EchoStar Moving Satellite to Brazilian Slot Absent a Local TV Partner
PARIS — U.S. satellite broadband and video provider EchoStar Corp. on May 9 said it is moving one of its satellites to a Brazilian orbital slot immediately despite the company’s inability to secure a Brazilian satellite-television partner 18 months after it won the slot at auction.
Englewood, Colo.-based EchoStar also said its Hughes division added 56,000 new subscribers to its HughesNet Gen4 consumer broadband service in the United States in the three months ending March 31, bringing the total to 692,000.
This performance, and the prospects for similar subscriber growth in the coming months, drove EchoStar in March to order what will be the largest-ever broadband satellite, fromof Palo Alto, Calif.
The satellite, called EchoStar 19 or Jupiter 2, will have more than 160 gigabits per second of throughput, or 60 percent more than EchoStar’s current EchoStar 17/Jupiter 1. It is scheduled for launch in 2016 and will cover all of the United States and much of Canada and Mexico.
EchoStar in September 2011 won a Brazilian government auction of satellite orbital slots, paying about $80 million for rights to direct-broadcast television frequencies at 45 degrees west.
Since then, the company has been seeking a Brazilian partner to share investment in a satellite to be placed there, and to help run a satellite-television business. It has come up empty so far.
In a May 9 conference call with investors, EchoStar Chief Executive Michael T. Dugan said moving an existing satellite into the Brazilian position will demonstrate the orbital slot’s potential and prove EchoStar’s commitment to developing a satellite-television business there.
“In some of the past negotiations, people have questioned whether we’re serious or if we’re just sitting on the slot as an investment or something,” Dugan said. “The answer is: We’re serious. We’re going to demonstrate the seriousness by bringing up this test system on a live satellite with very good coverage of Brazil.
“We don’t consider the satellite we’re putting up there to be the final solution for a long-term [direct-to-home broadcasting] business. It’s a fairly complicated deal because we’ve got to come up with a capital structure and start the construction of a Brazil-specific satellite. And when you have to start off a [joint venture] with that kind of an investment, you’ve got to be serious.”
Brazil, and Latin America in general, has been one of the world’s hottest satellite markets of late. Demand for satellite bandwidth is strong and several satellite operators have placed new capacity over the region. Others have spacecraft dedicated to Latin America under construction.
EchoStar’s Hughes division, based in Germantown, Md., uses the Spaceway 3 Ka-band satellite at 95 degrees west, with 10 gigabits per second of throughput, for those areas not covered by EchoStar 17/Jupiter 1, which began commercial operations at 107.1 degrees west in October 2012.
EchoStar earlier this year changed the way it calculates subscribers, stripping out those that are using the Hughes broadband service on satellite capacity purchased by third-party providers.
As of March 31, there were 28,000 subscribers in this category, compared to 26,000 a year earlier, Dugan said.
Hughes Chief Executive Pradman P. Kaul said the current subscriber growth rate — 56,000 net adds in the first three months of 2013 following 40,000 in the three months ending Dec. 31 — can be maintained.
Hughes’ consumer satellite broadband competitor, ViaSat Inc. of Carlsbad, Calif., operates a satellite similar to EchoStar 17/Jupiter 1 that entered service eight months earlier. ViaSat has yet to order a second satellite, saying it is taking longer than expected to determine its optimal specifications. That has prompted industry speculation about how large a business consumer satellite broadband will be in the United States.
For the three months ending March 31, EchoStar’s Hughes division reported $289.4 million in revenue, up 5.5 percent from the same period a year ago. In addition to consumer broadband, Hughes manufactures satellite ground terminals for a worldwide customer base. The hardware business had a backlog of $1.03 billion as of March 31, flat from a year earlier.