Takeaways from EchoStar’s Aug. 9 conference call:
— Order of 500 Gbps Jupiter 3 satellite confirms confidence in consumer broadband.
— Take-up of Gen5 service on Jupiter 2, and of Brazilian broadband service, both helped drive the Jupiter 3 decision.
— Co. gives detailed assessment of why 5G is not a threat.
— EchoStar Mobile’s new S-band satellite over Europe ready for service, regulatory talks continue.
— SES-11/EchoStar 105 launch slips from 2Q to 4Q on SpaceX rocket.
LOGAN, Utah — EchoStar’s Hughes Network Systems division on Aug. 9 doubled down on consumer satellite broadband in the Americas, ordering a 500-Gbps Ka-band satellite from Space Systems Loral to launch in 2021 and predicting its current capacity will be full well before then.
The new satellite, called EchoStar 24/Jupiter 3, will offer 100 mbps or more to subscriber homes, Hughes said.
In a conference call with investors was a defense of both itself and competitor ViaSat Inc., EchoStar officials reiterated their confidence that 18 million U.S. homes with poor or zero internet connectivity remain ripe for satellite broadband.
Hughes President Pradman P. Kaul said encroachment into that market by 4G/5G/LTE mobile broadband is a nonstarter given the 5G bandwidth allocated for use outside of urban areas.
ViaSat Inc., reporting consumer broadband subscriber losses the day before, said 4G/LTE had been one of the factors in the decline.
4G/LTE/5G seen as not a major competitive threat
Here is Kaul’s take on why 5G is not a threat to consumer satellite broadband:
“If you look at… the 5G world, you have two pieces of spectrum that are being used in implementing new networks. You have the low-frequency stuff, the 600 MHz that was recently auctioned, which will be used in more of our market areas — rural and semi-urban areas where you can have large cell sizes.
“The problem is that the amount of bandwidth available at that spectrum is… in smaller pieces of bandwidth. They won’t be competing with us directly because we’re going up to 100 megabits per second. In the low end of the spectrum that 5G will be using, that’s not a competitor.
“Then you go into the millimeter-wave spectrum, the 28-, 30-, 37-GHz pieces. There, the cell sizes are very small, but they will be focused in the urban areas, where we don’t compete.
“So we don’t envisage, either in the high-end spectrum or the low-end spectrum, competing directly with 5G. There will be pieces at the fringes, a certain amount of competition. But that’s OK. We still see this market of 18 million households, and only 10% penetration today, as a very viable market in our business. Today, when we compete with 4G, we have a very competitive offer in terms of performance and price.”
Consumer subs up, Brazil service outperforming forecast
Hughes said its consumer broadband service had 1.085 million subscribers as of June 30. That includes the company’s Brazilian service, which started in mid-2016 and as of May reported 50,000 subscribers. The total is up from 1.03 million on Dec. 31.
The EchoStar 19/Jupiter 2 satellite entered service in March and as of Aug. 8 more than 200,000 existing Hughes subscribers had signed up for the higher-speed Gen5 service enabled by Jupiter 2.
Some of those subscribers had moved from ViaSat’s service, but EchoStar officials were not crowing about this. Instead, they basically agreed with Via:Sat’s analysis that ViaSat’s business, with little satellite capacity available, would rebound once the ViaSat-2 satellite begins commercial operations late this year.
They also commiserated with ViaSat on the difficult transition both companies have been obliged to make as customer/distributor Dish Network — whose owner, Charlie Ergen, also owns EchoStar — moved from a wholesale distributor to a sales-agent model.
EchoStar Chief Financial Officer David Rayner cautioned investors not to view the second quarter of 2017 as an indicator of satellite consumer broadband health, for Hughes or for ViaSat.
“ViaSat [is] shedding subs trying to get ready for a ViaSat-2 conversion and an upgrade program, not dissimilar to what we did in Q4 and Q1,” Rayner said.
“Both of us experienced conversion pain with Dish as they shut off their wholesale sales and tried to ramp their sales agency model. The very first part of our Q2 activity there was a lot of upgrade activity that wasn’t resulting in net adds. So Q2 is an anomaly as it pertains to the entire satellite broadband infrastructure and growth curve.”
Kaul said Hughes’s net subscriber additions would have been higher were it not for the change in the Dish relationship.
Jupiter 2 is also targeting Canada, Mexico, Colombia and other Central American countries in addition to the United States. For Brazil, Hughes has leased Ka-band capacity on satellites owned by Telesat of Canada and Eutelsat of Paris.
EchoStar did not announce the cost of the Jupiter 3 satellite beyond saying it would add $100 million to the company’s 2017 capex plans and a similar amount the following year.
Kaul said the satellite design was made after a nearly year-long analysis of “cost, speed, data handling, coverage, technology risk and spectrum availability risk.”
European S-band mobile satellite ready, awaiting regulatory approval
EchoStar Mobile, based in Ireland, is offering a European mobile broadband service from the EchoStar 21 satellite launched in June. Anders Johnson, president of EchoStar Satellite Services, said the satellite completed in-orbit testing in June.
“We continue to be in regular communications with the European regulators regarding EchoStar Mobile’s licenses, and anticipate the launch of commercial service across the European Union in the fourth quarter following end-to-end integration of the satellite and the terrestrial network,” Johnson said.