small office users: Hughes and
Gilat. Hughes offers both a one way and a two way service. This service was originally marketed
under the DirecPC brand name, and the two-way service is now know as DirecWay. Gilat has focused
on their two-way offering known as Starband.
Hughes and Echo Star Communications have announced a merger of the DirecTV and Dish
Network units. This merger is awaiting regulatory approval. If allowed to proceed, it will have a
number of repercussions for the satellite internet services.

Starband (Gilat)
Gilat markets the Starband offering in the US through the StarBand Corporation headquartered in
Virginia5. The service is sold through the Dish Network6 dealerships, with or without direct to home
satellite TV service. At this time, StarBand suggests the up-front equipment cost to be about $500,
installation at $200, and the service starting at $70 per month. Dish Network dealers have pricing

Pegasus, Earthlink, Optistreams (Hughes DirectWay)
Hughes appeared for some time to focus on their one-way product7. However, more recently
several companies have begun to provide two-way DirecWay8 service as well. Pegasus9, which is
also a major DirecTV reseller, and Earthlink10, which provides nationwide ISP services, both offer
DirecWay services. Both charge about $400-$500 for the equipment, $200 for installation, and $70
per month. Both companies use local/regional installation providers; not all areas of the US are

Optistreams markets services both under the OptiStreams11 name and through their
RuralNetworks12 division. Optistreams offers the same Hughes DirecWay equipment as the other
providers, but uses a national subcontractor for installations. Optistreams aims at the SOHO, rather
than the purely residential market. Their up-front and per-month charges are somewhat higher than
those charged by Pegasus and Earthlink. Optistreams also supplies higher-end options, which are
described below.

Small Business Service
The hardware described above can, and has been, adapted to the use by small businesses. The
main difference lies in the support services provided, the data rates supported (in some cases, business
services promise higher data rates than the residential version, at a higher cost), and additional
services provided such as static IP addresses, encryption and VPN, and integrated web hosting.
5 http://www.starband.com
6 Dish Network is operated by Echo Star Communications; see http://www.dishnetwork.com.
7 See http://www.direcpc.com
8 See http://www.direcway.com
9 Pegasus Express offers the internet service, see http://www.pgtv.net/ContentExpress.htm and the parent site at
10 See http://www.earthlink.net/home/broadband/satellite/
11 http://www.optistreams.com
12 http://www.ruralnetworks.com

Optistreams manufactures a (windows-based) hardware gateway for use in a small network.
Combined with the standard Hughes DirecWay equipment, this setup can serve a small number of
PCs without using any one of them to perform packet forwarding services. The gateway provides
router, Network Address Translation, and packet filtering services. Static IP addresses are available,
as are Virtual Private Network services for telecommuting applications which require secure access to
internal corporate networks. Equipment costs are about $1,700, with service charges starting at about
$105 per month. Service charges increase with the number of users, and with the use of static IP

Skycasters13 is a system integrator providing turn-key installations. There service uses the
DirecWay hardware, and SkyCasters gateway equipment. Skycasters sells to business users only, and
provides different downlink speeds at different prices. The equipment cost is about $2,900, with
service starting at $99 for 128kbps uplink and 384kbps downlink, and currently go to about $500 per
month for 128kbps uplink and 1Mbps downlink.

“Enterprise” Services
Enterprise-wide satellite services have traditionally been used only by very large corporations
with many domestic sites or very significant foreign operations. There are some signs that the same
basic technology used for these services is being re-packaged for the mid-sized businesses market
looking for turn-key solutions.

Tachyon uses traditional VSAT equipment combined with a hardware gateway manufactured by
Tachyon. Contrary to Skycasters and Optistreams, Tachyon does not use DirecWay equipment, and
runs its own satellite hub facility and network management center (Skycasters and Optistreams use
the Hughes facilities). Their gateway, in addition to routing and firewall functions, does perform
protocol translation to overcome some of the satellite issues mentioned earlier. Tachyon markets its
services as a corporate or distance education network solution. Standard pricing information is not
available, but the company claims to be competitive with T1 access service and pricing in most areas.

Hughes, Gilat VSAT Service
Traditional VSAT services are beyond the scope of this report. They typically require that the
client company or a system integrator working for the company develop a network plan in
conjunction with the VSAT provider. While these network can be very effective, they are typically
aimed at very large corporations. More information on VSAT service worldwide can be found at

Future Services
No major changes in the satellite internet industry are likely until more spectrum and data
communication specific satellite technology become available. The FCC has licensed 500MHz of
spectrum in the Ka band (20/30 GHz) for fixed satellite service use. A large number of satellite
operators have filed for and received licenses to launch Ka band satellites. Almost all of them will
carry spot beam technology, which is designed to reuse the available spectrum many times over,
analogous to the cellular telephony approach. These systems hold the promise of providing both
13 http://www.skycasters.com
higher speed service and lower cost equipment compared to current offerings. Based on currently
available information, it appears unlikely that any of these satellites will be launched before 2003.
For a time, Low Earth Orbit Satellites (LEOS) like those used by Iridium and GlobalStar were
thought to be the best approach for providing wireless data communications services to small and
inexpensive devices. Since LEOS are close to the earth, much less power is needed to communicate
through them. Iridium and GlobalStar designed their systems for voice communications, with data
services promised later. Both systems are in operation and are for the most part technically sound.
However, neither company has been able to become profitable; Iridium filed for bankruptcy and
GlobalStar is suspending debt payments. The Teledesic LEOS system, which is still on the drawing
board, is designed to provide mobile and fixed-site data communication services. However, given the
LEOS failures up to this point, financing for the Teledesic system appears to be in doubt.

Satellite Internet services have matured to the point where they can be used to fill in gaps in the
internet access infrastructure. Users in rural areas will, however, continue to pay a premium for these
services. Lower cost hardware and higher capacity services are likely to become available in the 3-5
year horizon, but it is not clear what the cost and price structures of these future services will look