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a lot of folks use their phones as a de-facto Internet connection (video, FB, whatever), since an actual hardline ISP connection is either out of their budget (Satellite)

I don't see how that's the case. Last I checked, Exede Satellite Internet was cheaper than Verizon's LTE Internet Installed. Verizon has 10 GB/mo for $60/mo or 20 GB/mo for $90/mo, with $10/GB thereafter. Exede has 12 GB/mo for $50/mo or 25 GB/mo for $75/mo, with the meter stopped at 0300-0600 local time ("Free Zone"), and deprioritization instead of overage fees ("Liberty Pass").

Space-based Internet transport exists. National regulators of the radio frequency spectrum can arrest, try, and imprison people for using it without a license.

Now - will mobile data allow a way to skip over the cable-internet providers and offer real competition?

Not until mobile drastically increases its capacity. Currently Xfinity (home Internet and TV service by Comcast) has a cap on the order of 300 GB per month, compared to about 10 GB per month for comparably priced satellite or cellular data plans.

Simple answer is you won't.

Ever heard of Exede? Viasat has its own satellite in orbit and offers consumer internet. Pricing starts at $50 for 12 down, 3 up. Yes, latency may ruin your Skype session, but you know that will happen with any satellite link.

Exede user here. Here's my typical experience with my satellite connection:

• Minimum latency: 700 ms
• Download speed: Paying for 12 Mbps. Real speed: around 20 Mbps. Yes, actually faster than advertised. However, due to the built-in latency, websites feel a little slower to load.
• Upload speed: Paying for 3 Mbps. Real speed: Usually 1 Mbps. They obviously put low priority on uploads.
• Data cap: 15 GB/month. However, data is unmetered between 12 AM and 5 AM.
• Internet access Essentially unfiltered. Bittorrent is throttled. However, enabling protocol encryption bypasses the throttling.

My main issue with Exede is that it's DNS is flaky and sometimes requires me to cycle my network connection to fix. Even worse, it uses a proxy to hijack all port 53 DNS requests, so you can't choose an alternate server with the standard port. Netalyzr's log info on this:

UDP access to remote DNS servers (port 53) appears to pass through a firewall or proxy. The client was unable to transmit a non-DNS traffic on this UDP port, but was able to transmit a legitimate DNS request, suggesting that a proxy, NAT, or firewall intercepted and blocked the deliberately invalid request. A DNS proxy or firewall caused the client's direct DNS request to arrive from another IP address. Instead of your IP address, the request came from [Redacted]. A DNS proxy or firewall generated a new request rather than passing the client's request unmodified.

But other than that, it's still a *vast* improvement over the dial up I had for 15 years.

Having used the older satellite services, I would agree completely...however there is a new choice in the last year or so. If you haven't check out the new Excede service. 12Mbps down, 3Mbps up. Yes, the latency is still bad so no online gaming, but it's a HUGE improvement over the previous offering.

reasonable broadband service (estimated at $50/mo)

Would you find a 10 GB per month cap reasonable? Because that's what Exede includes in its $50 package.

The question I have for Microsoft is why are you even doing this? Why not get rid of the optical drive altogether and adopt the Steam model wholesale?

Because Exede still has a 10 GB per month cap. Some wireless ISPs are even stricter, with a lower monthly cap and no free early morning downloads. With current generation games already topping 30 GB, it could take months to download a game.

this is why i haven't run p2p in years. its cheaper to buy blu rays or pay for netflix

Provided what you want to watch is even available where you live. I'm aware of several films and TV series that aren't on DVD [1], Blu-ray [A], or Netflix VOD at all.

you only need 5mbps for netflix.

After streaming for four hours, you'll have eaten up nearly your entire 10 GB for the month.

a bunch of obsolete stuff involving optical disks, which people did 10-15 years ago before hard disks got big enough

So how do you get the movie from the studio to your hard disk, especially when a satellite ISP is still offering a cap of one single-layer BD a month as its best plan?

Disclaimer: I work for ViaSat, Inc.

We do sell high speed satellite internet access across the rural US. The FCC doesn't count it on their map. While lovers of FPS games won't be satisfied because of the latency, general net access (email, web browsing, streaming) is quite good.

http://www.exede.com/