PARIS — The two main providers of consumer satellite broadband in the United States, Hughes and ViaSat, both reported zero growth in subscribers in the three months ending Sept. 30 in what they said was a temporary slowdown that will be reversed in the coming months.

The figures nonetheless represent the first time since they introduced consumer satellite broadband that neither grew its subscriber base.

While they offer similar services, Hughes’ HughesNet and ViaSat’s WildBlue services are not marching in lockstep in their development.

Germantown, Md.-based Hughes, which in June was purchased by EchoStar Corp. of Englewood, Colo., has plenty of available satellite capacity and remains the bigger of the two businesses, with 626,000 consumer and small-business subscribers in the United States as of Sept. 30, according to an EchoStar filing with the U.S. Securities and Exchange Commission (SEC).

In a Nov. 7 conference call with investors, Hughes President Pradman P. Kaul said HughesNet was hit with an unusually large number of subscribers who were unable to continue to pay for their service in the three months ending Sept. 30 and were thus disconnected.

Offsetting these lost subscribers was an equal number of new customers signed on during the same period, permitting Hughes to report at least no decline in its subscriber base. Kaul declined to disclose the number of new subscribers added during the period but said the figure is “close to the highest” ever in recent years.

Hughes has received a $59 million grant as part of the U.S. government broadband stimulus package that gives steep discounts to consumers in certain regions of the United States that are not well served by terrestrial broadband alternatives. Hughes did not disclose the number of customers, if any, that it has added as part of this stimulus funding.

Kaul ascribed the unusually high number of customers being forcibly removed from the HughesNet service to “credit reasons which we believe have been driven by the very difficult macroeconomic climate. We have introduced several enhancements to the pre-activation process including a more detailed credit assessment.”

Kaul said Hughes, whose large all-Ka-band Jupiter broadband satellite is scheduled for launch in the first half of 2012, has already seen a reduction in the amount of customers being disconnected for nonpayment since the company tightened its subscriber credit screening process.

Hughes leases Ku-band capacity aboard commercial telecommunications satellites and in the past two years has been migrating its subscribers to its own Spaceway 3 Ka-band satellite. Hughes has said Spaceway 3 can accommodate as many as 600,000 subscribers. Jupiter, which employs a less-flexible satellite design but one with 10 times the raw throughput, will be able to handle between 1.5 million to 2 million subscribers, according to Hughes estimates.

Kaul said EchoStar and Hughes are eyeing Latin America for a Jupiter 2 satellite, perhaps using an orbital slot recently purchased at an auction organized by Brazil’s telecommunications regulator. Hughes paid a total of $98 million for the orbital positions, at 45 degrees and 68.5 degrees west longitude.

The transfer of rights to the positions is pending a resolution of a protest made by one of the losing bidders, EchoStar said in its SEC filing.

Carlsbad, Calif.-based ViaSat Inc.’s WildBlue service has reported a declining customer base for more than a year in what ViaSat has said is a direct consequence of the fact that the service has no available capacity remaining in high-demand regions of the United States.

The 380,000 subscribers reported as of Sept. 30 compared with nearly 425,000 subscribers in early 2010. ViaSat has said it would refuse to compromise service quality by loading its two satellites with subscribers.

Coming to the rescue of ViaSat’s WildBlue is the ViaSat-1 satellite launched Oct. 20 and is expected to enter service in late December. Like Hughes’ Jupiter, ViaSat-1 is a new-generation high-throughput satellite designed to deliver service that can compete with DSL performance in at least some cases.

Unlike the WildBlue-1 satellite launched in 2007, ViaSat-1 is aiming its beams on only about one-half the landmass of the United States — the half that WildBlue has found exhibits the highest demand. Due to a series of issues first with the satellite’s production and then with its launch vehicle, ViaSat-1 is six to eight months late in entering service.

In addition to stalling WildBlue’s subscriber revenue, the delays have slowed sales of ViaSat’s own ground equipment for WildBlue subscribers.

ViaSat Chief Executive Mark Dankberg said WildBlue subscription rates should shoot up dramatically starting in early 2012. In a Nov. 7 conference call with investors, Dankberg said subscriptions could come in at a rate of 20,000 a month or more once ViaSat-1 is ready for business. He said that depending on the type of subscriptions purchased, the satellite could accommodate at least 1 million subscribers, and perhaps many more.

Dankberg said ViaSat will be offering subscriptions that all offer the same throughput of about 12 megabits per second but differ in the amount of gigabytes per month can be downloaded — a way of assuring that a relatively small number of heavy users do not undermine the service of mainstream subscribers.

Dankberg said ViaSat hopes to order a ViaSat-2 satellite in time for it to be in service in mid-2013, which would suggest a contract order by mid-2012.


Peter B. de Selding was the Paris bureau chief for SpaceNews.