There were no satellites involved, and yes it was purely analogue. They did build most of the equipment themselves, the hardware to connect the computers to the video equipment.

But let Douglas Engelbart explain it by himself: "we leased two microwave lines, up from our laboratory at SRI, up in Menlo Park, so it’s roughly 30 miles, and it took two dish antennas on the roof there, four of them on a truck up on SkyLine, and two on the roof of the conference center”. https://www.youtube.com/watch?v=sG3PWet8fDk&t=19m50s

Edit: btw, a few seconds later he mentions Bill English: “but anyway it worked, and the main reason it worked is because Bill English is a genius”.

Certainly analog. The collaborative video/audio features would not have been practical in 1968. But all of the interactive computing concepts were indeed happening in real time.

The article is a little unclear about this. The Telstar satellites made it possible for IBM to send digital data but it would also stream analog video.

https://en.m.wikipedia.org/wiki/Telstar