StarBand moves forward, launches in Puerto Rico

By Susan Rush
from CED Broadband Direct, July 11, 2002

Despite seeking Chapter 11 bankruptcy protection last month, StarBand Communications Inc. has launched its two-way broadband satellite service in Puerto Rico.

At the time of its bankruptcy filing, StarBand said it intended to continue its day-to-day operations while in bankruptcy proceedings. Founding partner Gilat Satellite Networks has committed to $2.8 million for debtor-in-possession financing. The Puerto Rico launch is StarBand's first service roll out since the filing.

In addition to offering high-speed access to residential and small office customers, StarBand will offer a Web portal with Spanish language content.

On May 24, StarBand filed a lawsuit against EchoStar Communications Corp., claiming "EchoStar has not forwarded any of the millions of dollars in fees it has collected and is collecting as its billing agent." The suit was settled two weeks later in earlier June. As part of the settlement EchoStar agreed to pay $710,000 and surrender its voting power in StarBand. StarBand agreed not to make any negative EchoStar comments in public and not to seek further legal action against EchoStar.

Ever since its inception, StarBand has struggled, and despite being backed by heavyweights like EchoStar and Microsoft Corp., the StarBand system so far has signed up only a nominal number of subscribers and has been plagued with reports of poor service, distribution and performance.