(FORTUNE Magazine) – A year or so ago, when the term "broadband" first entered the tech vernacular, there were three competing strategies--cable modems, DSL (through existing phone lines), and satellites. That meant three sets of companies for an investor to bet on. But as Agatha Christie might have put it, now there are two. When people discuss broadband today, they talk about cable and DSL, with nary a mention of satellites.

On Wall Street, certain stocks associated with the cable and DSL buildout have soared. Broadcom (which makes chips for cable modems) and Copper Mountain (maker of equipment for DSL server providers) are up 300% and 157%, respectively, in the past year. What happened to satellites? It's an intriguing whodunit that shows how customers inevitably must come before profits.

First off, some people do have satellite broadband available to them, but they're no more than a sliver of the market. According to Netcentric consultant Jupiter Communications, satellite broadband offered in the U.S. by the likes of Hughes Electronics' DirecPC currently accounts for a negligible number of hookups, and by 2003 will have only 2.4% of the broadband market.

Why? Because satellites have so many things working against them. For starters, nobody's really offering two-way broadband access via satellite. The 33,000 DirecPC subscribers, for example, can download information from the Net about ten times faster than a high-end dial-up modem. But they still have to use a standard, sluggish phone line to upload. That's like driving to work every day in a Ferrari but returning home in a Yugo. What's more, while satellite companies like Hughes and Echo-Star Communications are deploying the technology that will enable always-on, two-way Internet access, it's not yet ready for consumers.

Then there's the so-called line-of-sight issue. Antennas linking PCs to satellites can't have any obstructions between down here and up there. That makes it tough for city dwellers, where rooftop space is at a premium. The antennas are easier to install in rural settings, but that's not exactly the market you want to bet your high-tech company on (given the difficulty of servicing customers in remote locations).

The third problem? Cost. DSL and cable companies are competing on price as well as service, and those prices are dropping. Zia Daniell Wigder, an analyst at Jupiter, predicts that rates for broadband service will fall to $20 to $25 a month within three years, compared with about $40 a month for cable-modem service and roughly $50 for DSL today. Falling prices among the incumbents won't make it any easier for satellite newcomers--especially ones now spending furiously just to get their systems in place and functioning--to woo away customers.

And that's why direct investments in satellite broadband are either tough to make or potential stinkers for years to come. Even though cable-modem and DSL services have expanded much more quickly than satellite broadband, the companies offering those services haven't fared well in the market. Shares of leading cable broadband provider Excite@Home have eroded by 70% in the last year, to a recent $20. Stock in DSL supplier Covad Communications tanked (from $66 to $16 in three months), as did shares of Rhythms NetConnections, whose 12-month chart is a black-diamond ski slope, going from $71 to $13.

The main contestants in the satellite business aren't doing much better. Thanks to strong performance last year in the direct-broadcast satellite TV business, shares of EchoStar Communications (with the killer symbol DISH) soared from a split-adjusted $20 to $80 in April but gave nearly all of it back as the TV business slowed. EchoStar traded recently for about $32. And shares of Hughes (a General Motors tracking stock that trades as GMH) have given up 35% of their stellar 1999 and early 2000 gains. Hughes followers expect that GM will eventually set it free, enabling the stock to trade independently of GM's.

Broadband satellite is one element of these companies' potential. As an also-ran technology, it's not likely to help their stocks. But if the sector blasts off, EchoStar and Hughes could fly as well. Indeed, both have game plans to boost their broadband-satellite fortunes. DirecPC, with partner America Online, plans to offer two-way satellite Internet access later this year. Similarly, EchoStar is an investor in Gilat-to-Home, a joint venture by Israeli satellite company Gilat Satellite Networks and Microsoft's MSN Internet service. They also plan to roll out two-way service this year. Gilat itself is the closest thing to a pure-play investment in broadband satellite. Its Nasdaq-listed shares, at $70, are down 60% from their March high.

But considering how cloudy the prospects are for satellite broadband, your cash may be far better left on the ground.

ADAM LASHINSKY is the Silicon Valley columnist for TheStreet.com. Read his daily column at www.fortune.com/investor/wired.