I also saw a neat show about the first transatlantic telegraph line, and how the first person to use it turned the current up too high and shorted it out.
Too much signal latency. Satellites are great for covering wide areas, but aren't good for anything that requires interaction. A satellite in geosynchronous orbit is about 22,600 miles above the equator. Even at the speed of light it takes at least a quarter of a second to send a signal up to a satellite and for it to be retransmitted back down to the Earth. Additional satellite relays increase the delay. Have you ever noticed how awkward live interviews are when there are multiple satellites relaying the signals? Fiber optic cables can send tremendous amounts of data even more cheaply than satellites, but they have a shorter path, so there is less delay between sending and receiving signals.
Geosynchronous satellites are placed at 22,500 miles above the earth. Traveling that distance takes significant time. The voice telephone routing rules only permit a single satellite relay in a voice path. Having a satellite both ways creates such a delay that it is virtually impossible to have a conversation without "talking over" the other person or resorting to ridiculous half duplex speech behaviors.
The large number of "customer service" boiler rooms operating in India would be impossible with only satellite links. Users are tolerant of delays when using a browser. It's an expected consequence of network delays and busy servers. The same can't be said of one-on-one voice conversations. It needs to have a full duplex feel with little discernible delay to be satisfactory.
Internet through satellites has got a high latency(response time) problem. Fibre optics is faster, and cheaper.
Here’s a great article from Wired magazine from a decade ago that covers both the modern laying of undersea cables and the history going back to the very beginning. Long but very interesting.
Mother Earth Mother Board
http://www.wired.com/wired/archive/4.12/ffglass_pr.html