(FORTUNE Magazine) – In a year when telephone and cable TV companies scrambled to spend money and form alliances for the information hypeway, who would have guessed that the first nationwide megachannel all-digital video service that actually works would come from. . . an automaker? Hughes Electronics, a subsidiary of General Motors, has a bona fide hit on its hands with DirecTV, a satellite service that delivers digital television signals to receivers the size of a large pizza. Analyst William Deatherage of S.G. Warburg says, "Right now they are selling these systems as fast as they can make them." The digital signals provide superior images and CD-quality sound. DirecTV and its partner USSB, a unit of Hubbard Broadcasting, also offer more variety than any cable operators and competitive prices. So why won't everyone ditch the cable company? For one, Directv subscribers must lay out $700 for a satellite dish and set-top decoder box (manufactured by RCA, a division of Thomson Consumer Electronics). And DirecTV doesn't carry local broadcast stations either. Thus initial subscribers will come mostly from among the 11 million families who live in sparsely populated areas that cable companies don't bother to reach. The 18-inch RCA dishes, which will pick up the high-powered Hughes satellite feed just about anywhere, are much smaller and cheaper than the six- footers people have used so far to pluck TV signals from the sky -- what novelist Thomas McGuane describes as "the state flower of Montana." Cable-poor families who invest $700 in DirecTV gear may be tough to win back, particularly if they have had unhappy experiences with their cable provider. DirecTV expects to have one million subscribers by next summer. Deatherage says DirecTV and other such companies may eventually steal 10% of the market from cable.