EchoStar Adds Subscribers, Targets 2016 for Solaris Commercial Service

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PARIS — Satellite consumer broadband provider EchoStar Corp. on Nov. 6 said it increased its subscriber base by 2.7 percent in the three months ending Sept. 30, with wider profit margins, despite a drop in wholesale revenue from broadband subscribers collected by its sister company, Dish Network.

In a conference call with investors, EchoStar also said its satellite-terrestrial broadband service, Solaris Mobile of Dublin, would launch its EchoStar 21 satellite, formerly called TerreStar-2, in early 2016, with commercial service to begin later that year.

Englewood, Colorado-based EchoStar purchased Solaris from satellite fleet operators Eutelsat of Paris and SES of Luxembourg but has not announced how it plans to commercialize the service in Europe once the EchoStar 21 satellite is in place.

Solaris has an S-band payload on a Eutelsat satellite already in orbit, which is the principal asset — plus a provisional European Union operating license — that EchoStar took over in the Solaris purchase. This satellite has a defective antenna and cannot meet the coverage requirements set by the 28-nation EU.

Mobile satellite services operator Inmarsat of London is building an S-band satellite payload to share space on Riyadh, Saudi Arabia-based Arabsat’s Hellas-sat 3 spacecraft. Inmarsat has said it is planning an air-to-ground aeronautical service in S-band and is rounding up partners to share in the necessary ground infrastructure.

In the conference call, EchoStar Chief Executive Michael T. Dugan said the company is “beginning discussions with potential [Solaris] customers. In the near term, our primary focus is on meeting with the European Union and member states to more clearly define and harmonize the regulations requiring the operations of a terrestrially delivered service.”

Dish Network took ownership of the nearly completed TerreStar-2 satellite following Dish’s purchase, in 2011, of TerreStar Networks, which had filed for bankruptcy. TerreStar and then-rival DBSD, which Dish also purchased from bankruptcy, are now part of Dish’s plans to accumulate spectrum for terrestrial broadband.

EchoStar’s Hughes Network Systems consumer broadband service reported 960,000 subscribers as of Sept. 30, up 2.7 percent from the subscriber total as of June 30. Dugan said that the increase is all the more remarkable for the fact that it came despite a drop in subscriber ads from Dish, which sells the HughesNet service on a wholesale basis.

Hughes President Pradman P. Kaul said that in the nine months ending Sept. 30, the HughesNet service booked 174,000 new subscribers to its high-end Gen4 service, which uses Hughes’ own Ka-band satellite capacity, and lost 74,000 legacy subscribers, most of which use Ku-band capacity Hughes leases from other satellite operators.

Hughes’ strategy is to let subscriber turnover gradually reduce, to near-zero, the amount of third-party capacity it leases so as to focus the business on higher-margin Ka-band service using Hughes’ Spaceway 3 and larger Jupiter 1/EchoStar 17 satellite.

As is the case with its consumer satellite broadband rival, ViaSat Inc. of Carlsbad, California, Hughes’ current service is filling up certain satellite beams faster than others. The EchoStar 17 satellite cannot allocate capacity based on demand; once a beam fills up, Hughes will need to focus on less-promising regions of the United States where demand is lower.

The Jupiter 2/EchoStar 19 satellite, which like EchoStar 17 is built by Space Systems/Loral of Palo Alto, California, is scheduled for launch in mid-2016, at which point Hughes will be able to apply renewed focus on the more populated areas of the United States, where demand is strongest.

In a Nov. 6 filing with the U.S. Securities and Exchange Commission, EchoStar said the HughesNet growth would have been stronger in the three months ending Sept. 30 were it not for the fact that some satellite beams are nearing their capacity limits.

Kaul said Hughes, while awaiting EchoStar 19, will begin special discounts and other marketing incentives in those regions whose beams still have plenty of capacity.

EchoStar and Hughes are preparing to offer a similar consumer broadband service in Brazil following EchoStar’s purchase of the Ka-band payload on Eutelsat’s 65 West A satellite, which has 16 Ka-band spot beams with a combined capacity of 25 gigabits of throughput.

Hughes’ mobile satellite business, which is mainly to provide ground-based beam-forming and other services to operators with their own satellite capacity, has been less active in recent years following the collapse of mobile-broadband startups in the United States.

But Hughes is selling the Mexican government a turnkey ground infrastructure for the MexSat system, whose satellites are built by Boeing Space and Intelligence Systems of El Segundo, California.

“Our strategy is to provide turnkey ground network solutions to mobile satellite operators in L-band and S-band around the globe,” Kaul said.