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EchoStar: Hughes South American broadband starts this summer, European mobile service faces launch delay

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PRAGUE – EchoStar Corp.’s Hughes division on May 10 said a recent consumer satellite broadband contract with the Turkish government and a combined Eutelsat/Facebook deal in Africa are just the start of the company’s ambition of replicating its U.S. success elsewhere.

EchoStar also lifted the veil, if only slightly, on its plans for a large S-band mobile communications satellite over Europe, whose launch has slipped to this summer following a rocket-related delay.

Despite the proximity of the launch and the size of the EchoStar investment in the EchoStar 21 satellite, Englewood, Colorado-based EchoStar has never spelled out exactly what business it expects to develop now that it has won European Union operating licenses.

There has never been any doubt about the consumer broadband plan: Develop North America, then head south to Central and South America before moving further afield.

Hughes expects to bring into service three new Ka-band satellites in the coming months, bringing the company’s total consumer broadband capacity in the Americas to 360 gigabits per second of throughput.

The most eagerly awaited is the EchoStar 19, also known as Jupiter 2, which will give Hughes badly needed new capacity to grow the North American consumer broadband service, which while more profitable than ever has been stuck in neutral in terms of subscriber additions.

EchoStar reported that Hughes’s North American subscribers totaled 1.038 million as of March 31, flat from Dec. 31 as most of the capacity of the two current satellites, Spaceway 3 and EchoStar 17/Jupiter 1, is booked.

Hughes reported revenue of $326 million for the here months ending March 31, flat from a year ago. But EBITDA, or earnings before interest, taxes, depreciation and amortization, was up 9 percent, to $99 million, as Hughes was able to squeeze additional earnings from its customer base by offering different subscriber plans and keeping a lid on user-terminal costs.

EchoStar 19/Jupiter 2 is scheduled for launch late this year aboard a European Ariane 5 rocket. The satellite’s entry into service will trigger the start of a recently signed contract with Global Eagle Entertainment (GEE) of Los Angeles, which provides satellite connectivity to business and commercial aircraft.

The GEE deal was Hughes’s first in the fast-growing aeronautical connectivity sector. Hughes President Pradman P. Kaul said Hughes’s aeronautical modem can deliver 200 megabits per second of throughput per aircraft.

Hughes has leased Ka-band capacity aboard satellites owned by Eutelsat of Paris and Telesat of Canada in an attempt to replicate its U.S. success in Central and South America, notably Brazil.

The Eutelsat 65 West A satellite, launched in March, should be in service this summer and provide 24 gigabits per second of throughput for Hughes’s Brazil consumer broadband service. The Telesat 19 Vantage satellite, scheduled for launch in mid-2018, will provide 31 gigabits per second of throughput from 63 degrees west.

In a May 10 conference call with investors, Kaul said the company has been focusing on satellite broadband in the Americas but has already won numerous contracts for Ka-band consumer broadband ground networks.

Two recent wins were in Turkey and Africa. The Turkish government has expanded an earlier contract with Hughes for a Jupiter ground network that will be double the territory covered by the previous contract. The network connects with Turkey’s Turksat 4B satellite’s Ka-band payload.

More recently, Eutelsat and social-media giant Facebook, which are cooperating in deploying an initial satellite broadband service in sub-Saharan Africa, selected Hughes for the ground infrastructure, including the ground terminals.

The decision was surprising insofar as Eutelsat is creating a consumer broadband joint venture in Europe with Hughes competitor ViaSat Inc. of Carlsbad, California, and uses ViaSat gear for Eutelsat’s existing European consumer broadband business.

Eutelsat and Facebook have leased the Ka-band payload on Israel-based Spacecom’s Amos-6 satellite, scheduled for launch in August aboard a SpaceX Falcon 9 rocket.

Kaul said the contract with Eutelsat and Facebook calls for three Hughes-built gateway Earth stations, two data centers, a network management system and an initial order for an unspecified number of user terminals.

EchoStar’s European mobile satellite communications business has never been clear beyond the fact that the company is launching a 7,000-kilogram satellite to perform the service. Anders N. Johnson, president of EchoStar Satellite Services, provided a few details during the conference call.

“We’ve developed, with our colleagues over at [Hughes], an adaptation of a portable data terminal, which acts as an S-band connected Wi-Fi hotspot capable of supporting telephony products,” Johnson said. “We’ve got an inventory of units that will be available for immediate deployment across Europe for testing and then available through the wholesale channel through a pre-existing relationship that we have in Europe with a distributor.

“We’re also in discussions with a number of other people about using the product as a feature for other services, where the S-band satellite capacity would act as a gap-filler [where] terrestrial networks are incapable of supporting service at the moment that it’s needed,” Johnson said.

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EchoStar: Hughes South American broadband starts this summer, European mobile service faces launch delay

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