Hughes Wins Largest Satellite Grant from Broadband Stimulus
Hughes Network Systems, WildBlue, EchoStar and Spacenet won some of at least $100 million in federal stimulus money that the Rural Utilities Service is giving to satellite projects to expand broadband’s reach. The funding came in the second round of the Broadband Initiatives Program (CD August 19 p1). Satellite projects may get additional money, said a RUS spokesman. Many winners learned of the awards Wednesday, but many of them said they're still waiting for details, including which of their applications was approved by RUS, executives said. The stimulus money can cover upfront equipment and installation charges and must reduce service fees to $50 a month or less.
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RUS announced winners of almost $87.3 million. The agency hasn’t decided who will get the remaining $12.7 million and any additional money, the spokesman said. Any money that’s allocated for terrestrial projects but isn’t given out to them could be redirected to satellite, he said. RUS has said it will announce the rest of the awards before October.
Hughes won the largest slice, a $58.7 million grant for the only winning satellite project aimed at providing nationwide coverage. RUS says “258,685 people stand to benefit” from the award, and the company expects 100,000-110,000 households to take the service, said Mike Cook, senior vice president of Hughes’ North American division. The company awaits specific requirements for the grant but hopes to begin marketing on its award within six months, he said. The award winners should receive the details in writing “shortly,” said the RUS spokesman. Hughes will mainly use its Spaceway satellite for the new subscribers, and all ground infrastructure is already in place to begin the service, Cook said. Overall, the awards probably will benefit the satellite broadband market rather than Hughes’ business specifically, he said. The company believes the award shows that satellite broadband has a role in U.S. broadband policy.
WildBlue was second-biggest winner, receiving about $19.5 million to provide service in the Midwest and West. Lisa Scalpone, the company’s general counsel, said she isn’t sure when the company will begin marketing related to the award, but it “can launch almost immediately after we get the documents finalized.” WildBlue will work with EchoStar, which received its own grant, to offer the service. “We are absolutely thrilled that between ourselves and our distribution partner” (EchoStar) they'll be able to give full continental U.S. coverage, Scalpone said. WildBlue plans to market through direct mail, targeting homes determined to be eligible for the RUS funds, and online, allowing users of the WildBlue website to type in their addresses to see whether they're eligible, she said. The RUS grant won’t lead WildBlue to offer its services to new service areas, but it will speed up the company’s roll-out of faster services. As required by RUS, WildBlue will offer 2- and 3-Mbps packages, which it hasn’t previously, said Scalpone. As the “first really big-scale federal program involving satellite broadband,” she said, she hopes it will be closely watched and possibly serve as model for future rural-adoption programs.
EchoStar XI Operating, a Dish Network subsidiary now named Dish Broadband, received $14.2 million to provide service in the eastern U.S. Dish declined to comment on its award. RUS said “42,478 people stand to benefit, as do roughly 1,888 businesses,” from the award.
Spacenet will get about $7.5 million to provide service in Alaska and Hawaii. The company will use its broadband provider, StarBand, to offer the service, said a Spacenet spokesman. Most of the federal money will go toward equipment and installation, which generally costs more than $100 and can be double that in more remote areas. Removing the equipment and installation fees “really lowers point of entry” for potential subscribers, he said. The company will use its capacity on EchoStar 9 and Galaxy 18 for the service, he said. RUS estimated that 12,550 people will benefit from the grant.