DirecTV, Microsoft Join to Offer Satellite Net Service

Hughes Electronics Corp.’s DirecTV, the No. 1 satellite-television broadcaster, and software maker Microsoft Corp. said they plan to jointly sell satellite Internet service by October.

Terms were not disclosed. The new service will integrate DirecTV programming with Microsoft’s interactive and Internet offerings available through its WebTV to create a personalized package of services for the television.

It requires customers to purchase a set-top box from Thomson Consumer Electronics, a DirecTV satellite dish, and a subscription to WebTV’s Ultimate TV service.

Hughes, with more than 8.6 million DirecTV subscribers, is facing competition from phone companies like BellSouth Corp., which plans to sell satellite service next year, and the introduction of digital TV by cable companies, offering hundreds of channels and better picture quality, analysts say.

America Online Inc. invested $1.5 billion in Hughes last year to offer services on DirecTV.

Separately, AOL is expected to launch its new AOLTV service next week, which will allow users to surf the Web, “chat” and e-mail while they watch TV.

Interest in interactive TV, which marries the Web with the TV set, has been reignited recently, analysts said. According to a Jupiter Communications research report, 35% of U.S. households are expected to use interactive TV services by 2005.

The new DirecTV receiver, which will include WebTV Network’s Ultimate TV and DirecTV services, is scheduled to be in stores by this year’s holiday shopping season.

The receiver incorporates two satellite tuners from DirecTV and a hard disk drive for digital video recording.

The system will enable viewers to watch two shows at the same time, watch a show while recording another, and record more than 30 hours of digital-quality programming for later viewing. Viewers will have access to e-mail, more than 500 hours per week of interactive TV, and can respond to promotions with their remote. They will also be able to play along with game shows or check sports statistics.