Hughes Communications’ Broadband Satellites Potentially ‘Quite Full’ in Some U.S. Markets in 2014

Hughes’ EchoStar-17 Ku-band satellite, which entered service at 107.1 degrees west in October 2012, serves about 440,000 subscribers and has potential for 1-1.5 million, Cook said. HughesNet itself had 807,000 subscribers Sept. 30 and EchoStar-17 also provides service for Dish Network’s dishNet as well as DirecTV, both of which package broadband with video. Cook declined to identify U.S. markets where capacity for HughesNet customers will be near capacity in 2014. But Hughes could ease capacity constraints by moving some subscribers in those markets to its Spaceway-3 satellite at 95 degrees west, Cook said.

"We potentially see some areas getting quite full in 2014,” Cook said. “But obviously our goal is to minimize the impact on our distribution and fulfillment channels so as to continue the flow of business. We are working on lots of things to make sure we minimize the process. By managing the technology we will use Ku-band and Ka-band transponders and the trick is how we make those things play together."

The Ka-band spotbeam EchoStar-19 satellite, which started construction at Space Systems Loral earlier this year, is expected to launch in first half 2016 and be in service by mid-year, Cook said. The satellite will increase throughput to 160 Gbps, 40 percent more than EchoStar-17 and give the service coverage of North America, Hughes officials have said. Hughes has selected a launcher for EchoStar-19, said Cook, declining to identify it.

"The most important thing about EchoStar-19 is that we will need more capacity by then and it will give us increased coverage so we offer more Gen4-type services,” Cook said. “But whether we introduce higher speeds or change the pricing, it’s way too early because we'll have to wait and see how the market develops."

HughesNet recently launched a special offer on its entry level Gen4 package, promoting it with a $39 monthly fee and 5 Mbps/1 Mbps download/upload speeds. The entry level price includes a 10 GB monthly data cap, the company said. It also is sold in 10 Mbps/1 Mbps at $49 and 20 GB; at 10 Mbps/2 Mbps and 30 GB at $79; and at 15 Mbps/2 Mbps and 40 GB at $129. “The majority of subscribers are coming in” at the entry levels, but “we still have some that come in at the higher rate,” he said. “The biggest challenge is managing it. In order to manage the potential for over-capacity we aren’t promoting heavily to get subscribers to upgrade right now.” But HughesNet is offering existing subscribers a discount on system pricing -- the satellite modem sells for $299 -- for those seeking to switch to the faster service available with EchoStar-17, Cook said.

While Hughes provides service for its own HughesNet and those from Dish Network and DirecTV, there has been little overlap between them. Dish and DirecTV have focused on bundling agreements, while HughesNet is aimed solely at broadband and targets taking subscribers from DSL providers. HughesNet has largely avoided competing directly with cable broadband, preferring to target “unserved and underserved” markets, the latter being those with slower upload/download speeds, Cook said.

"We have never attempted to go head-to-head with cable,” Cook said. “That is not a smart thing to do because it does lead to higher churn and if you persuade someone to move to satellite and they don’t get what they want” they can always switch back to cable. DSL, on the other hand, is fair game because we think we have a better service.”