Hughes Preps Latin American Broadband Service as U.S. Revenue Grows

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PONTE VEDRA, Fla. — EchoStar Corp.’s Hughes division on Aug. 6 reported a 6 percent increase in subscribers to its U.S. satellite consumer broadband service and said its new association with DirecTV as a distributor plus a voice-over-Internet Provider offering should stimulate further growth.

Englewood, Colo.-based EchoStar also said a recent Hughes contract with Telefonica Media for consumer broadband in South America — using Hughes ground gear but not a Hughes satellite — should help Hughes’ long-standing effort to begin its own broadband service in Latin America.

In a conference call with investors and an Aug. 6 filing with the U.S. Securities and Exchange Commission (SEC), EchoStar said it took a $34.7 million charge against its second-quarter earnings to account for further solar-array issues on the EchoStar 12 satellite.

EchoStar 12, operated at 61.5 degrees west, is one of several Lockheed Martin Space Systems-built A2100 models launched about a decade ago that have had electric-power anomalies.  

The charge against earnings for the three months ending June 30 will bring the satellite’s estimated value down to $11 million, EchoStar said. EchoStar 12, launched in 2003, had been used by direct-broadcast satellite television provider Dish Network, which like EchoStar is owned by Charles Ergen, as an in-orbit spare.

Anders Johnson, president of EchoStar Satellite Services, said the company has enough spare in-orbit capacity so that no new satellite construction program is needed to assure the requisite backup for Dish.

“We do have quite a few satellites in the air that are available for restoration services,” Johnson said. EchoStar Satellite Services’ problem since its creation has been more one of being unable to fill capacity than a lack of in-orbit bandwidth. The company has 12 owned or leased satellites in orbit. 

EchoStar Satellite Services reported a 36 increase in revenue from non-Dish Network customers in the three months ending June 30, saying it was able to sell transponder leases to a variety of customers.

In its SEC filing, EchoStar said its HughesNet consumer broadband service had 736,000 subscribers as of June 30, up 6 percent from the subscriber count three months earlier. Hughes President Pradman P. Kaul said during the conference call that the three months ending June 30 is typically Hughes’ worst quarter, and that the performance is evidence of the continued dynamism of the U.S. market for satellite broadband.

Hughes has already signed up Dish Network as a distributor and more recently contracted with Los Angeles-based DirecTV Group, Dish’s principal competitor, to perform a similar task by adding HughesNet to the services marketed by DirecTV’s extensive sales network.

EchoStar/Hughes has ordered a large all-Ka-band satellite to augment the service from Space Systems Loral of Palo Alto, Calif. The satellite, called EchoStar 19/Jupiter 2, is scheduled for launch in mid-2016 and will offer around 160 gigabits per second of throughput — 60 percent more than the Jupiter 1 satellite currently in orbit.

EchoStar and Hughes have purchased rights to an orbital slot over Brazil but have been unable to close a deal with a potential joint-venture partner for a satellite-television or consumer-broadband service.

“We continue to actively pursue the joint venture initiative to enter the Brazilian DTH [direct-to-home television] market,” EchoStar Chief Executive Michael T. Dugan said during the call. “Negotiations with potential partners have progressed considerably.”

EchoStar has moved its EchoStar 15 satellite to 45 degrees west to demonstrate the potential of that orbital position for a Brazilian satellite-television service, and to enable EchoStar to begin providing services quickly once it creates a joint venture.

Hughes has also expressed interest in a Latin American consumer broadband venture, but to date has not moved forward on its own satellite for the region. But the company recently contracted with Telefonica of Spain to install two gateway Earth stations, in Texas and Chile, to provide Ka-band consumer broadband in Latin America.

The service will be using the Ka-band capacity on Hispasat’s Amazonas 3 satellite and will provide broadband access to subscribers in nine nations in Latin America, Kaul said, adding that it gives Hughes a foothold in what is likely to be a fast-growing Latin American broadband market even if the bandwidth is not from a Hughes spacecraft.

“It introduces our Jupiter platform all over Central and South America and expands coverage of our technology globally,” Kaul said.