Satellites to play key role in broadband's hybrid future, Hughes exec says

➤ The growth prospects for satellite broadband are not limited to the consumer space.

➤ Hughes Network Systems is investing in low-earth-orbit satellite systems competitive with SpaceX's Starlink.

➤ The future of consumer and enterprise broadband will consist of stacked networks that provide redundancies and mitigate downtime.

EchoStar Corp.'s Hughes Network Systems LLC is investing in more advanced and hybrid technologies to bolster its position in the satellite broadband market. Competition in this space is growing as more services launch from both traditional broadband providers and new entrants like Space Exploration Technologies Corp.'s Starlink. The newer technologies that Hughes is rolling out offer users multiple options to connect for a better broadband experience.

S&P Global Market Intelligence recently caught up with Paul Gaske, Hughes North America executive vice president and general manager. What follows is an edited version of that interview.

S&P Global Market Intelligence: With lower cost and higher speed competition mounting in the consumer broadband space, what are the growth opportunities for traditional satellite providers?

Paul Gaske, Hughes North America executive vice president and general manager Source: Hughes

Paul Gaske: About 13 years ago, we first started using real high capacity [satellites], and we could do consumer broadband. But in parallel, we've been using them to connect to ships for the military, to connect small neighborhoods and rural areas through wireless.

Even today, the government is preparing to spend billions and billions to try to get fiber to as many places as possible, but when you figure out the cost per home, it's extraordinary. There's this whole market that's underserved. In the U.S., we have a huge, huge geography, and the economics don't really play out to hit some of the areas where people are. Internationally, the problem is potentially geography, but it's also income. There's people on cell phone plans of $2 a month. When you look at the services today that we offer here in the U.S. through any of the satellite providers, $2 a month wouldn't suffice to do anything, and you wouldn't roll fiber out at $2 a month either.

The satellite world fills out all of that void. Plus, it covers the things that nobody else can. It covers the oceans. It covers the poles. It covers places that you just can't get to.

Given the increased competition in the U.S., including potential subsidies for fiber and SpaceX's Starlink, how is Hughes keeping pace?

We have a new satellite called Jupiter 3, which will be the largest commercial satellite ever launched. That will go up in the spring.

At the same time, we worked very closely with a company called OneWeb LLC to launch a LEO [low-earth-orbit] system. We built the ground segment, we're an investor, and we're a big believer in what LEO can do. When you put up an LEO fleet, you can get coverage for anybody, and the traffic density isn't as high.

COVID had a unique impact on your business.

Nobody ever counted on every single person at home. The husband and wife would be working on the internet, and they have two kids homeschooled. That's a very different world. We're coming back off that a bit, but still, the usage is very high. Everybody's watching online video every night, and we can accommodate a certain amount of that, but we need the new satellites to really look good for our customers. We're in sort of a twilight zone here for the next couple of months until we get that system up.

And the new geosynchronous [or GEO] satellite technology will allow you to better serve that demand?

Yes. If you look at the GEO satellites, the No. 1 thing they can do really well, long-term, is video. At the same time, we've always wanted to do a better job for gamers. The GEO systems really don't work well for the active games. So we've invested in technology we call Fusion, which will bring together wireless access with our satellite access. It will figure out if you are trying to do something that requires low latency, or if are you trying to do something that needs high capacity. If it sees low latency, it will put you on wireless. If it sees high capacity, satellite. And there may be something that needs low latency initially and then shifts to satellite. So it plays between the two.

How do you see a typical customer accessing broadband, say, 10 years from now?

It's a blend. Ever since we started working on the OneWeb system, we've thought that the GEO-LEO combo is going to be really important. Especially as you get the cost of the LEO piece down, the two together are going to be very, very powerful. In our enterprise business, it was just a satellite service 15, 20 years ago. Now, it's fiber, cable, wireless and some satellite.

What kind of enterprises are you serving with this hybrid product?

These would typically be large retailers that are reaching all across the country. They'd be quick-serve restaurant chains. You might see us on pipelines, doing sensing, things like that. Generally, our customers are people that have a central control over a dispersed set of customers. We have partnership agreements with probably about 450 different providers. Some of them are wireless, some are cable and fiber. And some of the applications now, where they run all their operations from a cloud-based service, we're doing tertiary services and so on. The enterprise world is stacking these services.