EchoStar, sitting on $3 billion in cash, tightlipped on future global satellite play
PARIS – EchoStar Corp. on Aug. 9 said its recent $1.5 billion in bond offerings, which brought its cash reserve to $3 billion, were intended to provide sufficient liquidity to invest in one or more global satellite projects that it declined to identify.
EchoStar and its Hughes Network Systems division have been rumored for months to be preparing, with partners, a global mobile Ka-band satellite broadband network similar to what competitors ViaSat is preparing on its own, and Inmarsat already has in operation.
Company officials’ statements during the Aug. 9 conference call implicitly reinforced those rumors but did not confirm them.
“We have numerous plans on the drawing board for satellite projects on a global basis, as well as [for] pursuing other strategic opportunities,” EchoStar Chief Executive Michael T. Dugan said. “Given that satellite builds are multi-year endeavors, and we had debt maturities in three years, de-risking the financing of these projects made total sense to us.”
Englewood, Colorado-based EchoStar’s Hughes division runs a consumer satellite broadband service in the United States using the company’s own Ka-band satellites. These satellites’ beams over high-demand regions are about full.
The company said its consumer broadband subscriber base totaled 1.030 million as of June 30, down 8,000 from where it stood three months earlier. Hughes President Pradman P. Kaul said the subscriber losses came mainly from the company’s wholesale distribution channels, where it has less control than over the retail subscriber base.
The EchoStar 19/Jupiter 2 Ka-band satellite will provide capacity to restart subscriber growth starting in March 2017, Kaul said. It is scheduled for launch aboard a United Launch Services Atlas 5 rocket late this year.
EchoStar and Hughes in July debuted consumer satellite broadband service in Brazil, using the Ka-band capacity on Paris-based Eutelsat’s 65 West A satellite. The company has long said it wanted to replicate its U.S. consumer broadband success globally.
Ka-band preferable to Ku-band for aero and maritime
Kaul stressed that Ka-band, not Ku-band, was the more suitable bandwidth for both the consumer broadband and the aeronautical and maritime mobile markets.
“For the markets that we are addressing at Hughes, which is consumer access to the Internet, I think clearly Ka is our focal point because of the cost per bit and the amount of bits you can get in Ka-band,” Kaul said. “Ka-band would be the right solution for consumer Internet access. And that includes a lot of the mobile applications like aeronautical and maritime.”
Aeronautical and maritime broadband services provider Global Eagle Entertainment has leased Hughes Ka-band capacity over North America for the aeronautical market. Hughes is also an equity shareholder in OneWeb, which is planning a constellation of low-orbiting satellites in Ku-band.
Kaul said new dual-mode Ka-/Ku-band antennas would allow customers to switch between bandwidths depending on where they were, especially since it will be several years before Ka-band capacity is available in quantity on a worldwide basis.
“It’s going to be a long time before we have Ka covering every square inch on the Earth,” Kaul said. “[For] aeronautical and maritime applications, we’re looking at dual-band antennas, so that you can switch from a Ku satellite to Ka satellite. Some of the big FSS operators are building spot-beam Ku satellites. I envisage that we would use some of that capacity to provide global coverage. But the major markets, I think, would be at Ka.
“Our objective would be to put our dual-mode antenna and dual-mode terminals in the planes, which can operate both at Ku and Ka. So when they’re flying over Mexico or the United States, we would expect to use the capacity on our own satellite. Then the plane goes over the oceans or in other parts of the world where we don’t have Ka capacity at that time, we would use leased Ku-band capacity from one of the existing FSS guys.”
Initial European mobile satellite service by December
EchoStar and London-based Inmarsat both have licenses to offer S-band satellite-terestrial service in Europe. Inmarsat has said it will not meet the December deadline for service introduction because its satellite’s launch service provider, SpaceX, cannot make the scheduled launch date.
EchoStar’s service appears to be right at the December deadline. Anders Johnson, president of EchoStar Satellite Services, said the launch of EchoStar 21 aboard an International Launch Services (ILS) Proton rocket is now scheduled for October or November.
“At this point, given the dates that ILS is giving us, we’re still confident that we can have the satellite deployed and sufficiently tested to be offering a minimal service by the end of the calendar year,” Johnson said.
Johnson said EchoStar has focused less on building a network of ground towers to assure signal strength throughout Europe and more on the mobile satellite services possibilities.
The company “has not necessarily focused on fine-tuning or pursuing the CGC [complementary ground component, the tower network] licenses, as the MSS service precurses anything that might be done in the CGC arena. We continue to have discussions with the individual member states and their regulators regarding our desire to have a single, harmonized standard relating to CGC across Europe. That is not currently the case.”
Asked whether EchoStar, whose satellite services division has seen declining revenue, would consider investing in conventional fixed satellite service (FCC) capacity outside North America given the overall market’s lackluster performance, Johnson said:
“There is a certain instability in the FSS sector at this point. There’s probably some rationalization that will occur. We continue to… have discussions with folks who are in the sector, both about collaborative activities where it makes sense, as about other, more strategic, activities.”